Revenue in the Australian recorded music industry continues to shift into the ether, with massive increases in digital distribution offsetting losses in physical sales, according to PwC.
The PwC Entertainment and Media Outlook has forecast the physical distribution market to decline at an average compound annual growth rate (CAGR) of 12.8% over the next four years to just $140 million in 2017.
On the other hand, the digital distribution market will increase at 9.7% CAGR to reach a projected $381 million in 2017. PwC said digital sales jumped from 36.7% of the market in 2011 to 46.3% in 2012.
Meanwhile, streaming services recorded "extraordinary growth" in 2012. "As Spotify, Deezer and MOG joined Australian players such as JB Hi-Fi's Now, streaming sales grew 232% to $2.7 million," the report says.
"Initially a relatively abstract concept, digital subscription services have quickly become a practical and often preferred way to consume music. More people are choosing to pay for access to music libraries rather than own physical recordings.
"We expect bundling of music streaming services to grow dramatically in 2013 towards a mass market threshold as more players enter the market. However, the market is quickly fragmenting as rivals adopt a variety of business models, which has created some confusion."
PwC says piracy remains a big challenge for the industry despite the growing popularity of legal content, with Australia ranked sixth in the world for illegal downloads with 19.2 million in the first six months of 2012, according to the Music Metric Digital Music Index.
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