Boston - U.S. digital music revenue is projected to climb from $1.98 billion in 2007 to $5.34 billion by 2012, when "artists will increasingly keep the lion's share of this revenue as record labels become marginalized," according to a report from market research firm Yankee Group.

Overall, industry revenues have fallen 25% since peaking at $14.6 billion in 1999, and stood at $11 billion for 2006.

"It's not just that the record labels are facing declining revenue; rather, the basic relationship between recording artists, record labels and consumers is in major flux," said Michael Goodman, director of digital entertainment at Yankee Group.

"As bands retain ownership of their music, the record label's role shrinks while the role of technology vendors and online music stores grow."

Yankee Group further projects that online music will grow faster than mobile music downloads within the U.S. digital music industry, and that online single downloads will outpace album downloads or subscriptions.

Online distribution is expected to account for 80% of digital music revenue in 2012, when just 9% of mobile users are expected to actively use their phones as portable music players.

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