Cambridge, Mass. – Sales of digital music downloads will grow at a compound annual growth rate of 23% over the next five years, reaching $4.8 billion in revenue by 2012 — when they will overtake CD sales, according to a new report from Forrester Research (NASD: FORR). Despite the rise, digital will still not compensate for falling CD sales, which will drop off to just $3.8 billion in 2012. "This is the end of the music industry as we know it," said Forrester principal analyst James L. McQuivey.
"Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio."
Contrasted with the strong growth of download sales, Forrester expects that subscription music services will show modest growth, reaching just $459 million in revenue in 2012.
The firm also noted that "experiments in ad-supported downloads will be silenced by the powerful combination of DRM-free music and on-demand music streaming on sites like imeem.com."