U.K. Record Labels Generated One-Fifth Of Revenue From 'Diversified' Income Streams in 2011
U.K. Record Labels Generated One-Fifth Of Revenue From 'Diversified' Income Streams in 2011

Digital has overtaken physical as the biggest source of recorded music revenue in the United Kingdom, according to new figures released by British labels trade body the BPI.

Digital format sales accounted for 55.5% of U.K. trade revenues in the first quarter of 2012, surpassing income generated from physical product sales for the first time.

Significantly, the rise in digital revenues helped record industry income grow 2.7% in the first quarter to £155.8 million (around $240 million). BPI credited a diversified revenue base, including download stores, subscription services and ad-supported platforms, and increased consumer spending on digital album purchases and paid subscriptions with driving growth.

The BPI reports that digital income from all sources was up 23.6% year-on-year to £86.5m ($134 million) in quarter one, while physical format revenues fell 15.1% year-on-year, generating £69.3 million ($107 million). In line with the previous quarter, digital album sales were the biggest individual source of U.K. digital revenues, rising 22.7% year-on-year to £35.9 million ($55.6 million).

Income from paid-for subscription services was also up, climbing 93% year-on-year to £9 million ($13.9 million). Meanwhile, revenues from ad-supported services grew 20% year-on-year to £3.4 million ($5.3 million).

BPI chief executive Geoff Taylor called the accession of digital music revenues "a significant milestone in the evolution of the music business."

"U.K. record labels have embraced digital to their core, supporting innovation and licensing more new online and mobile services than any other country. As a result, the industry's prospects for growth look brighter than for several years," Taylor went on to say, before adding a note of caution.

"We will need to see this trend repeated for several quarters to say we have turned the corner," he stated, citing the still strong demand for physical product in the U.K., especially in the fourth quarter. "However, the creativity, investment and digital expertise of the British music industry point the way forward for growth in the U.K. economy," continued Taylor.

BPI in association with the Official Charts Company also revealed that the biggest-selling digital artist album in the United Kingdom in the first three months of 2012 was Lana Del Rey's Born To Die (Polydor/Universal). Emile Sandé's debut studio set Our Version of Events (Virgin/EMI Music) was the second highest-selling album, with + by Atlantic/Warner Music artist Ed Sheeran at No. 3.

No U.S. artists were in the Top 10, which also included albums by Adele, Coldplay, David Guetta and Florence and the Machine. Sales stats were not provided. The best-selling digital single in the first quarter was Gotye's "Somebody That I Used To Know" featuring Kimbra (Island/Universal).