A study of over 4,200 online consumers in Europe has predicted digital music will have a majority stake (57%) in the recorded music market by 2013. Digital licensing is expected to generate another €1.2 billion ($1.6 million).

The report, entitled "How Digital Licensing Will Help Save the Music Industry", was released today by independent research company Forrester Research.

Its six-year forecast also states that online piracy remains a massive problem, particularly amongst 16 to 19-year olds, where it found file-sharing occurred four times more than legal downloading.

The popularity of social networking is expected to double to 78 million by 2014, prompting a surge of subsidized services offerings free music. Such a business model is also on trial via Nokia Comes With Music.

Mark Mulligan, VP and research director at Forrester Research, urges music companies to steer away from traditional methods of business and focus instead on "monetizing consumption."

"The music industry is moving away from the distribution paradigm to the consumption era," he said in a statement. "The core principles of the old music industry, such as units shipped and album sales revenues mean less in the on-demand digital world. Digital licensing revenue will be a cornerstone of the new businesses models that do that.

"The music industry is not dying but the way in which it does business is changing irrevocably. Every industry stakeholder -- the record companies, consumer electronics manufacturers, telcos, ISPs and retailers -- must get out of their comfort zone and change their strategy in order to grab a piece of a smaller, yet more complex European music industry."

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