A new report from PriceWaterhouseCoopers says global spending on recorded music will fall from $33.4 billion worldwide in 2007 to $32.5 billion by 2012, a .6% compound annual decline. That's for all formats of recorded music combined.

Regionally, Latin America and Asia are expected to see gains, driven mostly by digital formats, but declines in the U.S. and the rest of the world will offset that positive note, the report says.

Not surprisingly, digital formats are expected to explode in that time. Global spending on digital music formats is predicted to reach $18.8 billion by 2010, from $7.3 billion in 2007, a more than 20% compound annual gain. Regionally, Asia is expected to contribute $7.5 billion to the 2012 digital total; the U.S. $5 billion; Latin American $1 billion; and almost $5 billion for the rest of the world.

PWC says digital revenues will overtake physical revenues in Asia by 2009, Latin America by 2010, by 2011 in the U.S. and Canada, and not until 2010 for the rest of the world.

And while mobile will edge out Internet-based distribution as the more lucrative channel, the Internet will remain the fastest growing with a compound annual rate of over 27% to $8.6 billion by 2012, while mobile phones will grow by 16.7% for a total of $10.3 billion. PWC says there were 361 million songs downloaded via mobile phone worldwide last year, and expects that figure to grow about 4% to 373 million this year, and to 580 million by 2012.

In the near term, single-track sales remain the dominant component of digital sales, at $802 million, but album downloads increased by 54% in 2007 over the prior year. The company expects single downloads to grow to 1.9 billion a year by 2012 (or $2.2 billion) worldwide, while album downloads will rise to 120 million units a year by the same time (or $1.2 billion). Interestingly, PWC believes tracks will cost more in the near future, to an average of $1.15 by 2012, while albums will average $10.15.

PWC pegged the music subscription market at $201 million and a total of 1.8 million subscribers. It says the market will increase slowly at about 2% annually to $218 million by 2012. Unlike the increase in track sales, PWC says subscription prices will fall, to an average of $8 a month by 2012.

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