Streaming music catches fire

Streamed music, like streaming of movies and TV episodes via Netflix and other Internet-based services, is gaining momentum as a preferred way to listen to tunes. About $3.4 billion of the $6.4 billion that consumers will pay for all music in 2012 will be for digital music, says a new report from Strategy Analytics.

That means for the first time ever, the amount spent on digital music will surpass that spent on CDs and other physical formats. Digital music — streamed and downloaded — is up from $2.9 billion in 2011, the firm says. Spending on physical music is expected to fall to $3.1 billion from $3.4 billion. Most spending on digital music — an estimated $2.2 billion this year — will be for PC downloads from iTunes and other online retailers. But Spotify and other PC streaming services, which could bring in about $413 million in 2012, are growing at four times the rate of downloads, the report says. In addition, just over $750 million comes from downloads and music subscriptions used only on mobile devices. Consumers are gravitating to "the Netflix model" for music, where they pay a monthly fee of $5 to $10 for access to a large virtual jukebox, says Ed Barton, director of digital media for the Boston-based research firm.