A Different Kind of Digital – Helps Music Sales Soar in Sweden

by Sven Grundberg

SFHH Logo 250X250Music sales in Sweden -– a country long known as an online piracy paradise — is suddenly showing double digit growth, amid a surge in digital music sales. But instead of instead of iTunes downloads, the growth is driven by almost entirely by streaming services, an increasingly popular method of consuming music by paying a fixed subscription every month, rather than buying individual songs.

While music sales in Sweden are still a small piece of a very large global pie, the small Scandinavian nation and its Nordic neighbors have long been seen as early adopters and innovators when it comes to tech trends — from the way physical devices are designed to the way content is delivered to consumers.

The Swedish Recording Industry Association Friday released some fascinating numbers on last year’s music sales in the Scandinavian country. The data showed a 14% increase in music sales in Sweden in 2012, with total music sales hitting 943 million Swedish kronor ($145 million), up from 829 million kronor in 2011.

After a prolonged period of decline, much like the rest of the world, music sales in Sweden started growing again in 2009 due to the rise of digital music sales.

The Swedish Recording Industry Association said digital-music sales overtook physical sales in Sweden two years ago. Last year, digital music sales accounted for more than 60% of music sales in Sweden, and 90% of the digital music sales came from streaming.

If the world is heading in the same direction as Sweden Apple Inc. AAPL +2.26% and its iTunes Store is certainly facing mounting troubles. While iTunes, the juggernaut in the digital media world, still benefits from its vast reach, it still doesn’t offer a streaming subscription service.

It’s easy to understand the appeal of streaming versus downloading. Music streaming services like Anglo-Swedish Spotify  and France’s Deezer offer unlimited access to their vast libraries of music for roughly the same price a month that users pay for a single album on iTunes.

Scandinavia, and especially Sweden, has long been known as an online piracy paradise, but thanks to the recent proliferation of companies providing legal on-demand streaming services for music, the region’s reputation as a safe haven for illegal file sharing is beginning to change.

This development has also attracted major U.S. video streaming companies to the region Netflix Inc. NFLX -4.39%, the U.S. video streaming service provider, started considering an expansion into the Nordics a year ago, and after spending months negotiating content deals with copyright holders in the region, the company launched its Scandinavian service in October last year.

Time Warner Inc.’ TWX -0.62% Home Box Office followed suit and expanded its online streaming service into Scandinavia in December.

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