Digital flow will not plug gap.

New research suggests that the digital market is not yet the knight in shining armour for the industry

The music industry faces another two years of belt-tightening and cost- cutting before the rise of digital halts the decline of physical sales, according to new research published exclusively today in Music Week.

A study by analyst Jupiter Research indicates that the slow rise of European PC and mobile digital revenues will not stem the descent of physical sales until 2010. Even then, revenues will only return the market to its 2007 levels by 2012, with steady but unspectacular growth culminating in E2bn (#1.49bn) in European revenues by then.

"The halcyon days of the music industry are gone," warns Jupiter Research vice president and research director Mark Mulligan. "Digital is not about to return it to the days of 2000 and 2001 - the slightly depressing story is that it's going to return the industry to where it is now. What's happening is not a blip, it's a re-alignment, and it has further to drop yet.

"Digital is not the knight in shining armour, but it is vital in helping the music industry change. With previous formats such as CD and tape, the new format was established by the time the old format was declining. That's not happening here. There's a slow shift to digital as CD is rapidly declining."

The research also shows European digital music adoption currently lags behind the US in terms of both adoption and relative rates of growth by more than two years.

In Europe, digital music buyer penetration is less than half that of the US, with US buyer uptake having grown more in 2005 than Europe did from 2005 to 2007.