MUMBAI: With the accelerating growth in the music industry, recorded music business is expected to witness a compound annual growth rate (CAGR) of 5.5 per cent to $19.8 billion in 2016 from $15.2 billion in 2011, according to a report by PricewaterhouseCoopers.

The annual 'Global Entertainment and Media Outlook 2012-2016' report stated that Digital distribution of recorded music is expected to overtake physical distribution in 2012 and will rise at an 11.7 per cent CAGR to $5.5 billion in 2016 from $3.1 billion in 2011. The report sees a steady decline in physical music sales as digital aided by streaming services, will continue to grow.

Radio revenues are expected to touch around $22.5 billion in 2016, a 4.1 per cent increase over last year, while ad revenue is expected to hit $18.2 billion, up from $15.7 billion in 2011.

Online radio advertising will reach $802 million and satellite radio advertising is projected to be $116 million in 2016, a 9.4 per cent CAGR from 2011.

The company also expected global spending in the entertainment and media field to rise from $1.6 trillion in 2011 to $2.1 trillion by 2016, growing at a CAGR of 5.7 per cent. As per the report, the US market has witnessed the largest increase since 2007 and expects faster growth at 5.2 percent CAGR reaching $597 billion in 2016, from $464 billion in 2011.

The report also expected growth in digital market spending to continue and significantly outpace growth in non-digital spending during the next five years. Digital spending is expected to account for 67 per cent of all growth in spending during the next five years, globally. In the US, it is expected to account for 31.5 per cent of all spending in 2016, up from 21.7 per cent in 2011.

PwC entertainment media & communications US practice leader Ken Sharkey said, "Change in consumer behavior is pervasive and accelerating and the E&M industry is in the front line of this change. The past uncertainty triggered by the digital migration has given way to a sharper focus of E&M companies on executing their digital strategies. While experimentation will continue, the way forward is becoming clearer as companies focus on identifying, choosing and executing the right business models, organizational structures and developing the skill sets to understand consumer behaviors and motivations in their connected, multi-screen environments."