Digital sales represented 10 percent of the total worldwide music market in 2007, up from 6 percent the previous year, and will account for 40 percent of all music purchased worldwide by 2012, according to a new report issued by market research firm In-Stat. Citing the global expansion of broadband services, demand for single-track downloads and expanding music catalogs as key drivers, In-Stat says digital music revenue growth also hinges on sales of full-track mobile downloads in regions outside of market-leading Japan. In-Stat forecasts worldwide full-track mobile downloads revenues will reach roughly $4.2 billion by 2012.

"Digital piracy continues to represent the primary challenge to online music service providers," said In-Stat analyst Stephanie Ethier in a prepared statement. "Other obstacles still include the lack of interoperability between services and devices due to differing digital rights management technologies, and weak consumer demand for subscription-based services. Another potential market inhibitor is the fact that content owners, cellular service providers and handset manufacturers are increasing the amount of marketing and promotion for mobile music."

For more on In-Stat's digital music forecast:
- read this release [1]

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How do we revitalize mobile music [4]?