Digital music sales will overtake physical music sales by 2011 in Western Europe, according to new research from analysts at Berg Insight.

They also expect digital music sales to account for 10 per cent of total music retail revenues this year.

Counter to some label bosses' fears, the rapid rise in digital sales are expected to offset the decline in physical sales and push the European music market back into growth from 2008, the analysts said.

They expect total European music retail value to grow at an annual compound rate of 6.5 per cent from €8.5 billion in 2007 to €11.6 billion by 2012.

Berg Insight anticipates the evolution of a converged digital music market spanning desktop and portable devices, where mobile handsets are going to play a significant role.

“Music-enabled handsets already outsell portable music devices,” said Hanna Hallberg, telecom analyst at Berg Insight. “We expect that the handset is going to become the primary portable listening device. Once consumers are provided with unhindered mobile internet access, these devices will increasingly be utilised for accessing online music content.”

The report also supports the notion that existing DRM-schemes are dissuading consumers from using legal music downloading services and underlines the importance of the ability to get dual delivery to both computers and mobile handsets.