By Daniel Hunter

Whilst the sales of CDs and vinyl still dominate the music industry, accounting for 61% of music sales worldwide, streaming services have seen a 40% increase in 2012.

On-demand services, such as Spotify and We7, will generate £696m for the global music industry in 2012 new research has suggested.

The research, carried out by industry watcher Strategy Analytics, goes on to show that sales of physical products dropped by 12% globally, and 30% in the UK. This suggests people are either downloading, streaming, or more worryingly, downloading illegally.

"The extent of the decline took us a bit by surprise," said Ed Barton, the company's director of digital media.

"The quality of the release slate was simply not desirable enough to drive the levels of spending we've seen in previous years.

"Maybe something will come along - even one of the compilations of songs from the Olympics ceremonies - which will give us something to shout about going forward."

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