The Internet and the social web continues to play a great importance to music in 2012.

Artists tracked and measured by Next Big Sound have added close to 100 billion new plays and over 5 billion new fans last year, underlining the fact that online activity must be taken into account when deciphering the music industry at large. The volume and percentage increases over 2011 demonstrates that people are sharing, discovering and listening to more music online than ever before. This state of the online industry report goes beyond the traditional metrics, and addresses what has become an increasingly important aspect of the business of music.

Breaking down fan activity on of each of the major social networks, we saw that across the board there was either an increase or maintenance of current levels. Music distribution website Soundcloud was most notable with activity near tripling from the beginning to the end of 2012. Emphasis on visual content is key, with video streaming platform YouTube seeing steady growth, though much more so than partner website VEVO which only services the major labels, excluding Warner. And while online messaging service Twitter grew at a faster rate in 2011, overall activity for artists was much higher throughout 2012. 

Market share in terms of record sales has long been the traditional method of analyzing the industry. Contrasting this with the social market share for each of the major labels as well as independent and unsigned artists, provides an interesting perspective on the opportunities available for independent artists. Online they represent twice what they do in sales. 

The most social albums of the year were determined by looking the percentage increases across several platforms for the top selling albums of 2012 in the two months surrounding release. The three albums selected for this all saw an immediate boost in fan base, fan engagement and online consumption. Here ingenuity with social strategies came into play. For instance The Lumineers, who offered fans a digital sneak peek of their album in exchange for fans connecting either their Facebook or Twitter account, saw a 320 percent jump in the number of new Twitter followers added the month following the drop and a similar increase on Facebook.

The aim of this report has been to been to break down the overwhelming quantities of data gathered about online music consumption in 2012, and extract valuable insights around how social the industry has become. Check out our State of the Industry report here