The music industry saw worldwide revenues from digital jump 8 per cent to $5.2bn (£3.3bn) last year, and these now represent one third of all sales, according to the IFPI trade body.
Prices for digital music are falling, but the number of tracks sold has risen. Digital singles rose 11 per cent and albums 24 per cent by volume.
The IFPI, which has been leading the war on piracy, also hailed the fact that the number of consumers who subscribe to an online music service such as Spotify and Deezer surged by 65 per cent to 13.4 million.
Some markets, such as the US and South Korea, now generate more than half of all recorded-music revenues from digital.
But the IFPI warned that illegal downloading, streaming and file-sharing remained a major threat.
In the UK, 23 per cent of consumers regularly download music illegally, according to the trade body.
"Our digital business is progressing in spite of the environment in which it operates, not because of it," said the IFPI's chief executive, Frances Moore. "We need legislation from governments with co-ordinated measures that deal with piracy effectively and in all its forms. We also need more co-operation from online intermediaries such as search engines and advertisers to support the legal digital music business."
Bruno Mars had the two top-selling songs of 2011. "Just The Way You Are" notched up 12.5 million copies and "Grenade" 10.2 million.