Online piracy has "declined significantly" while downloads have helped music sales increase for the first time in more than a decade.
Piracy on the internet has decreased in recent years, helping the music industry recover from more than a decade of dwindling sales.
The number of illegal file sharers dropped by 17% in the past 12 months alone - down from a peak of 33 million in 2005 to just 21 million worldwide in 2012 - according to a new report compiled by market research company The NPD Group.
Meanwhile, figures from the International Federation of the Phonographic Industry (IFPI) show that global music revenues have increased for the first time since 1999.
Frances Moore, chief executive of the IFPI, said: "It's hard to remember a year for the recording industry that has begun with such a palpable buzz in the air.
"These are hard-won successes for an industry that has innovated, battled and transformed itself over a decade. They show how the music industry has adapted to the internet world, learned how to meet the needs of consumers and monetised the digital marketplace."
The NPD Groups report indicates that as many as 40% of people using illegal music download services in 2011 stopped doing so last year.
More than half of those people said they now prefer using a legal music streaming service - like Spotify, We7 or Last.fm - while 20% said the illegal service they were using before had been shut down or infected their computer with malware.
In the US, new measures have been introduced to further reduce music piracy. The controversial 'six strikes' campaign, which came into force yesterday, is so-called because it gives illegal downloaders six separate warnings before legal action is taken.