Once Sweden’s role in pop was merely to export Abba albums. Now music’s biggest stars are heading to Scandinavia after Sweden and Norway stunned a record industry in decline by reporting soaring sales figures.

In the UK, the music industry continues to contract, with album sales tumbling 11 per cent last year. It’s a similar story in the US, where piracy and the switch to digital have slashed record company profits.

However Norway and Sweden bucked the global trend by posting a surprise leap in music revenues, forcing artists to reconsider where they focus their touring and promotional efforts.

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According to IFPI Sweden, the value of the Swedish recorded music market soared last year by 13.8 per cent, generating 943 million kronor (£92.5 million).

Norway’s trade body recorded an impressive 7 per cent rise, the first increase since 2004, with revenues hitting 545.3 million krone (62.4 million).

The temperature in Oslo might currently be sub-zero but the musical climate in Scandinavia is more welcoming for artists, who prefer to tour in markets where fans are most likely to buy their music after a show.

Biffy Clyro, The Killers and Jake Bugg, the rising British singer-songwriter, are among the acts who will play concerts in Oslo and Stockholm in the next few weeks.

Indie band Villagers, Patrick Wolf, Slash and the latest version of The Jacksons are also heading to Norway and Sweden.

Blur are not playing any UK shows this year but they have signed up to headline the Øya festival in Norway this Summer.

The Scandinavian success is due to both countries making a successful transition to paid-for digital music.

In Sweden, digital revenue accounted for 64 per cent of total recorded music revenue, up 12 per cent from 2011. Income from streaming services, such as Spotify, rose by 55 per cent and accounted for 90 per cent of all digital revenues. CD sales declined by 15 per cent.

It’s a similar story in Norway where streaming revenue increased by 226 per cent to 189 million kroner (£22 million), while downloads grew 6 per cent. This more than offset a 20 per cent decline in physical sales.

Record companies, reeling from the collapse of HMV, which holds 38 per cent of the declining CD market, are now hailing the “Scandinavian model”. David Balfour, commentator for the influential industry website Record of the Day, wrote: “The figures from Sweden and Norway lead the way in pointing to a music industry that has not only weathered the worst of the storm but looks to be on its way to increasing health.

“Streaming services now have critical mass in Scandinavia, whilst consumers are showing that this is how they want to access music.”

The Swedish success is considered particularly notable since the country is home to the file-sharing Pirate Bay website and the Pirate Party, which seeks to undermine copyright laws.

Swedish music fans can choose between a number of legal streaming services alongside Spotify, including Deezer, WiMP, Rdio, Sony's Music Unlimited, Xbox Music and Rara.com.

Norway benefits from a high rate of broadband penetration and the industry believes revenues will continue to soar.

Marte Thorsby, CEO of IFPI Norway, said: “This is the first time we have seen an increase in music sales since 2004 and 7 per cent is a solid increase. Streaming has grown from 13 per cent of the total sales in 2010 and now counts for 45 per cent of the total. And I do not think the top is reached.”