Ten years after Steve Jobs promised to reinvent the music industry with the iPod, digital downloads have overtaken physical sales of singles and albums for the first time in the US.

Digital downloads accounted for a record 50.3% of all music sales in the US last year, according to an annual report by Nielsen and Billboard, contributing to a rise in total album sales for the first time since 2004.

The report shows digital album sales passed the 100m mark for the first time in 2011, as London-born Adele dominated the US charts. Individual digital track downloads also set a new record, reaching 1.27bn sales last year – an increase of 100m sales compared to 2010.

However, while music fans flocked to the internet in record numbers, the report shows that vinyl also had something of a resurgence. Vinyl album sales topped 3.9m last year, accounting for a tiny 1.2% of all album sales but shattering the previous record of 2.8m LP sales.

Total US digital sales were up 8.4% year on year in 2011, while physical sales fell 5% to 228m.

According to the report, retail giants such as Walmart and Target remained the most popular place for Americans to buy their music in 2011. Online stores including Amazon and Apple's iTunes accounted for 31% of all album sales last year – with the same proportion of album sales from physical "mass merchant" stores, including Walmart.

British acts including Adele, Mumford & Sons, Radiohead and the Beatles featured prominently in the US best-selling charts, according to the report.

Adele became the first artist to claim the top spot for best-selling artist, album and digital song in the same year, thanks to a string of hits from her album, 21.

London-based folk act Mumford & Sons featured in the top 10 selling albums of the year, ahead of Justin Bieber, Jay Z and Kanye West. Radiohead were the top-selling vinyl artist in 2011, shifting 64,000 copies ahead of the Black Keys and Bon Iver. The Beatles' Abbey Road was the best-selling vinyl album of the year, with 41,000 units sold.

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