Maybe free online music can give money back to the industry after all. The British Phonographic Industry (BPI) says digital licensing income from on-demand streaming services, including ad-supported offerings like We7 and Yahoo (NSDQ: YHOO) Music, grew 55.7 percent in 2007; that includes both internet and mobile.

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With people showing less propensity to actually buy music, this may come as a god-send - the BPI also says non-sales income generally was up 13.8 percent to £121.6 million, representing 11.4 percent of record label income. That means the music biz is getting more from the services that want to use its wares, even if it isn’t able to sell those wares itself. It’s effectively trying to change who pays for its output.

The BPI is trumpeting that the figures show it’s “beginning to generate significant revenues outside the traditional base of retail sales”, which totalled £1.4 billion in 2007, saying “there are encouraging signs that these new revenue streams will contribute substantial additional revenue in years to come”. That’s highly likely, given the number of free or subscription music services that have launched since the 2007 period in question. Digital sales are proportionately small, however, at just 8.6 percent of all music sales. Separately, revenue from 360-degree deals was up 16.2 percent. Release.

Save the date for our EconMusic (Economics Of Digital Music) conference: September 23, Natural History Museum