The boom in downloading music and internet social networking appears to be encouraging larger numbers of people to see their favourite performers, according to a new report.

The amount being spent on live music, which was in steep decline just a few years ago, has been revived by a combination of new venues, a boom in festivals and networking websites, such as YouTube, MySpace and Bebo.

An estimated £743 million was spent on live music this year - an 8 per cent rise on last year - in venues ranging from pubs to the new 90,000-seat Wembley stadium, where George Michael was the debut performer.

There has also been a surge of big-name bands reuniting. The Police, Crowded House, Genesis and The Spice Girls have all announced what are essentially greatest-hits tours, which will attract affluent 40- and 50-somethings as well as the lucrative 1920s market. Meanwhile, long-running tours from the likes of The Rolling Stones, Rod Stewart and Bob Dylan ensure that the baby-boomer generation is well catered for.

Geoff Ellis, managing director of the staging company DF Concerts, said: "It has always been word of mouth that has 'broken' a band. It used to be school kids telling each other, or people sitting in the pub, but nowadays it's on the internet.

"For instance, back in 1993 we put Radiohead on at King Tut's twice as support group before headlining. Nowadays, we would have had them doing an outdoor gig within a year." However, Mr Ellis added: "The difficulty with any band is that while they may get large numbers initially, they can drop away very quickly.

"The Kaiser Chiefs played the SECC on their first album, which was unheard of, but doesn't mean they will be able to play on their second; people are always looking to see the new big act."

The corporate entertainment industry is increasingly looking towards pop and rock concerts. The O2 Arena features 96 VIP suites available to hire for more than £100,000 a year.

The trend has been bolstered by the closer relationship between fans and artists such as Lily Allen and the Arctic Monkeys through the musicians' own websites and blogs.

Many bands are bypassing traditional music labels by building a reputation for performing live and via internet sites, according to the Mintel report.

The National Arenas Association said there were 936 concerts at Britain's major venues last year, performing to 5.5 million fans - up 11 per cent. Scotland's festival circuit is also experiencing its strongest year yet, with T in the Park being joined by the likes of Rock Ness, Connect and The Outsider Festival, as well as numerous local events.

According to the report, half of adults agree with the statement "you can't beat the atmosphere of a live performance" and a similar proportion have listened to live music in the previous six months.

There were also an estimated 240 festivals, up 20 per cent on 2004. Richard Cope, leisure analyst at Mintel, said: "There has been a renaissance of indie bands, such as the Libertines, that depend on live performances. Also, you have got third-agers going to concerts as the baby-boomer rock 'n' roll generation come through. Before, people like that would not have been seen dead at a rock concert."

But Alun Woodward, co-owner of the Scottish record label Chemikal Underground and former lead singer with The Delgados, denied the scene was now more influential than it had been: "I think that this has only come from the decline in music sales. People now look at the live scene as if it is stronger than it was in the past, but I don't think it's any more important than when we started ten years ago."

• IT is widely acknowledged that Edinburgh and Glasgow have strong local music scenes.

But according to Geoff Ellis, managing director of staging company DF Concerts, current audience figures show that while Scotland has ten per cent of the UK population, it represents 11 per cent of the national gigging audience and "punches above its weight".

Industry experts say the local perception is not one of rapid growth, rather than one of sustained strength.

The manager of one Glasgow ticket outlet said: "This city has always had a strong concert-going tradition. People here love their live music. Even when shops around us have gone, we've always maintained our sales and keep going."

He highlighted the likes of relatively major new venues in the city such as the Carling Academy, the Classic Grand and ABC in already heavily catered for market as a sign that there was a continued expansion in the demand for live music.