Sales of streaming music top CDs in flat year for industry

Services like Spotify and Pandora have quickly grown to become a major part of the American market for recorded music

The American market for recorded music was flat in 2014, but income from streaming services like Spotify and Pandora has quickly grown to become a major part of the business, eclipsing CD sales for the first time, according to a report released Wednesday by the Recording Industry Association of America.

The association, a trade group that represents the major record companies, said that recorded music generated $6.97 billion in 2014, down less than 0.5 per cent from the year before, when revenue was slightly more than $7 billion.

Overall revenue from recorded music, after falling from a high of $14.6 billion in 1999 - when CDs were the dominant format - has remained relatively stable for the last several years, hovering around $7 billion, according to the recording industry association. But within that total, the sources of income have changed significantly as consumers have increasingly shifted their purchasing habits online.

In 2010, for example, when 253 million CDs were sold, sales of physical formats, like CDs and vinyl LPs, made up about 52 per cent of total music revenue; downloads represented 32 per cent, and streaming about 6.6 per cent. (Ringtones and other miscellaneous income made up the rest.) By last year, the number of CDs sold had fallen to 144 million, and the split between formats was evening out: Physical formats were 32 per cent of revenue, digital downloads 37 per cent and streaming 27 per cent.

The finer details of the industry association's report, which is compiled from data supplied by the record companies, show how quickly the shifts are happening. In 2014, downloads of singles and albums generated about $2.6 billion, down 8.5 per cent from the year before. CD sales were down 12.6 per cent to $1.85 billion. (Vinyl records, a growing niche, were worth $321 million, up 50 per cent.)

In aggregate, the various kinds of streaming outlets generated $1.87 billion, up nearly 29 per cent from the year before - and, for the first time, slightly more than the total for CDs.

That figure includes not only paid subscription outlets like Spotify, Rdio and Rhapsody, but also Internet radio services like Pandora, which does not let users pick exactly what songs they will hear, and outlets like YouTube and Spotify's free tier, which let users pick specific songs and are generally supported by advertising.

©2015 The New York Times News Service