Sales of Streaming Music Top CDs in Flat Year for Industry

BEN SISARIO NYTimes.com 3/18/15

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 percent 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 percent of total music revenue; downloads represented 32 percent, and streaming about 6.6 percent. (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 percent of revenue, digital downloads 37 percent and streaming 27 percent.

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 percent from the year before. CD sales were down 12.6 percent to $1.85 billion. (Vinyl records, a growing niche, were worth $321 million, up 50 percent.)

In aggregate, the various kinds of streaming outlets generated $1.87 billion, up nearly 29 percent 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.

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