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RIAA points to a ‘staggering transformation’ as streaming services finally eclipse CD sales

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It’s official: streaming music has finally eclipsed CD sales.  According to figures recently released by the RIAA, revenue from streaming services in 2014 passed $1.87 billion (or 27% of total music industry revenues) as opposed to CD sales, which brought in $1.85 billion (or a 26.5% share).

Related: Radio still beats digital for music discovery

Digital downloads are still the primary recorded music revenue source in the U.S., bringing in 37 percent of overall recorded music revenue. Coming behind them are overall physical sales, which includes CDs, vinyl, and cassettes (32%), and streaming services (27%).

Perhaps surprisingly given recent trends, overall music revenue remained relatively stable, falling just 0.5 percent from 2013 to $6.97 billion in 2014. Noting that the industry “continues to experience important changes in its revenue composition,” the report highlighted a segment on the way up in streaming services, while digital downloads and CD sales continued a steady decline. One bright spot for the old guard was the growth in revenue for vinyl records: the format sold 9.2 million units last year — the most since Nielsen Soundscan began reporting in 1991, though it accounted for just 6% of physical music revenue.

While streaming music revenue certainly hasn’t come close to replacing the drop in overall recorded music revenues — which topped off at about $15 billion in 1999 — streaming services may be on their way to helping replace lost revenue from the decline in digital downloads. Streaming revenue rose significantly in 2014, to $1.87 billion from $1.45 billion, while download sales from sites like iTunes fell 9.5% to $2.64 billion.

As revenue from digital downloads and CDs alike points south, the recorded music industry is focusing on its single growth sector.

“Streaming music has been the subject of a healthy debate, which is appropriate,” said CEO of the RIAA Cary Sherman in a blog post. “…But the reality is that the consumer has spoken and this is what the fans want. The entire music community must come together to help make these services work for fans, artists and the music industry.” Sherman also called the juxtaposition of revenue that has taken place in recent years a “staggering transformation.”

One thing’s for sure: considering that paid subscriptions to services like Spotify, Rdio, and Google Play totaled just 7.7 million in the U.S. last year, the industry will need to convert more music fans into paying subscribers if it hopes to rise out of its current state of stagnation.

Chris Leo Palermino
Former Digital Trends Contributor
Chris Leo Palermino is a music, tech, business, and culture journalist based between New York and Boston. He also contributes…
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