Streaming Music Revenue Now Greater than CD Sales in US

Posted by at 12:21 pm on March 20, 2015

A new report from the Recording Industry Association of America (RIAA) finds that revenue from music streaming services such as Beats Music, Pandora, and Spotify have now in total beaten out revenue from CD sales in the US, capitalizing on the latter’s continued fall from grace (largely thanks to excessively high CD pricing). Both formats are still well behind download sales as the top revenue stream, but even that format is gently declining.

The study says that 2014 was the first year in which streaming revenues outperformed CD sales, largely thanks to a six percent growth in money from streaming services versus a 12.7 percent decline in CD sales. Streaming revenues, which include satellite radio and music video income (from sites such as Vevo) alongside streaming sites like Spotify and ad-supported Internet radio like iTunes Radio, totaled $1.87 billion for the year, just above the total of CD sales in the US at $1.85 billion.

streaming music services

Legal, paid downloads continued their reign as the top money-earner for the record industry, bringing in $2.85 billion in the US over 2014, but this was down 8.7 percent from 2013. Downloads make up about 37 percent of all music sales, all physical formats (CDs and records, and even cassettes) about 32 percent, and streaming accounts for about 27 percent — up from 21 percent in 2013, according to the study.

The entire music industry as a whole dropped slightly to just under $7 billion in total revenue, down 0.5 percent from 2013. The only growth area, in fact, was in streaming services. Paid subscriptions in streaming services rose 25 percent, to a total of $799 million, and while ad-supported on-demand services grew their revenues even faster — up 34 percent for the year — the total revenue was less than half that of paid subscriptions, at $295 million.

Apple is said to be revamping its iTunes streaming offerings to incorporate and redesign Beats Music, which has won wide praise but has not beaten its rivals Spotify and Pandora, bringing it into the iTunes tent more fully rather than as just an independent service that happens to be owned by Apple. Plans are unclear, but the company is likely to continue with a paid subscription service, possibly as a premium version of the existing iTunes Radio, which is ad-supported by (like Pandora) allows users to create custom “radio stations” that offer artist discovery and music purchasing while offering free streaming music.

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