Revenue from digital-music downloads and subscriptions edged out those from CDs for the first time in 2014, holding overall sales steady at about $15 billion globally, a trade group said.
Sales of CDs and other physical formats declined 8%, to $6.82 billion, while digital revenue grew nearly 7%, to $6.85 billion, the International Federation of the Phonographic Industry said in a report on Tuesday. Each of those represented 46% of overall music revenue. The other 8% came from sources such as radio airplay and licensing songs for television shows and films.
Streaming services such as Spotify AB and Apple Inc.’s Beats Music, which have been controversial because some artists believe they don’t pay enough royalties, nonetheless exhibited growing importance to the industry. Online services that let users listen to music at no cost with audio ads, or for a monthly fee, grew a combined 39% from 2013.
Subscription services generated $1.57 billion, or 23% of digital revenue; ad-supported services were 9% of digital revenue. Their combined 32% of digital revenue is a sharp increase from 2013, when they represented 23% of digital revenue.
Download sales declined eight percentage points from 2013, but were 52% of digital revenue.
In Sweden, South Korea and 35 other markets, streaming revenue has surpassed downloads.
Services, such as Spotify’s ad-supported free version, attract more users than paid subscriptions but generate far less revenue. On a conference call on Tuesday, IFPI Chief Executive Frances Moore acknowledged that the tension between the two approaches “remains a lively debate within the industry.”
The overall stability comes after years of steep declines in world-wide music sales, which peaked at $40 billion in 1996.
“If we keep the current trajectory, the industry will inevitably grow,” Sony Music International CEO Edgar Berger said on the same conference call as Ms. Moore. “And there is no doubt that paid subscription will be the predominant format.”
The top-selling album in 2014 was the “Frozen” soundtrack, which sold 10 million copies world-wide. Taylor Swift’s “1989” was next, with six million sold. The most popular digital song was Pharrell Williams’s “Happy,” with 13.9 million sold. [Wall Street Journal]
