What, music streaming services are just beating CDs now?! In 2014, the money generated from streaming services finally outpaced compact disc shipments, according to a recent report from the Recording Industry Association of America. Revenue from streaming services such as Pandora, Spotify, and music video services like Vevo and YouTube hit $1.87 billion in 2014. CD shipments, meanwhile, were valued at $1.85 billion.
Major superstars like Taylor Swift may have little love for streaming services, and businesses like Spotify aren't yet making a killing from subscription revenue. Nevertheless, streaming is growing fast and is on its way toward becoming the most popular way to consume music.
Why this matters: Two decades ago, the compact disc was the biggest sales driver of recorded music and helped the labels achieve big profits. But then Napster happened, and the music industry hasn't been the same since. Physical shipments (CDs, LPs, SACDs, and so on) in 2014 still accounted for a bigger piece of the music revenue pie than streaming. But if CDs make up 82 percent of the physical market, it may not be long before streaming overcomes it entirely.
Digital downloads are next
The biggest takeaway from the music business in 2014 may be that the days of music fans' wanting to own a particular album or song (be it a physical copy or a digital download) are in decline.
During 2014, streaming was the only major recorded music category that saw any growth (29 percent year over year). Digital downloads, meanwhile, fell by 8.7 percent compared to the year prior, and physical sales were down by 7.1 percent.
Meanwhile, it appears collectors and audiophiles are giving vinyl a second life. LP shipments grew by 49 percent compared to the year prior, and for the first time since 1987, LPs accounted for a double-digit percentage of the physical market at 14 percent, the RIAA said.