Streaming grows as music sales decline

Warc, 7 July 2014

NEW YORK: Combined music and video streaming, provided by media services like Spotify and YouTube, increased 42% in the first half of 2014 at the same time as total album sales in the US fell 14.9%, the latest music industry data has revealed.

According to Nielsen SoundScan's midyear analysis, Americans used audio and video streaming services to listen to 70.3bn songs over the period while album sales – both physical and digital – declined to 120.9m, the New York Times reported.

Within the figures for total album sales, digital downloads also recorded a double-digit decline, falling 11.6% to 53.8m, while CD sales fell 19.6% to 62.9m.

However, sales of vinyl albums rose an impressive 40% to 4m, up from less than 1m as recently as 2007, although the format represents a tiny proportion of overall sales.

David Bakula, a senior analyst at Nielsen, said the music industry is now in "a period of transition", adding that just two years ago nobody "would have expected sales numbers to go down this dramatically".

Downloads of individual songs began to decline only last year, and with streaming revenues still much lower than those from digital and CD sales, the music industry will be asking itself whether streaming will be able to generate enough income for it to continue creating new music, the Financial Times suggested.

However, more encouragingly, media streaming services like Spotify have witnessed rapid growth in the number of paying subscribers – the market has grown from 8m paying customers in 2010 to 28m last year.

"Streaming continues to be an increasingly significant portion of the music industry," confirmed Bakula, who said the growth of streaming, as well as the improved outlook for vinyl sales, showed interest in buying and consuming music continued to be robust.

Data sourced from New York Times, Financial Times; additional content by Warc staff