For the first time, annual revenue from streaming music services has eclipsed the annual revenue from CDs, according to a new report from the Recording Industry Association of America released this week.
The RIAA reported that sales of music CDs topped out at $1.85 billion in 2014, a decrease of 12.7 percent compared to the year prior. Revenue from streaming services grew 29 percent year-over-year to $1.87 billion.
Paid subscriptions to the various streaming services grew 26 percent from 2013's 6.2 million subscribers, reaching a total of 7.7 million subscribers in 2014, the association reported. And 2014's total subscription count was more than three times what it was back in 2011, when streaming services had a mere 1.8 million total subscribers.
As for what counts as a streaming service in the RIAA's figures, that includes all of your standard streaming services—Spotify, Rhapsody, Rdio, etc. —as well as any SoundExchange streaming services like Pandora or SiriusXM, plus other on-demand (non-subscription) streaming services like YouTube, Vevo, and others.
"Streaming revenue growth was driven by relatively consistent increases from each of its components. Paid subscription services grew 25 percent year-over-year to $799 million. Revenues from ad-supported on-demand services grew 34 percent to $295 million, and SoundExchange distributions grew 31 percent to $773 million," the RIAA said.
To be fair, streaming services haven't yet eclipsed all physical media—at least, not according to the RIAA's figures. In total, streaming services contributed just around 27 percent of the U.S. music industry's total revenues in 2014. Physical media, which includes CDs, vinyl records, DVD audio, music videos, and all sorts of other offerings, contributed 32 percent of total revenues in 2014.
Revenue from digital downloads, which fell 8.7 percent year-over-year to $2.58 billion, still made up 37 percent of the music industry's sales.
"The difference between revenues from permanent digital downloads and streaming has narrowed considerably. As streaming has grown to approach $2 billion annually, the balance between these digital markets has evened out," the RIAA said.
Total recorded music revenue was flat for the fifth straight year, coming in at $6.97 billion in 2014, a decrease of 0.5 percent from the year prior.