Streaming music drowns out CD sales in US for the first time

US revenue from streaming services like Pandora, Spotify and Apple's Beats eclipsed sales of CDs last year, according to data from the music industry's trade group.

US streaming music sales jumped from 5 percent of the market five years ago to 27 percent in 2014. Lexy Savvides/CNET

Prophesies that streaming music is the future -- whether as a threat or an aspiration -- are starting to come true.

Revenue generated by streaming music last year overtook that from CDs, the format that once floated the industry's sales to its high-water mark in the late '90s.

According to data on music sales from the Recording Industry Association of America, sales in the US from streaming music were $1.87 billion in 2014, the RIAA said, while CD sales were $1.85 billion. Streaming revenue -- which includes subscription services like Spotify and Apple's Beats Music, radio like Pandora and Sirius XM, and ad-supported operations like Vevo, YouTube and free versions of Spotify -- jumped 29 percent last year, while CD revenue dropped 12.7 percent.

Meanwhile, digital downloads, the music purchases that typify Apple's iTunes store, still represented the biggest slice of the recording industry's revenue. Their sales fell 8.7 percent to $2.58 billion

The data illustrates an increasing shift from purchasing music to own in the form of a downloaded track, CD, record or cassette tape to a world in which music is increasingly paid for with subscriptions for all-you-can-eat access or with advertising. This underlying change in the music industry has led to outcries from some camps and praise from others.

Overall, total music sales in the US fell 0.5 percent to $6.97 billion last year.

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RIAA

RIAA data showed streaming services making up a larger proportion of the industry's sales total. Streaming contributed 27 percent of total industry revenue last year, compared with 21 percent a year earlier. Five years earlier, these services were 5 percent of the total. Digital downloads were 37 percent of the total market, down from 40 percent the year before, and physical-product sales were 32 percent last year.

One of the most popular segments of digital music was the free, ad-supported services that let people hear the specific song they're looking for: think Spotify's free version or YouTube. The category grew 34 percent, though it remained still relatively small at $295 million in revenue.

Paid subscription services, like Spotify Premium, Rhapsody and Beats Music, were up 25 percent to $799 million.

Physical sales, for CDs and the like, continued to slide, down 7.1 percent.

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