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Digital music revenue overtakes CD sales for the first time globally

Digital music revenue overtakes CD sales for the first time globally

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Subscriptions to streaming services like Spotify helped close the gap

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Global revenue from music downloads and subscriptions has overtaken sales of physical formats for the first time. In 2014, digital revenue grew nearly 7 percent to $6.85 billion, while physical sales — of which CDs make up the vast majority — fell 8 percent to $6.82 billion. These figures, from a report from the International Federation of the Phonographic Industry (IFPI), also reflect the growing popularity of digital music streaming, with revenue from services like Spotify growing 40 percent to $1.57 billion.

downloads still account for 52% of digital revenue

However, despite the increased popularity of streaming music, downloads still accounted for 52 percent of digital revenue — even though the format showed declining sales, falling 8 percent in all established markets. Despite these fluctuations, however, the industry as a whole is relatively stable, with overall revenue falling just 0.4 percent to $14.97 billion for the year 2014. (For historical comparisons, this is down from a peak of $40 billion in 1999.)

The report by the IFPI also shows just how varied the markets for music sales can be. Despite the rise of digital, for example, many countries still prefer physical formats. In Japan, 78 precent of the music industry's revenue comes from CDs and the like; in Germany the figure is 70 percent, and in France it's 57 percent. By comparison, some countries have overwhelmingly moved from downloading music to streaming it, with nations like Sweden — the home of Spotify — generating 92 percent of its digital revenue from subscriptions.

In a press call for the report, industry execs also acknowledged the current tension between artists backing paid-only streaming services and free, ad-supported models. According to a report by The Wall Street Journal, Sony Music International CEO Edgar Berger said on a press call that there was "no doubt that paid subscription will be the predominant format."

However, the report itself showed that customers currently prefer getting their music for free. Thirty-five percent of consumers surveyed by the IFPI had used a free service in the last 13 months, compared to 16 percent who had paid for a subscription.