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Digital music sales dropped 9% in 2014 while streaming surged 54%

Apple's acquisition of streaming service Beats Music looms large over the latest music sales data, showing once again that the industry is trending away from sales of digital songs and albums.




Nielsen SoundScan this week revealed its year-end statistics for the music industry, spotlighting 54 percent growth in on-demand streams of audio and video music-related content. Total streams were up from 106 billion in 2013 to 164 billion in 2014.

The rise of streaming services comes as traditional digital album and song sales are on the decline. Sales of digital albums fell 9 percent in 2014 to 117.6 million, while songs dropped 12 percent to 1.26 billion.

Overall album sales, both physical and digital, saw a decline of 11 percent to 257 million.

In fact, the only album sales to grow in 2014 were vinyl, which surged 52 percent. With 9.2 million vinyl records sold last year, the legacy format accounted for more than 6 percent of all physical album sales.

Vinyl sales have increased year over year for the past nine consecutive years, and 2014 was the best year for vinyl since 1991, when Nielsen SoundScan first began tracking music sales.

"Digital music consumption continues its robust growth, with On-Demand streaming up 54% over last year and 164 billion song streams being played in 2014 ," says David Bakula, SVP Industry Insights, Nielsen Entertainment. "Although overall music sales are showing declines, Vinyl album sales were up 52% in 2014, shattering last year's record-setting total by more than 3 million LPs."

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Nielsen's stats only underscore the importance of Apple's acquisition of Beats Music last May, which gave the iPhone maker an entrance into the booming subscription music service market. It's expected that Apple plans to use both iTunes and Beats Music to cater to different segments of the market.

Apple is expected to push Beats Music as a native iOS app starting with an update early this year. The change would help Apple better compete against leading streaming services like Spotify, which currently has a larger number of subscribers.

It's also been suggested that Apple could retire the Beats Music brand and instead label it under the company's iTunes umbrella, bringing it in line with other first-party offerings like the iTunes Store, iTunes Radio and iTunes Match.

Before it was owned by Apple, Beats Music got off to a slow start, with just 110,000 subscribers as of March. Its performance since being acquired by Apple remains unknown.

It's also been reported that Apple hopes to boost Beats Music subscriptions by cutting the price to just $5 per month. Apple is said to have pitched a proposal to music labels suggesting that a lower price point could grow music subscriptions considerably.

Currently, a subscription to Beats Music costs $9.99 per month, but if users are willing to sign up for a full year, it costs $99.99 for 12 months.