Music

Streaming music revenues beat CD album sales for the first time in history

by Mark Teo

We’re starting to feel bad for the lowly compact disc. Fifteen years ago, the CD was the dominant physical format for albums: It’d crushed both the vinyl and cassette industries. But while the format still has its perks—audiophiles and hi-fi obsessives still love the format for its size, durability, and most importantly, its arguably superior sound quality—CDs are seeing their market share shrink to record lows. First, digital music, which is easy to sell and even easier to pirate, cut into its bottom line. Then, cheap, convenient streaming music services like Rdio and Spotify came along. So, where does that leave the CD?

The answer: In a bad place. As Consequence of Sound reports, streaming-music revenues have eclipsed CD sales for the first time ever. An RIAA report says that in 2014, Spotify and co. raked in $1.87 billion—a staggering amount, considering their affordable subscription rates—while CDs pulled in $1.85 billion. It’s a shift that’s not surprising: From a consumer’s perspective, streaming services are cheap, have deep libraries, and are essentially accessible anywhere.

Despite the decline in CD sales, however, physical formats still managed to pull in a good amount of sales. Physical formats still have 32 per cent of the revenue pool—which trumps streaming services, which pull in a quarter of its total revenue—meaning that along with CDs, the vinyl boom (and to a lesser extent, the resurgence of cassettes) is bolstering album sales. Digital downloads, for their shrinking market share, still earn the most sales, clocking in at 37 per cent. (Although we must give kudos to Bandcamp, who have paid out artists more than $100 million.)

Still, these consumer trends can be problematic—and may not be a good indicator of the future direction of the record industry. Streaming music services, while affordable to consumers, pay artists laughably little for their work—lest we forget, the artist who wrote the most-streamed song in Spotify history earned a meagre $4,000 for his work. Digital downloads are easy to replicate and, depending on the format you prefer, won’t provide the sound quality of a CD or vinyl. And while vinyl is having its moment, it’s large, cumbersome and easily damaged—unlike CDs.

Such trends, too, may be leaving independent musicians behind. CD-Rs, for labels and bands with smaller budgets, are cost-effective to make. Vinyl, on the other hand, is costly, and its pressing plants are being massively overloaded—the vinyl-pressing process, as recently defunct Canadian label Mammoth Cave noted, isn’t friendly to independents. Nor are streaming services: If Cee-Lo Green only made $4,000 for a smash song, can you imagine what a smaller band would pull in?

So yes, the CD may be dying a rapid death. But that may not be a good thing.