Global Digital Music Revenue Exceeds CD, Album Sales for First Time

Digital music sales made up 45 percent of global music sales revenue in 2015, compared to 39 percent for CD and vinyl sales, according to a new IFPI report.

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Music sales around the world continued to change dramatically in 2015, with 45 percent of global music sales coming in for digital music, compared with 39 percent of sales from old-fashioned CDs, vinyl albums and other formats.

That's the conclusion of a recent report from the IFPI, a London-based international trade body for the recording industry, which also found that global music revenues increased overall by 3.2 percent in 2015, largely fueled by the growth in digital streaming music sales.

According to the IFPI, 2015 marks the first time that digital music "became the primary revenue stream for recorded music, overtaking sales of physical formats," the study states.

The IFPI Global Music Report 2016 found that digital music revenues rose to $6.7 billion in 2015, up 10.2 percent from 2014, which helped offset a decline in downloads and sales of physical CDs and albums.

Total industry revenues of $15 billion last year rose 3.2 percent from the year prior, the report states. That was the industry's "first significant year-on-year growth in nearly two decades," the group reported.

Digital music revenue has become so important that it now accounts for more than half the recorded music sales in 19 markets, according to the IFPI.

At the same time, however, while digital music revenues are rising, "this explosion in consumption is not returning a fair remuneration to artists and record labels," the report states. "This is because of a market distortion resulting in a 'value gap,' which is depriving artists and labels of a fair return for their work."

That "value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders," Frances Moore, IFPI chief executive, said in a statement. "Change is needed—and it is to policy makers that the music sector looks to effect change."

The report found that streaming music grew to bring in about 19 percent of global industry revenues in 2015, up from 14 per cent in 2014, as well as 43 per cent of digital revenues. Streaming revenues are close to overtaking downloaded music revenues, which made up 45 percent of the digital revenue in 2014.

Streaming music subscription services now have about 68 million customers who are paying for subscriptions, up from 41 million in 2014 and 8 million in 2010, when data in this space was first compiled, the report continued.

Downloaded music, which now makes up just 20 percent of global industry revenues, fell about 10.5 percent to $3 billion in 2015, after dropping 8.2 percent in 2014.

Meanwhile, full album downloads continued to have good performance with 2015 sales of $1.4 billion, up from $983 million in 2010 and $1.3 billion in 2011, according to the report.

The revenue from physical music formats in 2015 fell by 4.5 percent, an improvement compared with declines of 8.5 percent in 2014 and 10.6 percent in 2013, the report stated. Still, music on physical media made up 39 percent of global revenue last year and "remains the format of choice for consumers in a number of major markets worldwide, including Japan (75 percent), Germany (60 percent), and France (42 percent)."