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Revenue from music streaming leaves CD sales in the dust for the first time




Streaming services such as Spotify and Pandora offer millions of songs for listeners for a small fee each month.
Streaming services such as Spotify and Pandora offer millions of songs for listeners for a small fee each month.
Jonathan Nackstrand/AFP/Getty Images

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It's no secret that CD sales have been dwindling for years, but it's looking more and more like streaming music may portend the end of the once-beloved compact disc. 

According to data from the Recording Industry Association of America, U.S. revenue from streaming music sites — such as  Pandora and Spotify — surpassed CD sales in 2014 for the first time ever.

Streaming is also the fastest-growing source of income in the music industry, with a 29 percent increase in 2014, compared to a nine percent drop for digital downloads.

While downloads still bring in the most dollars, even that fell last year. 

Consumers are trending towards streaming services for many reasons. One is the value that the monthly subscription model offers. Users pay one price for the ability to stream any song they want, whenever they want. The industry seems to be listening and reacting to the trend. 

"Now that the industry is starting to warm up to the idea of licensing their music to these all-you-can-eat services, there is a reason why consumers like it," said CNET senior digital writer Joan Solsman. "It is a really great value for them."  

Even Apple seems to be of the mind that subscriptions are the future. Former Apple CEO Steve Jobs resisted subscription services early on, but the company seems to be changing under the direction of Tim Cook. 

"Right now, it seems like one of the best-positioned players is definitely Apple, because Apple has such a brand recognition and they have devices everywhere," Solsman said.

Still, Spotify is the leader when it comes to music subscriptions, boasting the most paying subscribers of any of the streaming outlets. Pandora is also a veteran in the streaming music world. but their mechanism does not allow for users to listen to any song at any time. 

"It will be interesting to see how consumers gravitate, depending on whether or not consumers feel they need to have that sort of control over exactly what they are hearing when they are streaming music," Solsman said.

 

 



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