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Streaming Overtakes Downloads, CDs as Top Music Revenue Driver

The U.S. music industry made more money with streaming than with CDs or digital downloads in 2015, according to new data from the Recording Industry Association of America (RIAA). This is the first time streaming has surpassed the two other categories, the trade organization revealed Tuesday.

The RIAA attributed much of this growth the launch of Apple Music and Tidal. “The music industry is now a digital business, deriving more than 70% of its revenues from a wide array of digital platforms and formats,” said RIAA chairman and CEO Cary Sherman in a blog post.

Streaming accounted for 34.3% of all U.S. music industry revenue in 2015, while digital downloads made up for 34%. Physical disc sales still contributed 28.8% of a total retail revenue of $7 billion for the full-year 2015.

It’s worth pointing out that the RIAA keeps a variety of different services and revenue sources under the streaming category. It’s not just subscription revenue from Spotify, Tidal and Apple Music that’s included, but also revenue generated from ad-supported streams generated on YouTube, Pandora and Spotify’s free tier. Even SiriusXM’s music royalties are counted as streaming revenue.

In this big hodgepodge, paid subscription services brought in around $1.2 billion, while ad-supported on-demand streaming accounted for about $385 million. Sherman criticized the data, pointing out that vinyl sales revenue surpassed ad-supported on-demand streaming revenue in 2015.

Music industry executives have long pushed for a move away from ad-supported on-demand services and toward paid models. Service providers like Spotify have argued, on the other hand, that both models go hand-in hand, with free streams a marketing tool for paid services. The model certainly seems to be working for Spotify: The music service revealed yesterday that it now has 30 million paying subscribers.

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