Spotify, Pandora, downloads surpassing CDs


The CD’s run as the music industry’s biggest U.S. revenue source will end this year, eclipsed by downloads and streaming services such as Spotify and Pandora. U.S. digital music sales will rise to $3.4 billion this year, exceeding the $3.38 billion in revenue from CDs and vinyl, Boston-based Strategy Analytics said 8/16 on its website. Globally, digital music will surpass physical purchases in 2015, the company said.

Record labels are licensing artists’ catalogs to streaming services as CD purchases shrink. Sales of digital tracks and albums will rise 6.7% this year, while streaming revenue will climb 28%, Strategy Analytics said. Together they account for 41% of U.S. music sales, compared with 22% worldwide, reported Bloomberg.

“Streaming music services such as Spotify and Pandora will be the key growth drivers over the next five years as usage and spending grow rapidly,” Ed Barton, director of digital media at Strategy Analytics, said in a statement. “The industry will be hoping that digital can rebuild the U.S. music market to something approaching its former stature.”

U.S. sales of CDs and vinyl will decline 9% in 2012, a slower rate of decline than the rest of the world, Strategy Analytics said. Total U.S. recorded music spending this year will rise $134 million, or 2.1%, to about $6.38 billion, according to the researcher.

RBR-TVBR observation: We’re a little surprised it took this long. CDs are the equivalent of 8-Tracks. You can fit suitcases worth of CDs into a tiny MP3 player. Using online music services like iTunes, etc make trips to buy the plastic dinosaurs a thing of the past. The good news is the radio is still playing the music, consumers are discovering the music and the labels are still in business (some better than others)—not as bad a transition as some had thought, huh?