Digital music sales outweigh physical revenues for the first time

Streaming services like Spotify help push industry revenues up for first time since 1995

Music industry profits are up for the first time in more than 20 years thanks to a major boost in revenues from streaming services like Spotify and YouTube.

Digital revenues, meaning those from streaming subscriptions, downloads, and even advertising revenue from YouTube views, accounted for 45% of the industry’s takings in 2015, according to a new report. Physical formats, meanwhile, like CDs and vinyl records made up just 39% – and were beaten into second place for the first time in history.

The report, by the International Federation of the Phonographic Industry (IFPI), found that streaming has completely altered the way people listen to music. Physical sales have been falling steadily for years, but it’s taken a long time for the digital arena to catch up – and it looks as though streaming could be the answer to the industry’s prayers. The industry as a whole turned over an estimated £10.2bn last year, with streaming rising to £2bn of that, alongside digital sales of £4.7bn.

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Subscriptions are one area that’s excelling, having grown 66% in a year to reach a value £47.7m in 2015.

The IFPI’s chief executive Frances Moore paid tribute to “an industry that has adapted to the digital age and emerged stronger and smarter”, after two decades of strife and falling sales.

However, it’s not all a rosy picture; streaming services have long been criticised for undervaluing the worth of each individual instance of streaming. And with artists earning fractions of a cent – between $0.006 and $0.0084 – for each listen, the IFPI believes that Spotify only paid record companies £13 per user in 2014. YouTube, meanwhile, paid just 70p per user per year in 2015.

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