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Digital music revenues overtake physical formats for first time

You might think that everyone listens to music digitally nowadays, but in terms of revenue generated the humble CD has remained king – until now.

It turns out that 2014 saw global digital music revenue exceed that generated by physical formats (led by the CD) for the first time.

According to an International Federation of the Phonographic Industry (IFPI) report, digital revenues rose 6.9 per cent to $6.85 billion in 2014. Meanwhile physical sales dropped by 8.1 percent to $6.82 billion.

It’s the slightest of margins, then, but digital has overtaken physical as the main money maker for the music industry.

Taylor Swift won’t be too happy to hear this, but a large part of this swing is down to the growth of subscription services like Spotify. While MP3 download sales dropped 8 percent in 2014 (though it still represents 52 percent of the digital market), subscription revenues rose 39 percent.

With 23 percent of the digital market, the IFPI’s conclusion here is that “Subscription services are now at the heart of the music industry’s portfolio of businesses”. That’s only going to increase with the likes of Apple, YouTube, and, er, Jay Z entering the fray.

Read More: Why musicians hate Spotify

Of course, that’s not the case for all major markets. In Germany, for example, the CD is still responsible for 70 percent of revenue. In Japan, that figure is 78 percent.

Despite this radical shift in the make-up of the music industry, overall revenue remains fairly stable. Revenues dropped by just 0.4 percent to $14.97 billion last year.

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