Music Streaming Eats Downloads With On-Demand Up 42% Over 2013, Digital Sales Down 12%

The 2014 Nielsen’s music report in the U.S. underscores a rapid shift in digital music consumption from downloads to streaming. A notable 42% increase in on-demand streaming was recorded in the first half of the year compared to the same period in 2013. Concurrently, digital track sales fell by 13% to 593.6 million, and album sales dropped by 11.6%. These U.S. trends, excluding international patterns, validate Apple’s strategic acquisition of Beats, as the slow phasing out of iTunes and its download sales model became apparent. Overall, both digital and physical sales declined as streaming grew, causing a 3.3% reduction in music industry sales.

Intriguingly, driven primarily by a niche market of hipsters, vinyl sales rose by 40% in the first half of the year comparing to 2013, hitting 4 million sales. Vinyl was the singular medium where sales showed growth.

It’s important to note that globally, where iTunes is functional in over 83 countries and streaming services are often inaccessible, downloads may persist longer.

For some time, YouTube has been a substantial provider of music streaming via videos. However, with apps like Spotify entering the scene, on-demand audio music streaming is reaching new heights and growing faster (+50%) than video (+50%). By the end of 2014 alone, 33.65 billion songs were streamed compared to 36.64 billion music video streams. This suggests that audio streaming may soon surpass music video streaming in the U.S. Internationally, though, where top streaming apps accessibility can pose a challenge, YouTube holds significantly larger market shares.

The in-depth report by Nielsen can be accessed here:

This report illustrates a significant evolution in the music industry. The decline of downloads and the rise of streaming indicate a shift in power. Where once iTunes and Amazon reigned in the age of legal downloads, now Spotify, Google Music, and Beats are poised to lead the music streaming era.

Apple’s purchase of Beats emphasizes this shift. Insider sources propose that Apple chose not to suddenly convert iTunes into a streaming platform to prevent shocks to users and the music industry. Instead, Apple smoothed the transition, allowing late adopters to stick with the established pay-per-download model while early adopters migrated to Beats streaming.

Google, to reinforce its Google Music All-Access streaming service, acquired Songza, a contextual playlist application. Google Music now offers a more personalized understanding of users’ preferences alongside the well-curated playlists of Beats.

Getting past its half-billion-dollar capital raise, Spotify now boasts a potential that makes it a prime acquisition target for industry heavyweights like Google, Microsoft, or Facebook. It leads the music streaming industry within a myriad of apps, promising a bright future for the platform.

Although Pandora maintains a large user base, its licensing model prevents users from choosing specific songs like its competitors do. This limitation throws some uncertainty on its future in the industry. Meanwhile, Soundcloud is vying for a prominent market position with on-demand streaming of user or artist-uploaded music. Despite being seen as a genuine platform for fans to connect with artists, it struggles to monetize this advantage.

Amazon has launched its Prime Music on-demand service, aiming to enhance the value of Prime subscriptions. YouTube keeps attracting users with free browser-based videos, bypassing the need for a paid dedicated music application while also planning to launch its on-demand music streaming subscription service soon.

Summing up, over the past decade and a half, we’ve transitioned from CDs to Napster piracy, to iTunes downloads, Pandora radio, YouTube’s music video streaming, and Spotify’s audio streaming. Perhaps the near future will witness the rise of numerous music discovery apps building on some legal rights holders’ platforms, ensuring all can enjoy a customized listening experience.

Light edits were made in 2025 to improve clarity and relevance.