Digital music sales have overtaken physical globally for the first time thanks to streaming

Digital music sales overtook physical globally as the music industry's primary revenue stream for the first time last year. 

A new report from the International Federation of the Phonographic Industry (IFPI) has found that digital revenues skyrocketed by 10.2% to 45% of the sector's wealth in 2015, overtaking the 39% market share from physical music sales.

Digital's dominance is a result of a colossal boost in streaming subscriptions. Services like Apple Music, Deezer, Spotify and Tidal make up the industry's fastest growing revenue source, increasing by 45.2% from the previous year thanks to an estimated 68 million people paid subscribers worldwide.

Despite this change being the case for a majority of countries, physical still rules territories including Japan, Germany and France.

Performance rights revenues are also on the up, meaning that music used by broadcasters and venues now accounts for 14% of industry intake across the globe.

And while physical format sales continue to decline, they have fallen at a slower rate than in previous times, by 4.5% in 2015 compared to 2014's 8.5%. Perhaps Adele can be thanked for that?

MORE: The Official Top 40 biggest albums of 2016 so far revealed

The overall positive uplift means that total industry revenues rose in 2015 for the first time in nearly 20 years; a promising sign for the future of the music business. The 3.2% uplift in global music revenue means the biz generated 15 billion dollars.

This is good news for an industry that was previously in decline for 20 years, but there is an underlying weakness to this recovery. While music is now being consumed at record levels thanks to streaming, the benefits are not being felt by artists or record labels, resulting in a “value gap” which is depriving artists and labels of a fair return for their work.

MORE: The Official Top 40 biggest songs of 2016 so far revealed

IFPI Chief Executive Frances Moore said: "After two decades of almost uninterrupted decline, 2015 witnessed key milestones for recorded music:  measurable revenue growth globally; consumption of music exploding everywhere; and digital revenues overtaking income from physical formats for the first time. They reflect an industry that has adapted to the digital age and emerged stronger and smarter.

"This should be great news for music creators, investors and consumers. But there is good reason why the celebrations are muted: it is simply that the revenues, vital in funding future investment, are not being fairly returned to rights holders.  The message is clear and it comes from a united music community: the value gap is the biggest constraint to revenue growth for artists, record labels and all music rights holders. Change is needed - and it is to policy makers that the music sector looks to effect change."

Article image: Rex