• by Steve Smith , Staff Writer @popeyesm, January 5, 2015

The revolutionary shift that Apple helped start over a decade ago is now shifting again . Digital album and track sales sank in 2014 for the second year in a row, down 9% for albums (117.6 million) and 12% for individual song purchases (1.26 billion), per Nielsen SoundScan.

The reason for the slump is clear: People aren’t listening to less music but are moving their habits to new models, namely Internet radio and subscription services.

I suspect that it is the latter, subscription services, that tend to eat into track sales more aggressively. Entities like Spotify let users play any track from their library on demand, undermining the impulse track buy.

It's less clear whether the change in model is eroding people’s taste for the album format. While overall album sales (physical and digital) were down 14% to 257 million, vinyl album sales were up 52% to 9.2 million. Astonishingly, vinyl now accounts for over 6% of all tangible album sales. The new new and the old old appear to be triumphing simultaneously. Taylor Swift’s “1989” was the bestselling album of the year, followed by the “Frozen” soundtrack and Sam Smith’s “In the Lonely Hour.” Not surprisingly, Pharrell Williams’ “Happy” was the bestselling single track. Jack White’s “Lazaretto” topped the vinyl chart for the year, selling 87,000 in that format.  

Streaming is the main driver of music consumption now. The overall number of song streams was up 54% from 106 billion in 2013 to 164 billion in 2014.

The Wall Street Journal reports that, using common calculations of overall music consumption, there was little change in 2014. The problem for the music industry is, it's inspiring no growth in its product as distribution moves to much-less-profitable channels.

Apple has tried to shore up its leakage to rivals like Pandora and Spotify by purchasing the Beats brand, which includes a subscription music service, and launching iTunes Radio. Beats has a long way to go before catching up to the competition in the space, as its user base was a mere 110,000 before the acquisition. It's expected that Apple will include the service as an app that is baked into an upcoming upgrade of the iOS platform. Whether Apple will retain the Beats branding or slap it with an iTunes rebrand is not clear.

Music companies and artists complaining about the low returns they see from streaming services may not get any relief soon. If anything, Apple is rumored to be considering opening a price war on Spotify by cutting the Beats price in half (and also half of Spotify’s) to about $5 a month. Of course Apple is also in a better position than just about anyone to bankroll increased payouts to artists in order to attract exclusives and tie streaming seamlessly to digital sales.

In other words, the sands beneath the feet of the music industry generally will keep shifting. It would help if this entertainment sector actually started innovating creatively and gave us something of interest to buy now and then.