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TheStreet Open House

Streaming Is the Only Relevant Music Option

Stocks in this article: SNECMCSAGOOGPAMZNAAPLNLSN

PORTLAND, Ore. (TheStreet) -- If you're not streaming new music or watching new music videos, you may as well be reciting it in Latin.

Streaming is the only relevant music medium, and even Billboard and Nielsen Soundscan have figured that out. During the first six months of 2014, Nielsen Soundscan found that on-demand streams through both audio and video services like YouTube, Vimeo, Spotify and recent Apple  (AAPL) acquisition Beats Music are up 42% from the period last year. That's more than 70 million total streams, including a 50% jump in audio music streaming to 33.6 million. That still lags behind video streaming, which accounted for 36.6 million music streams in early 2014 and jumped 35% from last year.

Everything else that isn't on a vinyl disc is dead. Nielsen Soundscan equates 2,000 streams to one album, but even with that in the equation, album sales are down 3.3% through June. Take streaming out of the mix and you're looking at a 14.3% drop from the same time last year. The nearly 20% drop in compact disc sales over the last year is almost expected as CDs continue their post-'90s free fall, but the 11.6% drop in digital album sales and whopping 13% drop in digital track sales is a bit more jarring.

Digital music sales fell for the first time last year, but this is just an unpleasant reminder that those sales aren't coming back. It doesn't matter that you generally can't stream music in subways or in tunnels -- people aren't loading up their smartphones with songs anymore and definitely aren't lugging around an iPod.

That's incredibly bad news for the music industry, which uses digital track sales as a crutch to limp toward respectable numbers. When you factor in "Track Equivalent Albums" -- or 10 of an artist's tracks that add up to one album -- Katy Perry, Pharrell Williams, Lorde and Beyonce all had albums sell 1 million copies and go platinum this year. Take those individual tracks away and reduce album sales to strictly physical and digital albums in their entirety, and suddenly Beyonce, Lorde, Coldplay and Eric Church are the only artists to go gold and break 500,000 sales this year. The only album to go platinum by that measure? The soundtrack to Disney's Frozen, with 2.7 million copies sold in the first six months of 2014.

The only albums seeing sales rise this year are vinyl records, which have seen a 40% jump through June. Granted, that's only up from 2.9 million to 40 million, but it's better than any non-streaming medium can offer. Still, it should be noted that it's an incredibly small, esoteric segment of the market. The top-selling vinyl album, Jack White's Lazaretto, sold only 49,000 copies in the first half of 2014. The next-best seller, Arctic Monkeys' AM, sold only 25,000 -- or roughly half White's total. If you're not pre-ordering new Black Keys, St. Vincent or Mac DeMarco albums or buying yet another version of Bob Marley's Legend anthology or The Beatles' Abbey Road, you're inhabiting a very small portion of the vinyl segment and an even smaller space in the overall music industry.

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