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TheStreet Open House

Pandora and Apple Will Bail Out the Music Industry

PORTLAND, Ore. (TheStreet) -- Streaming music won't stop the music industry's bleeding, but it may slow it just enough to let both artists and labels alike figure out its future.

A new report from English data firm Juniper Research finds that digital music industry will see worldwide revenue grow from $12.3 billion this year to $13.9 billion in 2019. Juniper's research indicates that even that grown hinges on the streaming music sector bringing in more cash as sales of digital downloads, ringtones and ringback tones continue to plummet.

That isn't exactly out of line with what Billboard and Nielsen Soundscan are seeing here in the U.S. During the first six months of 2014, Nielsen Soundscan found that on-demand streams through both audio and video services like Google's  (GOOG)  YouTube, IAC's (IACI) Vimeo, Spotify, Pandora (P - Get Report)  and recent Apple  (AAPL - Get Report) acquisition Beats Music are up 42% from the period last year. That's a jump from 49.5 million total streams to more than 70 million and includes a 50% leap 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.

Read More: Vinyl Is The Only Way To Buy Music

That growth comes as any album that isn't released on vinyl dies a horrible death. 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 13% drop in digital track sales is far more troubling.

Digital download sales fell for the first time last year and aren't coming back. People aren't loading up their smartphones with songs anymore and aren't carrying iPods anymore.

That's not great 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" -- a stat  that equates 10 of an artist's tracks with 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.

Read More: Amazon Prime Music Just Set Streaming Music's Price

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