Another year, another record business in flux.
A great deal of attention will be given to last year's decline in U.S. music purchases -- it's a trend that is hard to ignore.
Once again, declines in sales of CDs and downloads overshadowed a relatively small gain in vinyl LP sales. Total album sales dropped 11.2 percent to 257 million units, according to Nielsen Music. Track sales declined 12.5 percent to 1.1 billion and are down 17.5 percent from the high of 1.34 billion in 2012. Vinyl is a small victory: sales were up 51.8 percent, but accounted for just 3.6 percent of album sales.
But there's more to the story. Recorded music looks better when streaming gains are taken into account. And not all genres are going through the same changes at the same time. Dig deeper into the year in U.S. recorded music with these six observations.
1. Purchases aren't the entire story. On-demand streaming rose 54 percent to 164 billion songs, according to Nielsen Music. That increase of 57.5 billion tracks is equivalent to an increase in album sales of 56.1 million units -- a number that exceeds the decline in track-equivalent albums (or TEA, a combination of album and track sales) of 47.9 million units.
There were actually more streaming gains in 2014. Not included in the streams tracked by Nielsen Music are non-interactive digital services like Pandora and Sirius XM. This is a big chunk of money. The growth in Pandora's royalties to rights holders in the 12 months ended September 30th is equivalent to about 16.3 million album sales.
In all, streaming gains may have helped the U.S. record business break even, or come close to it, in 2014. Recall that label revenues were down 4.9 percent in the first half of the year. Revenues could also end the year down, but the final tally won't be as bad as one might expect from looking just at sales trends.
2. Taylor Swift's switch to pop from country had a huge impact on the two genres' sales in 2014. The 0.1-percent increase in pop album sales was entirely due to Swift's 1989 -- the top album of 2014 with sales of 3.66 million -- being classified by SoundScan as pop rather than country. This helped make pop the only major genre to experience an increase in album sales last year.