Read: RIAA CEO Mitch Bainwol's Farewell Letter to Music Execs
Read: RIAA CEO Mitch Bainwol's Farewell Letter to Music Execs

Growth in digital and synchronization revenue slightly outpaced the decline in physical revenue, leaving the U.S. recorded music business up 0.2% in 2011, according to figures released Monday by the RIAA.

For its annual year-end shipments report, the RIAA tracks the value of physical shipments as well as the dollar value of digital downloads, mobile sales, subscription revenue, digital performance royalties and synchronization royalties. All figures were reported to the RIAA by member record labels.

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The new music business is heavily digital and multi-faceted. In addition to digital downloads, today's music business looks to subscriptions, digital performance royalties from the likes of Pandora and Sirius XM, and royalties from record music's use in TV, movies and other media. These revenue streams need to make up for the decline in the old music business for the overall business to stabilize. And, according to the RIAA's figures, that's exactly what happened in 2011.

Led by strong growth in download revenue, the newer parts of the new music business rose 16.2% last year. Download revenue increased 17.3% to $2.62 billion, an increase of $387 million from 2010. The others - subscriptions, performance royalties and synchronization royalties - combined for a 12.2% increase, or $79.2 million. Distributions for digital performance royalties increased 17% to $292 million in 2011. Record labels were paid only half that amount, however. SoundExchange, the organization that collects and disburses digital performance royalties, pays recording artists and performers separately from record labels.

Subscription services averaged 1.8 million subscribers, up from 1.5 million in 2010, according to the RIAA. Subscription revenue grew to $241 million.

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The fact the RIAA counted a mere 300,000 increase in subscribers in 2011 may raise some eyebrows. Spotify's July launch obviously did not make much of an impact. Muve Music launched in January and finished the year with 500,000 subscribers. Spotify launched in July and had a reported 250,000 U.S. subscribers by October. Given those gains, subscription gains should be higher than 300,000, right?

The explanation for the small increase in the RIAA's figures comes from the way it calculates the annual weighted average number of subscribers. For purposes of tracking revenue, the RIAA takes into account when people started paying fees. Put another way, a customer gained in October wasn't worth the same as a customer gained in February. The RIAA confirmed to that "most of the gains" in subscribers occurred in the second half of the year. Recall that Spotify launched in the second half of the year and Facebook's f8 conference, a big boost for subscription services, occurred in September.

Synchronization royalties rose 4% to $196.5 million in 2011. This is the first time the RIAA's end-of-year report included these royalties, which cover the use of sound recordings in media such as TV, movies and video games. These figures are wholesale rates because they represent business-to-business transactions. All other figures in the report are business-to-consumer transactions.

The above gains narrowly offset losses in physical and mobile revenues. The value of physical shipments dropped 7.7% to $3.66 billion. That figure represents the retail value of units shipped, not the final price paid by consumers.

Finally, ringtunes tanked 39% and ringback tones fell 28%. In aggregate, the two mobile formats fell 38.1% to $277.4 million. If there is a bright side here it is that ringtones don't have much further to fall to zero.