Streaming music growth is staggering

Americans streamed more music than ever last year, according to Nielsen Music’s Year-End Music Report.

Streaming audio consumption was up 63% and crushed sales of physical albums, digital albums and digital tracks — all of which posted annual volume declines in both current and catalog content.

The music industry first was shaken up by digital downloads from platforms such as Apple’s iTunes, which debuted in 2003. That disruption resulted in the bankruptcies of physical album retailers such as Tower Records.

This second paradigm shift — led by streaming platforms such as Spotify, Pandora, Apple Music and Amazon Music — occurred because improved mobile connectivity and data plans made downloading songs seem cumbersome.

However, the music streaming industry is still a tough one to thrive in due to high content-licensing and data costs. That’s why many top players, including Pandora and Spotify, still aren’t profitable.

However, bigger players such as Apple and Amazon can afford to run their music streaming platforms at a loss in order to tether more users to their ecosystems. Steve Jobs once said that people “don’t want to rent their music,” but times seem to be changing.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon, Apple and Pandora.