Music industry heads might not have been shocked at the announcement this week but the news was still monumental: According to royalty disbursement agency Kobalt (via TechCrunch), streaming royalties from Spotify have surpassed the totals of iTunes for the first time during the last quarter. The company reported that the average performer received 13 percent higher payouts from streaming royalties than that of downloads.
It's a dramatic turnaround. During Q3 of 2013, iTunes still trumped Spotify by more than 32 percent in terms of royalties earned. The total revenues from streaming has tripled over the course of the last few years.
The competition between formats explains other happenings in the music world. Perhaps the biggest buyout of the year, when Apple paid upwards of $3 billion for Dr. Dre and Jimmy Iovine's Beats Audio, the company wasn't trying to get better headphones. The real target was the newer streaming option, Beats Radio, which reports indicate the company aims to package into its iTunes platform. Apple is still reaping in profits from iTunes—a $300 million gain last quarter according to The Wall Street Journal—but all of that money isn't coming from music anymore.
"Spotify overtaking iTunes in Europe is an important new milestone in streaming," Kobalt CEO Willart Ahdritz said. "The music industry's infrastructure is failing them, unable to efficiently account for the enormous volumes of data from digital transactions."
Streaming hasn't nearly overtaken downloads as a whole however. The format still makes up just 10 percent of the revenues dished out by Kobalt, far behind downloads and radio spins.
Taylor Swift may be returning her discography to Spotify soon enough.
