Music downloads fall as streaming, vinyls surge

There appears to have been a surprising shift in the music business last year, as sales of digital downloads fell, with fans turning instead to streaming services such as Spotify and vinyl.

Paid downloads of songs declined by 12 percent in 2014, falling to 1.1 billion from 1.26 billion in 2013, according to Nielsen SoundScan, while album downloads fell 9 percent.

In contrast, the streaming of music surged 54 percent from a 106 billion songs in 2013 to 164 billion in 2014.

Jonathan Nackstrand | AFP | Getty Images

Interestingly, despite the popularity of streaming, vinyl continued its revival. Sales of records came in at of 9.2 million in 2014, a 52 percent rise from the year before, marking the highest level since SoundScan started tracking the data in 1991.

The report underlines a shift in the digital music sector, with the download format -- which was integral to the success of Apple's iTunes—continuing to mature, while the likes of streaming services Spotify and Deezer gain popularity with consumers.

Read MoreVinyl frontier: Old music formats make comeback

To counter the fall in downloads, Apple plans to bundle the music streaming service it acquired as part of the $3 billion Beats Electronics deal earlier this year into its iOS operating system, according to a report in the Financial Times.

But some musicians have hit out at music streaming services, arguing that they pay artists very little.

Radiohead and Atoms for Peace frontman Thom Yorke last year described the service as "the last desperate fart of a dying corpse," while pop megastar Taylor Swift pulled her entire catalog from Spotify in November.

Spotify, which charges users $9.99 a month for its premium service, has continuously stressed that its payment system is fair and released a detailed breakdown of the process last year.

Swift's rejection of the service does not appear to have dented her popularity, however. Her album "1989" was the top-selling album in 2014 with 3.66 million digitally downloaded copies and physical editions shifted, followed closely by Disney's "Frozen" soundtrack, with 3.53 million copies bought, according to Nielsen.

Pharrell Williams' "Happy" – the theme song to animation film "Despicable Me 2" – was crowned America's best-selling song of 2014, after selling more than 6.4 million copies, followed by John Legend 's "All of Me" and Katy Perry 's "Dark Horse."