Americans are turning up the volume on Katy Perry, Pharrell Williams and Beyoncé, but as they stream ever more of the artists’ songs and videos their reluctance to buy music is extending from CDs to digital downloads.

Digital album sales dropped 11.6 per cent to 53.8m in the first half of the year, from 60.8m in the same period in 2013, according to Nielsen SoundScan, while sales of individual digital tracks sank 13 per cent to 593.6m from 682.2m.

Last year marked the first time digital downloads fell since Apple’s iTunes store launched in 2003, as streaming music services such as Spotify, Rdio and Pandora captured ears.

In the first six months of 2014, combined audio and video streaming jumped 42 per cent to 70.3bn streams from 49.5bn last year.

“Streaming continues to be an increasingly significant portion of the music industry,” said David Bakula of Nielsen Entertainment. He said the growth of streaming, coupled with a 40 per cent jump in sales of vinyl albums, “shows interest in buying and consuming music continues to be robust, with two very distinct segments of the industry expanding substantially.”

Vinyl sales represent a small sliver of the industry, however, at 4m copies sold from January to June – just 3 per cent of all album sales.

The acceleration in the shift to streaming is putting digital downloads on a downward trajectory approaching the double-digit annual declines in CD sales seen from 2007 to 2011.

Total album sales – physical and digital – have dropped 14.9 per cent so far this year to 120.9m from 142m. CD sales were down 19.6 per cent to 62.9m after a more moderate 14.5 per cent decline in 2013.

With streaming revenues still far lower than those generated by digital and CD sales, many in the industry are questioning – as they did during the rise of iTunes – whether artists and labels can make enough money from the new format to keep making new music.

The rise of digital subscription services such as Spotify and Beats, recently acquired by Apple for $3bn, offers some hope, however. The number of paying customers has ballooned to 28m last year from 8m in 2010, with subscription revenues reaching $1.11bn, and some of the largest technology and media companies are investing in the services.

Google bought Songza, which allows users to make customised playlists, for a reported $39m this week. Last month, Amazon launched music streaming as a part of its Prime subscription bundle.

The biggest selling album in the period – in physical and digital formats – was the soundtrack to Disney’s animated hit, Frozen, followed by a Beyoncé album launched last year through a heavily promoted exclusive deal with iTunes.