According to data compiled by the BPI, a trade body which represents British record labels, and the Official Charts Company, 30m albums were downloaded in the UK last year.
The decline, from 32.6m in 2013, occurred at the same time as the retail value of subscriptions to streaming services shot up by 65% to £175m, the Financial Times reported. Overall, the retail value of recorded music sales fell almost 2% to £1.03bn.
CD album sales declined 8% to 55.7m in 2014 while sales of vinyl records continued to grow, rising to 1.3m, its highest level since 1995.
However, it was the rise of ad-supported streaming services that marked the clearest indication of change.
As reported by Noise11, there were 14.8bn audio streams – or 560 for every UK household – and that accounted for 12.6% of all music consumed in 2014 and 17% of retail music spend.
A similar picture emerged across the Atlantic as the latest figures from Nielsen SoundScan revealed that sales of downloaded albums and songs in the US fell by 9% and 12% respectively in 2014.
As in the UK, audio and video streaming increased rapidly by more than 50% and up to 164bn songs were streamed during the year, the Wall Street Journal reported.
Apart from Japan, the US and the UK are the two largest music markets in the world, so the growth of streaming is likely to signal the emergence of a global trend, industry insiders predicted.
Kevin Brown, Spotify's head of label relations for Europe, described 2014 as "the year in which streaming has truly become mainstream in the UK" and forecast that the market would continue to grow in 2015.
Data sourced from Financial Times, Noise11, Wall Street Journal; additional content by Warc staff