Music streaming services generated more than half of the income earned by record labels in the UK last year, as CD sales continue to plummet.

Subscription streaming platforms operated by Spotify, Amazon Music and Apple Music, made revenues of £468m in the UK last year, 54% of the £865.5m total income for the recorded music industry. It is the first time that subscription streaming revenues, which grew at 35% year-on-year in 2018, have accounted for more than half of total recorded music revenues for labels.

The overall streaming total, which includes a cut of advertising revenue from YouTube music clips and ad income from Spotify’s free service, was £516.4m – or 60% of the total. The most streamed tracks in the UK last year included Drake’s God’s Plan, Calvin Harris and Dua Lipa’s One Kiss, and George Ezra’s Shotgun.

The figures, reported by the BPI, the record labels’ association that promotes British music, also highlights the ongoing financial dispute between the music industry and YouTube, with artists and labels demanding a greater share of the revenue generated by the video service.

YouTube, owned by Google’s parent group, Alphabet, paid just under £30m to record labels from an estimated 30bn views of music videos by UK fans last year. This represents just over half the £57m in royalty income that record labels received from the sale of 4.2m vinyl albums in the UK in 2018.

“The outlook for the future remains positive, but there is still a long way to go to recapture lost ground,” said Geoff Taylor, the chief executive of the BPI. “Long-term growth depends on robust government action to tackle the value gap, promote investment and ensure online platforms take responsible action to reduce infringement.”

In November, Google said it paid out more than $1.8bn globally to the music industry between October 2017 and September 2018 in advertising revenue.

The BPI’s annual figures also underline the ongoing decline of the CD. Record labels made £176.8m from their cut of the sale of music CDs in the UK last year, a 28.4% drop year-on-year. As recently as 2017, record labels pocketed almost £300m from CD sales in the UK.

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The biggest-selling albums in the UK last year, counting streams and downloads, included The Greatest Showman soundtrack, George Ezra’s Staying at Tamara’s and the soundtrack to Mamma Mia! Here We Go Again.

In January, Kim Bayley, the chief executive of the Entertainment Retailers Association , which publishes an annual roundup of sales and spending on entertainment products, said high street retailers has suffered a “Christmas from hell” last year.

In the week leading up to Christmas, sales of DVDs were down more than 31%, Blu-ray discs plummeted by more than 33% and music CD sales slumped by 29%, a festive nightmare that pushed the UK’s biggest music and movies retailer HMV into administration.