Digital downloads had a short run as the top-selling format in the music industry. It took until 2011, a decade after the original iPod came out, for their sales to surpass those of CDs and vinyl, and they were overtaken by music streaming services a few years later.

Now, digital downloads are again being outsold by CDs and vinyl, the Recording Industry Association of America (RIAA) says.

It released its 2017 year-end revenue report on Friday, showing that revenue from digital downloads plummeted 25 per cent to US$1.3 billion ($1.8b) over the previous year. Revenue from physical products, by contrast, fell just 4 per cent to US$1.5b.

Overall, the music industry grew for a second year straight. And with US$8.7b in total revenue, it's healthier than it has been since 2008.

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Nearly all the growth was the result of a continued surge in paid music subscription services such as Spotify and Apple Music. Those services grew by more than 50 per cent to US$5.7b last year, and accounted for nearly two-thirds of industry revenue.

Physical media accounted for 17 per cent, while digital downloads made up 15 per cent.

RIAA Chairman Cary Sherman called the industry's recovery "fragile" in a Medium post on Friday: "We're delighted by the progress so far, but these two years of growth only return the business to 60 per cent of its peak size - about where it stood 10 years ago - and that's ignoring inflation."