Online streaming services such Spotify and Apple Music have become the music industry's single biggest revenue source, overtaking physical sales and digital downloads for the first time, a global industry body said on Tuesday.

The rapid growth in streaming music services in recent years has led to a recovery in the fortunes of the global recorded music industry, which enjoyed its third year of positive revenue growth, according to a report by industry trade group IFPI.

By 2014, music sales had fallen by 40 percent to $14.3 billion in the 15 years since 1999, when the rise of music file-sharing service Napster ravaged sales of CDs and the development of download services like Apple iTunes failed to offset declines.

Last year, subscription-based streaming revenue accounted for 38 percent of all recorded music, up from 29 percent the year before, IFPI said.

Figures released in IFPI’s Global Music Report 2018 show total revenues for 2017 were $17.3 billion, with an increase of 8.1 percent from the previous year.

Industry leaders say that the rise of music streaming is enabling the market to reach new regions of the world, while helping weaning a generation of music fans away from free or pirated music.

“We estimate that only half the world’s population lives in a thriving music environment and we want to bring the streaming revolution to all of it,” Stu Bergen, from Warner Music Group, told reporters in London.

Latin America and China saw the biggest market growth, with a rise in overall music revenue of 17.7 percent and 35.3 percent respectively.

Despite the healthy figures, revenues for 2017 are still only 68.4 percent of the market’s peak in 1999.

IFPI - The International Federation of the Phonographic Industry - says governments should do more to tackle the "value gap" between the value created by some digital platforms such as Google's YouTube for their use of music and what they pay those creating and investing in it.

"Things are looking good but there’s a structural fault in the system. Until we fix it, it will always be a struggle,” said IFPI Chief Executive Frances Moore.