By Eric Kelsey and Mary Milliken
LOS ANGELES (Reuters) - The old-fashioned radio still reigns as consumers' top source for finding new music, but at Sunday's Grammy Awards, online streaming might show itself to be the fast track to industry recognition.
With the likes of record-of-the-year nominees Iggy Azalea and Meghan Trainor breaking out on YouTube and streaming services such as Spotify, this year's Grammys could be a celebration for one of music's few growing segments.
Among the nominees for this year's top awards - song, record and album of the year - only British soul singer Sam Smith and R&B artist Pharrell Williams had a hit that placed among the top 10 radio songs in total plays in 2014, according to Nielsen Music.
"I don't think anyone who is voting thinks that the Grammys happen in a world where streaming doesn't exist," said William Gruger, the social/streaming chart manager at Billboard.
The online success of Azalea's rap hit "Fancy" with singer Charli XCX and Trainor's ode to full-figured women "All About that Bass" underscore the power that streaming - and its young-skewing consumers - have in elevating a song's profile at the grassroots.
Such is the promise of streaming that Apple Inc bought headphone maker Beats for $3 billion last year, in part for its curated music service.
Grammy voters, however, are supposed to cast their ballots only on artistic merit, said Neil Portnow, the president of the National Academy of Recording Arts and Sciences, which hands out the awards.
"The fact that music is available to consumers via streaming and via download or via traditional product, that doesn't have anything to do with the awards process itself," Portnow said. "There isn't anything about streaming that relates directly to how those awards are given."
STREAMING DIVIDES INDUSTRY
But falling album sales and digital song downloads have elevated streaming's prominence within the industry. In December, Billboard and data compiler Nielsen Music revamped the weekly album chart to include online streaming.
Services such as Spotify, Beats and Google's YouTube helped propel on-demand music streams to 55 percent growth in 2014.
"The industry is paying more attention to it especially when Billboard is changing their charts," said Lyndsey Parker, editor of Yahoo Music.
Azalea's "Fancy" was the top song on Spotify in 2014 while its video racked up 440 million views on YouTube in under a year.
"'Fancy' blew up because people were streaming that song like crazy ... it's good for discovery and elevating the profiles of new artists," Parker added.
Trainor's "Bass" has been streamed 569 million times on YouTube. By contrast, John Legend's "All of Me" was last year's top radio song with 816,000 plays.
But streaming still faces an uphill climb among the industry's establishment, which is unhappy with the way and amount of money services such as Spotify compensate for the art.
Megastar Taylor Swift, a song and record of the year nominee, notably pulled all her music from Spotify and streaming sites in November prior to the release of top-selling album "1989."
Spotify, which boasts 60 million active users, says about 70 percent of its revenue goes to record labels and publishers, which then have their own separate agreements with artists.
"If a streaming service bases its business on the music that it plays, one would think there has to be a way where the people who write, perform and own that music can be fairly compensated for the work they do," Portnow said.
"I don't think we are there yet," he added, "and I think there is a long way to go."
(Refiles to reflect Nielsen Music from Nielsen SoundScan in third and ninth paragraph)