More people are building their vinyl collections while confined at home during the pandemic.
The RIAA released its annual music industry revenue numbers for 2020 last Friday. These numbers, which the RIAA has published every year since the 1970s, are great barometers of the health of the recorded music industry. They’re especially interesting now as an indication of how the industry has fared during the pandemic. Last year’s numbers indicate that people are investing more in their vinyl collections now that they’re stuck at home.
Sales of vinyl LPs and 45s grew 23% over 2019. That’s despite the fact that most record stores had to close for a good part of the year, and even when they reopened, foot traffic fell sharply out of safety concerns. Many record stores posted their inventory online last year, especially on discogs.com, the biggest online marketplace for vinyl. Discogs has exacting standards for the metadata that sellers have to supply in order to list their vinyl for sale on Discogs Marketplace. While this makes the task of posting inventory online time-consuming for retailers, the site is known as a reliable place for vinyl fans to buy with confidence.
The rise of vinyl sales after its near-death in 2006 has gone hand-in-hand with the rise in music streaming since the early 2010s. Digital downloads never really offered a sense of music ownership; so those fans who wanted that gravitated to vinyl, while those who didn’t care about ownership gravitated to Spotify or Apple Music.
The pace of vinyl sales growth started to slacken around 2016, but it picked up again last year. The RIAA numbers say that vinyl pulled in over $600 million last year and exceeded 5% of total industry revenue. The true total is likely higher than this due to under-reporting by retailers. (Of course, that’s a far cry from vinyl’s peak of almost $11 billion (2020 dollars) in 1978.)
The other remarkable trend in the vinyl market comes from charts that Discogs publishes on its blog. The 2020 sales chart that it published earlier this month shows that vinyl is no longer just about buying classic rock and pop favorites like Ziggy Stardust, Dark Side of the Moon, and Thriller. Vinyl fans are skewing younger and are now buying new releases. The number one album of 2020 also shows the appeal of ownership and collectability: it’s Live at Third Man Records, a limited-edition release of a secret, invitation-only 2019 acoustic performance in Nashville by Billie Eilish with her brother Finneas. Copies are selling on Discogs for prices that start at $45 and go north of $200.
Vinyl is now bigger than CDs—something that hasn’t been true since 1986. Vinyl sales account for the majority of the market for physical music products. CD sales continue to plummet at about the same rate at which vinyl is growing. The other category that’s still in free fall is digital downloads, such as from iTunes (now Apple Music) and Amazon AMZN +1.2%. Vinyl should overtake downloads by the end of this year.
The RIAA numbers show that the overall industry grew 9% from 2019 to 2020 to a total of $12.2 billion. That’s decent growth, but while it falls short of the double-digit growth that the industry enjoyed since 2016 (revenue grew 13% from 2018 to 2019), the slowdown is easily attributable to the pandemic.
Likewise, interactive streaming continues to grow at a faster rate than the industry as a whole, though its growth rate is slowing down. Paid services like Spotify Premium, Apple Music, and Amazon Music Unlimited AMZN +1.2% now command 64% of the market; ad-supported interactive streaming services such as YouTube, Vevo, and Facebook pull in another 10%, as do digital radio services such as Pandora, iHeartRadio, and Sirius XM SIRI -0.2% satellite radio. In total, streaming in all its forms now accounts for 83% of the recorded music market.
These numbers don’t reflect two major sources of revenue for the music industry. First, of course, is revenue from live performances, which has all but disappeared since last March. The other category is music publishing—revenue earned by songwriters and music publishers (the RIAA tracks revenue earned by recording artists and labels). Music publishing revenue is roughly a third of recorded music revenue and tracks its growth fairly closely. The National Music Publishers Association (NMPA), the analog to the RIAA for music publishing, won’t release its 2020 revenue numbers until June.
I am the founder of GiantSteps Media Technology Strategies, a consulting firm whose clients include content providers and digital media technology companies ranging from