The music industry is often seen as a barometer of cultural and technological shifts, and the latest statistics from the Recording Industry Association of America (RIAA) provide a fascinating insight into its current state. In the first six months of 2023, the US recorded music industry surged ahead, generating a staggering $8.4 billion in gross revenues.
The Growth of Music Retail
This impressive figure, disclosed in the RIAA’s Mid-Year 2023 Report, signifies a 9.3% year-over-year growth in recorded music revenues when considered from a retail perspective. Retail revenues encapsulate spending on streaming subscriptions, physical music, and digital downloads.
When examined from a wholesale standpoint, which tracks the money that returns to record labels, distributors, and artists, the industry pulled in $5.3 billion in the first half of 2023, marking an 8.3% year-over-year growth.
Streaming Dominates the Landscape
Breaking down these figures reveals that streaming is the driving force behind this music industry resurgence. Streaming services, including paid subscriptions, ad-supported platforms, digital radio, and even fitness apps, contributed significantly to this retail revenue surge.
In the first half of 2023, streaming revenues ballooned by 10.3% year-over-year, climbing to a staggering $7 billion, comprising a substantial 84% of the total recorded music revenues in the US.
The Power of Paid Subscriptions
The real star of this streaming show is the segment of paid subscription services. Revenues from paid subscriptions skyrocketed by 11% year-over-year, reaching $5.5 billion in the first half of 2023. This includes both full-premium and ‘limited-tier’ subscriptions. Astonishingly, this accounts for almost two-thirds of the total industry revenue in this period and over three-quarters of all streaming earnings.
However, ad-supported music streaming services didn’t enjoy the same growth as their subscription counterparts. Revenues from on-demand services like YouTube, the ad-supported version of Spotify, and Facebook only grew by a modest 0.6% year-over-year, amounting to $870 million in the first half of 2023.
Slower Subscription Growth
While subscription music streaming saw growth, the pace slowed down compared to previous years. In the first half of 2023, the average number of subscriptions increased by 5.8 million year-over-year, reaching a total of 95.8 million. This compares to 90 million subscriptions during the same period in 2022.
This gradual decline in subscription growth mirrors a multi-year trend. In the first half of 2020, paid subscriptions grew by 14.4 million year-over-year. In 2021, the growth was 9.4 million, and in 2022, it was 8 million. In 2023, this growth tapered further to 5.8 million.
The Impact of Price Increases
The disparity between streaming revenue growth and subscription growth is likely tied to price increases implemented by major streaming platforms in the first half of the year. Apple Music, Amazon Music, and Spotify all raised their standard monthly subscription prices. The full impact of these adjustments on H2 revenues will be revealed when the RIAA publishes its year-end report.
A Future of Price Increases
This data suggests that the US may be approaching a saturation point for streaming subscriptions, emphasizing the need for ongoing price increases. Industry leaders have called for recurrent price adjustments, a crucial strategy if the trend of slower subscription growth persists.
Vinyl Records: A Nostalgic Surge
Despite the digital dominance, physical music formats, including vinyl LPs and CDs, enjoyed a revival in the US. In the first half of 2023, these formats generated $882 million in revenue, up 5% year-over-year. Vinyl records, in particular, recorded a 1% year-over-year growth, reaching $632.4 million, constituting 72% of physical format revenues.
It’s worth noting that despite the increase in revenue, fewer vinyl records were sold in the first half of 2023 compared to the same period in 2022. This implies that vinyl prices are rising.
A Thriving Music Ecosystem
In conclusion, the RIAA’s Mid-Year 2023 Report paints a vivid picture of the music industry. It’s a thriving, ever-evolving ecosystem that continues to shape culture and generate significant revenue. As Chairman & CEO Mitch Glazier aptly states, it’s a testament to the creative genius and hard work of all those who contribute to the music industry. The future promises even more exciting developments as the industry navigates the challenges and opportunities that lie ahead.