There was a period early in the new century when the music recording industry was believed to be in its death throes. The industry had come to depend on overpriced CDs for their revenue and profits, but the iPod launched a digital download model, and then the iPhone put the nail in the coffin of physical distribution. (No one uses these retro ’90s gadgets anymore.)
CD sales have tanked so much that vinyl records (the kind developed and sold in the 1950s) even outsell CDs. In the first half of 2023, sales of physical products, primarily CDs and vinyl records, totaled $882 million, just over 10% of the all-time high $8.4 billion total for recorded music sales. Music streaming, through outlets like Spotify, Amazon Prime, and Apple Music accounted for 84% of the music industry’s revenue, and the vast majority of that came from paid subscription revenue.
According to a report published Monday by the Recording Industry Association of America (RIAA), streaming subscriptions accounted for $5.5 billion of the $7.0 billion total the music industry hauled in during the first six months of 2023. Paid subscription subscribers rose by 6% during the period, and those subscribers generated 11% more revenue for the industry: “Nearly 2/3 of total revenues – and more than 3/4 of streaming revenues – came from these paid subscription services.”
Here is a chart from the RIAA showing sales of recorded music between 1973 and 2022. The interactive original is easier on the eyes, but even at this scale it is easy to track the vinyl era (blue), the CD era (orange), the short-lived download era (purple), and the streaming era (green). In less than 20 years, streaming has risen faster than CDs and is still climbing. By the time CDs had completed their first 20 years, (through 2004), sales had already begun declining.
Digital downloads accounted for just 3% ($225 million) of industry revenue, down 12% compared to the total for the first half of 2022. Download revenue has dropped by more than 30% since 2021.
CD shipments dropped by 17.2% year over year in the first half of 2023, but the dollar value of the shipments increased by more than 14%. During the first six months of the year, 15.1 million CDs were shipped at a dollar value of $236 million.
One interesting thing about the sale of recorded music is that even though unit sales declined by 14.5% in the first half of the year, revenue rose by 9.3%. The moral of the story is that people are willing to pay for music. The question then becomes, “Is there a limit to how much they’re willing to pay?” Taylor Swift and Beyoncé will get back to you on that.
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