Five things to know about the record music industry
In 2020, US consumers spent more on vinyl LPs than CDs, but it was streaming that kept the record industry in the black.
- Streaming made up 83% of music industry revenue in the US in 2020, up from 10% in 2010.
- Spotify is the top performer for pure music streaming, with 165 million paying subscribers.
- The value of vinyl record sales in the US in 2020 increased 28.7% year on year to US$626 million.
1. Streaming is the music industry king
The music industry was brought to its knees by the piracy wars of the nineties and early noughties as music tracks were shared for free on Napster, LimeWire and Pirate Bay. But things have bounced back with the advent of streaming services.
In 2020, recorded music revenue in the US grew 9.2% to US$12.2 billion, its fifth consecutive year of growth, according to the Recording Industry Association of America (RIAA). And streaming accounted for 83% of music industry revenue in the US, up from 10% in 2010.
Spotify’s streaming service launched in 2008 and Apple Music in 2015. There’s also Pandora, Deezer, Amazon Music and SoundCloud among others.
Leading players boast libraries of tens of millions of songs. Spotify is the leading pure play music streaming service, with 165 million paying customers, followed by Apple Music with an estimated 72 million-plus users, according to Statista. But video streaming platform YouTube, established in 2015, puts them both in the shade with its 2.3 billion monthly users who each day watch some 5 billion videos, with music clips among the most popular, reports Global Media Insights.
YouTube has even reshaped how the music industry finds and develops new talent. Justin Bieber was discovered after he won a talent quest and uploaded a video to YouTube in 2007 as a 12-year-old.
2. CDs are dead – and vinyl isn’t as popular as you may think
CD sales peaked in 1999 when music lovers in the US alone paid US$13 billion for the little discs, almost 90% of music industry revenue, according to RIAA. But along with the problem of pirated music, Apple released its iPod in October 2001 and free MP3 downloads took off. (These peaked in 2012, with almost 1.4 billion music single downloads in the US, Statista reports.)
Physical music recordings were on the slide. In 2020, the CD market in the US was worth just US$483 million.
Some diehard fans say there’s been a renaissance in analogue formats, including the vinyl LP record. It’s true that in 2020 revenue from vinyl record sales in the US were larger than from CDs for the first time since 1986. But while last year’s US vinyl sales were worth US$626 million, a 28.7% increase in value on the previous year, they made up just 5.2% of music industry revenue, the RIAA reported.
3. The oldies are winning
When it comes to album sales, 20th-century musicians top the charts. The highest selling album of all time is Michael Jackson’s Thriller, first released in late 1982, which has sold 70 million copies. It’s followed by Australian band AC/DC’s 1980 album Back in Black with 50 million copies. Nirvana’s seminal album Nevermind, which celebrated its 30th anniversary in September 2021, has sold about 30 million copies.
4. Streaming is strong – but doesn’t pay well
Website chartmasters.org lists Canadian rapper and singer Drake as the most streamed artist in the world, with more than 41 billion Spotify streams. In second place is English singer-songwriter Ed Sheeran, with 31 billion streams. Canadian popster Justin Bieber comes in at number seven, with 24 billion streams, and American singer-songwriter Taylor Swift is number nine, with 21 billion streams. But unless you’re a hit-maker, don’t count on streaming to pay the rent. Streaming payouts are terrible.
Spotify pays an average US$0.004 per stream, Apple Music US$0.00783, and YouTube US$0.002, according to freeyourmusic.com.
Spotify also acknowledges that 70% of what it pays for music goes to record labels; how much their recording artists actually receive depends on individual contracts.
5. Classical is a growth market – but not all artists love streaming
It’s not only modern music on streaming services. Data from Spotify shows Beethoven’s compositions attract 6.1 million monthly listeners, trailing his compatriot Johann Sebastian Bach who has 7.2 million monthly listeners. Mozart comes in third with 5.7 million.
Although classical composers don’t have any say about whether their music is available on streaming services, contemporary artists do. Taylor Swift pulled all her albums off Spotify in 2014 in a dispute about artists’ royalties. She didn’t return to the streaming service until 2017, after her album 1989 had sold 10 million copies. (She had made 1989 available on Apple Music.) Once she restored her back catalogue to Spotify and Pandora, Swift reportedly pulled in US$400,000 in two weeks in streaming revenue and publishing royalties, and her music was streamed 4.5 million times in the US alone.