U.S. music industry sees third consecutive year of double-digit growth

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The American music industry posted its third consecutive year of double-digit growth, according to the RIAA’s year-end revenue report (Streaming services push recorded music business to highest revenue in a decade).

The report notes that in 2018 recorded-music revenues rose 12 per cent to their highest level in 10 years — $9.8 billion, up from $8.8 billion the previous year but still below 2007’s $10.7 billion. This was largely due to the boost in paid music subscriptions, which rose 42 per cent to 50.2 million from 35.3 million the previous year (and 10.8 million in 2015), while streaming revenues soared 30 per cent to $7.4 billion from $5.7 billion in 2017 (and $2.3 billion in 2015).

Total subscription revenues increased 32 per cent to $5.4 billion, the report states. That figure includes $747 million in revenues from “limited tier” paid subscriptions (ones without full mobile or on-demand access, such as Amazon Prime and Pandora Plus).

Streaming revenues accounted for 75 per cent of the total industry revenue in America, with physical accounting for 12 per cent, digital downloads for 11 per cent and synch for 3 per cent.

“Fifty million subscriptions illustrate fans’ unrivalled love for music and the way it shapes our identities and culture — and showcases an industry that has embraced the future and found a healthy path forward in the digital economy,” said Mitch Glazier, the RIAA’s new chairman/CEO. He also said, “Make no mistake, many challenges continue to confront our community. As noteworthy as it is for the business to approach $10 billion in revenues again, that only returns U.S. music to its 2007 levels. Stream-ripping, and a lack of accountability for many Big Tech companies that drive down the value of music, remain serious threats as the industry strives for additional growth.”

Although the industry has been at odds with free, ad-supported music services such as YouTube for not returning significant revenue to music companies, RIAA data shows that “on-demand ad-supported streaming” — which includes YouTube, Vevo and the free version of Spotify — contributes $759.5 million annually, a 15 per cent increase since 2017.

The RIAA also revealed that vinyl sales continue to rise, up 8 per cent to $419 million in 2018, while CD sales fell 34 per cent to $698 million, the first time CD revenue was below $1 billion since 1986. Vinyl records now account for one-third of music industry revenue from physical formats.

How long this double-digit growth will continue remains to be seen. But as Glazier notes, “As our report illustrates, there are reasons to be excited for today and eager for tomorrow.”

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