Physical Sales Outdoes Digital Downloads According To Recent Reports
The Recording Industry Association of America (RIAA) annual end-of-year report notes that recorded-music revenues in 2018 were up 12 percent to their highest levels in ten years—$9.8 billion. But digital downloads, which includes those on iTunes, made up just 11 percent of this revenue. CDs and vinyl, meanwhile, accounted for 12 percent, according to a report by Digital Journal.
75% Of Last Year’s Revenue Came From Streaming Services
If it was unclear that streaming is taking over the music business, the latest revenue figures leave no doubt. Digital download sales have fallen so much that they’re now smaller than sales of CDs, vinyl, and other physical media. This has happened for the first time since 2011.
Most of last year’s revenue—75 percent of it—came from music streaming services such as Spotify, Google Play and Apple Music. Total subscription revenues from music streaming increase by 32 percent to $5.4 billion. Included in that figure is “limited tier” subscriptions such as Amazon Prime, which were up 26 percent to $747.1 million. Ad-based free services such as YouTube were also up by 15 percent to $759 million.
Back in 2015, digital downloads and streaming had an equal share of around 34 percent. Last four years have seen streaming become most people’s method choice for enjoying their favourite tracks. The sales of digital downloads has suffered the most.
Heading Back To 90s?
The emergence of music streaming has brought with it the low-point for digital downloads. Sales of digital downloads fell 26 percent to $1.04 billion while physical format was down 23 percent to $1.15 billion. Interesting thing to note is that despite decrease in physical sales, more people are falling back in love with vinyl. Sales of vinyl records were up 7.9 per cent to $419.2 million.
One might think that the reason behind the revival of vinyl is baby-boomers sticking to the old-school ways of enjoying music. That is not entirely true. Millennials are buying vinyls in increasing numbers as they search for authenticity in the experience of listening to music, according to a report by Financial Times. While the highest selling vinyls remain classics such as Michael Jackson’s Thriller and The Beatles’ Yellow Submarine, record labels and stores are manufacturing and selling higher number of vinyls than the years before.
While record store chains, like the UK based bankrupt HMV, face business crisis, Sony returned to the vinyl printing business after an almost 30-year absence. Canada’s Sunrise Records, which purchased HMV, hopes that vinyl can be the saviour of HMV. In the US, 17 million vinyl albums were sold in 2018, up 15 percent on the year before, bringing in a total of $419 million. It was the highest revenue earning year for vinyl since 1988. In total, vinyl made up one-third of revenues from physical formats. This is big mark-up from the years preceding it.
The talks surrounding the death of physical formats overshadowed the fate of digital downloads. Just like e-books didn’t kill physical books and bookstores, music streaming, despite its dominance in the revenue share, will leave way for the thriving of physical formats of music; such as vinyl records.