In a world where music is more accessible than ever, the U.S. recorded music industry is breaking records. According to the Recording Industry Association of America (RIAA), the industry amassed a staggering $8.4 billion in gross revenues in the first half of 2023. That’s right, music is not just surviving; it’s thriving.
The RIAA’s Mid-Year 2023 Report, released on September 18, reveals that recorded music revenues in the U.S., factoring in streaming subscriptions, physical sales, and digital downloads, grew by an impressive 9.3% year-over-year on a retail basis. While that’s exciting news for the music industry, the story goes beyond the numbers.
On a wholesale basis, which accounts for the share that flows back to record labels, distributors, and ultimately artists, the U.S. recorded music industry generated a robust $5.3 billion in the first half of 2023, marking an 8.3% YoY increase.
Streaming Takes Center Stage
Now, let’s dive into the heart of this musical renaissance: streaming. It’s no secret that streaming services have revolutionized how we consume music. In H1 2023, streaming flexed its muscles, growing by a substantial 10.3% YoY, amounting to a colossal $7 billion in revenue. This genre-agnostic phenomenon accounted for a staggering 84% of total recorded music revenues in the U.S. Clearly, streaming has become the heartbeat of the music industry.
Paid Subscriptions Lead the Way
Within the streaming realm, paid subscription services were the champions. They experienced an 11% YoY growth, amounting to $5.5 billion in H1 2023. This includes both full-premium and ‘limited-tier’ subscriptions and constituted nearly two-thirds of the U.S. industry’s total revenues during this period, along with more than three-quarters of total streaming revenues.
However, not all streaming avenues shared the same growth rate. Revenues from ad-supported music streaming services lagged significantly behind their subscription-based counterparts, rising by a mere 0.6% YoY to reach $870 million in H1. Clearly, the ad-supported model has room for improvement.
The Subscriptions Story
While the number of paid subscriptions to on-demand music services continued to grow in H1 2023, the pace of growth slowed compared to previous years. The average number of subscriptions during this period stood at 95.8 million, a YoY increase of 5.8 million. While this is still a substantial rise, it reflects a trend of decelerating growth in paid subscriptions.
To put this in perspective, here’s a quick historical overview:
- H1 2020: Paid subscriptions grew by 14.4 million YoY to reach 72.6 million.
- H1 2021: Subscriptions increased by 9.4 million YoY, totaling 82 million.
- H1 2022: Paid subscriptions grew by 8.0 million YoY, reaching 90 million.
- H1 2023: Subscriptions saw a YoY increase of 5.8 million, totaling 95.8 million.
This trend indicates a potential plateau in the growth of streaming subscriptions in the U.S. market, signaling that we might be nearing saturation.
Price Increases and Beyond
The growth in streaming revenue in H1 2023, despite slowing subscription growth, can be attributed, in part, to price increases implemented by major streaming platforms. Apple Music and Amazon Music raised their monthly subscription prices, while Spotify bumped up its Premium subscription cost in the U.S. to $10.99 in July. The full extent of the impact of these price hikes won’t be clear until the RIAA publishes its full-year report.
While new subscriptions may have grown more slowly, existing subscription accounts were willing to pay more, making these price adjustments vital for sustaining the industry’s growth.
Vinyl Records and the Bigger Picture
In the midst of the digital revolution, there’s a fascinating subplot: the resurgence of vinyl records. Revenues from physical music formats, including vinyl LPs, CDs, and other physical media, reached $882 million in the U.S., a 5% YoY increase. Vinyl records alone accounted for 72% of physical format revenues, growing by 1% YoY to reach $632.4 million. Interestingly, despite this modest revenue bump, fewer vinyl records were sold in H1 2023 compared to H1 2022, signaling that vinyl prices might be on the rise.
In the words of Mitch Glazier, Chairman & CEO of the RIAA, “This report describes a thriving, growing music ecosystem that continues to reach new heights and shape our culture.” The numbers reflect the relentless creativity of artists, songwriters, labels, and the entire music industry, proving that music remains a driving force in our ever-evolving world.