The US recorded music industry is hitting all the right notes, with revenues soaring to $8.4 billion in the first six months of 2023, according to the Recording Industry Association of America’s (RIAA) Mid-Year 2023 Report. This represents a robust 9.3% year-over-year growth in retail-based revenues. But let’s dig deeper into these musical numbers.
On the wholesale side, which includes the money shared among record labels, distributors, and artists, the industry raked in a hefty $5.3 billion in H1 2023, marking an 8.3% YoY increase.
Streaming Steals the Spotlight
Streaming music continues to be the main act, contributing significantly to the industry’s revenue. In H1 2023, streaming services reported a 10.3% YoY growth, adding a staggering $600 million to reach a total of $7 billion in revenues. Streaming accounted for a whopping 84% of total recorded music revenues in the US.
Even more impressively, revenues from paid subscription services within streaming jumped 11% YoY to $5.5 billion in H1 2023. This category, which includes both full-premium and ‘limited-tier’ subscriptions, now constitutes almost two-thirds of the US music industry’s total revenues and over three-quarters of total streaming revenues.
However, not all streams were equally rapid. Ad-supported music streaming services experienced slower growth, increasing just 0.6% YoY to $870 million in H1 2023.
Deceleration of Paid Subscriptions Growth
Here’s where the tune gets interesting. While revenues soared, the growth rate of paid subscriptions to on-demand music services slowed down. The average number of subscriptions in the first half of 2023 reached 95.8 million, up by 5.8 million YoY (compared to 90 million in H1 2022). This deceleration in growth aligns with a multi-year trend.
In H1 2020, paid subscriptions surged by 14.4 million YoY to 72.6 million. H1 2021 saw 9.4 million more subscriptions compared to the prior year, reaching 82 million. H1 2022 recorded 8 million additional subscriptions, totaling 90 million. H1 2023 added 5.8 million more subscriptions to reach 95.8 million.
This gradual slowdown hints at a potential saturation point for streaming subscriptions in the US, the world’s largest recorded music market.
The Price of Music
What’s behind this shift in subscription growth? Price increases at major streaming services during the first half of the year may be a key factor. Apple Music, Amazon Music, and Spotify all raised their subscription rates, and the full impact of these adjustments will become clear in H2.
While new subscriptions might be slowing, existing ones are paying more, making price adjustments an essential strategy to maintain growth in a maturing market.
Vinyl Records Find Their Groove
In contrast to the digital realm, physical music formats, including vinyl LPs and CDs, made a comeback with revenues hitting $882 million in H1 2023, up 5% YoY. Vinyl records played a significant role, growing 1% YoY to $632.4 million, accounting for 72% of physical format revenues.
Interestingly, even though fewer vinyl records were sold in H1 2023 compared to H1 2022, with 23.4 million units versus 23.8 million, revenues were up. This suggests that the price of vinyl is on the rise.
The Music Industry’s Ongoing Symphony
Mitch Glazier, RIAA Chairman & CEO, paints a vibrant picture of the music industry. He describes it as a “thriving, growing music ecosystem” that continues to shape culture. It’s a testament to the creativity of artists, songwriters, labels, publishers, and services, all working together to create a harmonious experience for fans. As the music industry embraces innovation and forward-looking strategies, the melody of success continues to play on.
