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U.S. Music Biz Hits an All-Time High of $15.9 Billion; Is the Market Pumping the Brakes?

After bouncing back from COVID, growth slows. Vinyl Albums outsell CDs in decided fashion…

By Paul Marszalek

The numbers are in for 2022 and no one is complaining. The Recording Industry Association of America pegs 2022 music industry revenue up 6.1% year over year — to a record $15.9 billion.

There’s plenty to celebrate as streaming revenues continue to climb – up 7.3% to $13.265 billion. As in recent years, increases in paid subscription were more than enough to offset continued slides in permanent digital downloads and sales of CDs.

More good news comes from the vinyl sector: For the first time in decades, vinyl outsold CDs, and in a big way. CD units dropped from 46.7 million shipped in 2021 to 33 million in 2022 — with a corresponding revenue loss of roughly $100 million.

Vinyl was up a tick, from 40 million units shipped to 41.3 million in 2022. Revenue was even better, climbing 4% t0 $1.731 billion despite seven million fewer units sold overall. In other words, higher prices on vinyl offset all of the losses in CD revenue.

The 17.2% rise in vinyl revenue continues to puzzle many in the sector — not because people are buying it, but because the industry simply won’t manufacture it. Experts in the space believe that the demand side on vinyl is twice the supply side, but major labels will not step up to the plate and press.

Insiders say that major labels believe vinyl to be a fad and don’t want to be stuck with pressing plants and personnel in the future. While plausible, it does not explain why majors would not band together to create a special purpose vehicle to build capacity.

Beyond the good news, there appear to be chinks in the armor. While a 6.1% rise is far from an insult, the balance sheet continues to bleed in many areas. For example, if synch royalties (up 24.8%) were factored out, the consumer side of the industry is up only 5%.

If subscription streaming stumbles even slightly, we may have just seen the near-term peak.

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