The beat goes on for the US recorded music industry, which saw impressive numbers in the first half of 2023, raking in a staggering $8.4 billion in gross revenues. This headlining statistic, revealed in the Recording Industry Association of America’s (RIAA) Mid-Year 2023 Report, indicates a vibrant and thriving music ecosystem.
Digging into the data, it becomes evident that the music industry in the US is in good shape. On a retail basis, which includes money spent on streaming subscriptions as well as physical and digital music, the industry saw a robust 9.3% year-on-year growth. On the wholesale side, which tracks the money that flows back to record labels, distributors, and ultimately artists, the recorded music industry generated a substantial $5.3 billion in the first half of 2023, marking an 8.3% year-on-year increase.
A significant contributor to this financial crescendo is streaming. Streaming, encompassing paid subscriptions, ad-supported services, digital and customized radio, social media platforms, digital fitness apps, and more, took center stage in this melodious performance. In H1 2023, streaming services saw revenues grow by 10.3% year-on-year, totaling $7 billion, constituting a staggering 84% of the total recorded music revenues in the US.
Paid subscription services were a big part of this streaming bonanza, contributing significantly to the industry’s success. Total revenues from paid subscription services surged by 11% year-on-year to reach $5.5 billion in H1 2023. This accounts for nearly two-thirds of the entire industry’s revenue in the period and over three-quarters of the total streaming revenues.
However, not all aspects of streaming saw the same growth rate. Revenues from ad-supported music streaming services experienced slower growth compared to their subscription-based counterparts. These ad-supported services, including platforms like YouTube and the free version of Spotify, grew at a more modest rate, increasing by just 0.6% year-on-year to $870 million in H1.
But here’s where the plot thickens. While the growth in new subscriptions during H1 2023 was slower compared to H1 2022, existing subscription accounts were paying more. The price increases implemented by major music streaming services earlier in the year contributed to this revenue acceleration. Apple Music, Amazon Music, and Spotify all made adjustments to their pricing structures, and it appears that these moves paid off, at least in the short term.
Yet, beneath this financial crescendo lies a subtle yet significant trend. The growth of new subscription accounts in the US has been slowing down over several years. This indicates that the streaming subscription market in the US might be inching toward saturation. In this context, recurrent price increases, a suggestion made by many music industry leaders, could become increasingly crucial in the years ahead.
Beyond streaming, the report reveals that physical music formats, including vinyl LPs, CDs, and other physical media, achieved $882 million in revenue in the US during H1 2023, marking a 5% year-on-year increase. Vinyl records contributed significantly to this segment, growing by 1% year-on-year to reach $632.4 million and accounting for 72% of physical format revenues. Surprisingly, despite the modest revenue growth in vinyl records, the number of units sold actually decreased in H1 2023 compared to the same period in 2022. This suggests that the price of vinyl records is on the rise.
In conclusion, the RIAA’s Mid-Year 2023 Report paints a picture of a thriving and growing music industry in the US, despite some nuanced challenges, particularly in the streaming sector. The industry continues to shape culture, reaching new heights, and drawing inspiration from the creative genius of artists, songwriters, labels, publishers, and innovative services. It’s a testament to the resilience and adaptability of the music community, forging ahead in an ever-evolving landscape.
