The Future of Downloads, Accelerating Growth & Vinyl Vinyl Vinyl: 5 Takeaways From the RIAA Year-End Report

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The U.S. recorded-music business grew again in 2017 -- and grew even faster than it did the year prior. Overall, revenues were up 16.5 percent to $8.7 billion, the highest mark since 2008 and the second straight year of double digit revenue growth. A closer look once again reveals some dynamic trends, surprising results and notable points. Here are five big takeaways from the RIAA's 2017 year-end report.

Not Just Growing, But Growing Faster

In 2016, the U.S. recorded-music business grew 11.7 percent over the year prior, the industry's first double-digit growth in nearly two decades. And while that was a huge milestone for the industry, 2017's 16.5 percent lift means that business is accelerating even further and faster. The RIAA is quick to point out that, even though the $8.7 billion in revenue is the highest mark since 2008, it still represents just 60 percent of the industry's 1999 peak of $14.6 billion (and, as the RIAA also stresses, that doesn't account for inflation). But more money means more investment, more development -- and more risk-taking, all of which are sure to be themes that will run through the next 12 months.

Subscription Supremacy

In 2016, overall streaming revenue from paid and ad-supported services totaled $3.93 billion, or 52.9 percent of total revenue -- surpassing the halfway mark for the first time ever. This year, one of the more eye-popping numbers revealed in the RIAA's report was that that number had leapt to 65 percent, or just shy of two-thirds of total revenue overall. But the most consequential number within total overall streaming is that the revenue generated from paid subscription services like Apple Music, Amazon Unlimited and Spotify Premium -- no doubt boosted by the additions of Pandora Premium and iHeartRadio All Access to the field -- totaled $4.1 billion, or 47 percent of all revenue on its own, with ad-supported streaming brought in $659 million. Even with a significant 34.6 percent bump in revenue over 2016, ad-supported streaming lags far behind in its share of the revenue pie.

Are Physical Sales Stabilizing?

At this point the general trends of the RIAA year-end report are fairly predictable: streaming will gain, downloads and physical sales will fall, with the intrigue arriving in just how far in each direction the formats will move. But after revenue declines of 10.1 percent in 2015 and 15.7 percent in 2016, total physical revenues fell by just $56.8 million in 2017 to $1.5 billion, a decline of 3.7 percent. A one-off anomaly, or a sign that physical formats may be settling out after such steep drops?

Reports of Vinyl's Peak Have Been Exaggerated

The "vinyl revival" has been one of the industry's favorite underdog storylines of the past decade, after the format averaged 38 percent growth from 2012 to 2015. But after growing just 3.7 percent in 2016, there were signs that the revival was stuttering into a more even lane, and may be nearing its peak. Yet in 2017, the numbers perked back up again, as revenues from LPs got a 10 percent boost over the year prior, to $395 million. It's not the type of roaring growth that it was, but it's heading back in the right direction, with many fans still seemingly bent on having that physical piece of art to call their own.

How Long Can the Digital Downloads Hang On?

Speaking of, what does that mean for digital single and album downloads? After dropping 10.4 percent in 2015 and 21.6 percent in 2016, digital download revenue was cut in a quarter in 2017, dropping 24.7 percent and bringing in less revenue ($1.3 billion) than physical formats ($1.5 billion) for the first time since 2011. Will the long-gestating (and frequently-denied) rumors of Apple's iTunes Store shutdown finally come true? And with the average number of paid streaming subscribers rocketing 56 percent from 22.7 million in 2016 to 35.3 million in 2017, is there room for the simple mp3 to hang in there much longer?