Streaming Growth (to a Point), Vinyl's Victory & More: Four Takeaways From the RIAA's 2019 Mid-Year Report

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The U.S. recorded music industry is still seeing strong double-digit growth, up 18% over the first six months of 2019, according to the Recording Industry Association of America's (RIAA) mid-year report published Thursday (Sept. 5). 

That continues an upward trend sparked in 2016 led increasingly by streaming's dominance, now accounting for 80% of total $5.4 billion revenues at retail. 

The report showed growth across all streaming revenues -- paid subscriptions up 31% year-over-year, advertising-supported on-demand up 25% and digital and customized radio up 5% -- while digital sales continued to decline and physical sales remarkably improved (on a net basis). 

Here are four more takeaways from the report.

1. Is subscription growth leveling off? It's still too soon to tell.

Music industry analysts have been watching for signs the streaming boom is slowing towards a seemingly inevitable plateau. So are we getting there? Some signs suggest yes, but it's probably too early to make that call. While overall streaming revenues grew 26% year-over-year to $4.3 billion, total subscribers were up just 14.2 million. That's a 30.4% increase year-over-year from 46.9 million at 1H 2018 to 61.1 million at 1H 2019, and while it's nothing to scoff at, it's also a good deal less than the 26.4 million added between the 2017 and 2018 halfway points. This latest report also marks the first time U.S. paid streaming subscribers figures haven't doubled in the past three years, following 129% year-over-year growth at the same time last year and 125% growth at 2017's mid-year point. 

One should note any expectation of doubling 46.9 million subscribers in a year is unrealistic, but that's the point: As the total number of subscribers continues to grow, expect to see decreased growth. Just how drastic that decrease will be, it's too soon to say for certain.

2. Paid subscribers and subscription revenue are rising in lockstep.

Paid subscriptions on services such as Spotify and Apple Music (not counting ad-supported or limited-tier offerings) amounted to roughly half of streaming revenues overall -- $2.9 billion out of $4.3 billion total. That compares to $2.2 billion at the same point last year, marking 30% year-over-year growth using non-rounded figures. That percentage almost perfectly matches the 30.4% year-over-year growth in paid subscribers. While many in the industry have complained that ploys by Spotify and others to attract more subscribers at lower rates with family and student plans are decreasing the average revenue per user, this lockstep growth suggests relative ARPU stabilization. 

3. CD revenue is flat, meaning it's actually not declining for once. 

At this point last year, CD shipments were down 46.9% and sales were down 41.5% year-over-year -- further continuing the format's decline since it peaked in 2000. But now those figures are both pretty much flat with 18.6 million units shipped for $247.9 million in revenue, marking 0% and .8% increases respectively. These totals are a far cry from the $13.2 billion ($18.8 billion adjusting for inflation) CDs earned nearly two decades ago, but just finding a baseline -- however low it may be -- seems like a bright side for the format. 

4. Vinyl record sales keeps growing at a steady rate (and are catching up with CD revenues).

Often maligned as niche, vinyl records may soon become the U.S. music industry's most lucrative physical format. At 2019's midpoint, vinyl record sales grew 12.9% year-over-year -- narrowly besting last year's 12.8% revenue growth at the midyear. Now, with $224.1 million earned, if vinyl records can match that again (or come close with, say, just 11% growth) the format is on pace to top CD sales for the first time since 1986, provided CD sales remain flat. What's more, it will do so with roughly half the units shipped: Over the first six months of 2019, 8.6 million vinyl units were shipped, amounting to a $26.1 average unit revenue -- almost double CDs' $13.3 average. 


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