Vinyl and the Virus: Four Takeaways From the RIAA's 2020 Mid-Year Report

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The RIAA released its 2020 mid-year report on the state of the U.S. recorded-music business Thursday (Sept. 10), documenting the first half of an unprecedented year for the modern music industry.

With the COVID-19 pandemic shutting down much of the United States beginning in mid-March, the report outlines a half-year split between two distinct quarters: that of before the shutdowns, with historic growth continuing on the previous pace set over the past several years; and that of pandemic America, where retail was largely suspended, touring and live events ground to a halt and music consumers, not to mention everyday Americans, began to settle in to a new kind of normal.

Despite that, the recorded-music business managed to continue to grow, up 5.6% over the first half of 2019 to $5.7 billion at the mid-way point of this year, continuing the positive trend of the past five years. Digging deeper into the numbers, here are four takeaways from the RIAA’s report:

1. Vinyl Outpaced CDs For the First Time in Over 30 Years

It has been our favorite thing to watch over the past several years and now it has finally happened, at least at the half-year mark: vinyl sales revenue overtook CD sales revenue for the first time since 1986. In the first half of 2020, vinyl sales accounted for $232.1 million, up 3.6% year over year, which far outstripped the $129.9 million generated from CD sales during the period. Physical retail was affected most by the pandemic, but even still, vinyl sales accounted for 62% of physical, up from 46% at the mid-way point last year, even as the number of CDs sold (10.6 million) still outpaced the number of vinyl records (8.8 million). It finally happened (in terms of revenue)!

2. CD Declines Mean Last Year Was a Blip

At the mid-way point last year, one of the big surprises was that CD shipments and revenue were both essentially flat year over year, with revenue even managing to increase 0.8% to $247.9 million. But those numbers now appear to have marked a one-year blip on the radar amidst the broader decline, as both shipments (down 45.2%) and revenues (down 47.6%) fell off a cliff once more, returning to the rates of decline seen in years prior to 2019. The pandemic surely had plenty to do with the format’s decline this year, but it seems that any thought that CDs had reached their bottoming-out point last year have been dashed, much to the chagrin of those who still love their boomboxes. On another note, digital download sales slipped again, down 18% to $164 million. If bundling can’t save the download, maybe nothing can.

3. Pandemic Guts Ad-Supported On-Demand Revenue Growth

Over the past few years, ad-supported on-demand streaming revenues have grown by leaps annually: up 37.1% at mid-year 2017; up 21.4% at the mid-year mark in 2018; up 24.6% at the mid-year point in 2019. At the mid-year mark of 2020, that revenue stream grew just 2.7%, to just $421 million against the $410 million at the same time last year. That’s not the biggest amount of money to the business, of course — just 7% of all revenues for the first half of the year — but it was a reliable big-figure growth metric for years, and one that was set to continue to grow as more resources were dedicate to maximizing advertising-based revenue on streaming services like YouTube. But, as the report pointed out, it was one sector that took the biggest hit from the pandemic, as Q1 figures pointed to a continuation of that massive year-over-year percentage growth only for advertising cuts caused by the nationwide shutdowns to wipe out most of those gains in Q2.

It’s worth watching this sector for the rest of the year to see what kind of recovery is possible for the second half of 2020.

4. How Much Can You Read Into Numbers?

The RIAA pointed out some key figures that changed dramatically between Q1 and Q2 and accounted for some momentum discrepancies for the first half of 2020 compared to previous years. But it’s still not easy to tell just how much the pandemic affected the recorded-music business, beyond a few top-level numbers. For example, paid subscription revenue grew by about $400 million in the first half of this year compared to the same period in 2019, while in previous years the number was around $600 million.

Is this a product of discounting or bundling, of a possible subscription revenue ceiling approaching, or simply the pandemic forcing some households to divert income away from paid subscriptions and towards more basic and elementary needs? And the report noted that paid subscriptions rose faster in Q2 than they did in Q1, suggesting that more people signed up during the pandemic than had been prior to lockdowns setting in. Is that conversions from ad-supported users, or new users altogether? What was the discrepancy in the number of subscribers between the two quarters? And, again, how much can you read into those figures without simply asking more questions than we’re posing here?

Here again, the RIAA’s year-end report will presumably provide some fascinating answers as the rest of 2020 plays out. But there’s plenty to keep an eye on as the full scale of the pandemic continues to impose itself on the music business, without a real end in sight.

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