The overall economic data provided by the RIAA's year-end report "reflects this core truth -- showing that even in a deeply disrupted and challenging year, the sustaining and uplifting power of music still found ways to draw in fans and provide an economic lifeline for artists and songwriters when they needed it most," RIAA chairman and CEO Mitch Glazier wrote in a note, accompanying the release.
Streaming With Pride
Looking within streaming on a revenue basis, paid subscription revenue grew at a 14.6% clip to $7 billion, up from 2019’s $6.12 billion, while limited-tier paid services, like Amazon Prime and Pandora Plus, grew 13.4% to $723.6 million from 2019’s $638.2 million.
Meanwhile, ad-supported streaming, such as Youtube and Spotify’s free tier, totaled $1.18 billion, up 16.8% from the prior year’s $1.01 billion.
SoundExchange revenue -- from programmed streaming services like Pandora and iHeartRadio -- grew 4.3% to $947.4 million from $908.2 million.
Other ad-supported streaming services increased as well, but at a slower rate, increasing 1.9% to $211.2 million in 2020 from the prior year’s total of $207.3 million. (Other ad-supported streaming is described in a footnote as revenue from statutory services that are not paid out by SoundExchange, which likely covers direct payments to labels with direct deals; and streaming revenue not included in other categories.)
Separate from the revenue derived from U.S. consumers, when the music industry as a whole is looked at, including recording artists, touring, concert venues, and people working at digital services and retail stores, the RIAA estimates that the U.S. music industry contributes $170 billion toward the country's gross domestic product, supporting 2.5 million jobs, Glazier wrote in the accompanying note.
Downloads and physical sales revenue declined 7.8% to $1.81 billion from 2019’s revenue of $1.96 billion. As a percentage of revenue, those sales generated 15.3% of total U.S. revenue in 2020 -- down from the prior year’s contribution of 16.0% of U.S. revenue.
On a percentage basis, vinyl posted the biggest increase last year across all formats, growing 29.2% on a revenue basis to $619.6 million, from the prior year’s total of $479.5 million. While units grew 23.8% to 22.9 million copies from 18.5 million copies in 2019, another component of the format's revenue growth is the increase of list prices to an average of $27.06 per copy versus $25.92 per copy in 2019, or a $1.14 increase per unit.
CD volume fell a whopping 23.4% to $483.3 million from $630.7 million, even though the average list price grew $2 to $15.29 from $13.28. Of course, the 33.5% unit downturn to 31.6 million copies from 47.5 million copies more than offset the increase in average list price. Stores wrestled all year with government-mandated closures and store traffic counts, but online CD sales had a slight pickup, according to other data.
Overall, physical formats combined produced $1.139 billion in U.S. revenue, only down slightly from the prior year’s $1.14 billion, or a 0.5% decrease, thanks to increasing vinyl sales and rising vinyl and CD list prices. As a percentage of revenue, physical accounted for 9.4% in 2020, versus 10.3% in 2019.
Downloads Way Down
Like the CD, downloads also had a big decline, accounting for $674.4 million in 2020, an 18.0% decrease from the prior year’s total of $822.8 million. As a percentage of revenue, downloads -- which includes ringtones, kiosk on-demand CDs and other digital -- totaled 5.55% of overall U.S. revenue versus 7.4% in 2019.
Within that, track downloads had the biggest decline of 23.4% to $312.8 million from 2019’s $408.4 million, while album downloads fell 13.4% to $319.5 million from 2019’s $368.8 million.
When streaming revenue and download revenue are combined, digital totals $10.75 billion, nearly a 10.8% increase from the prior year’s total of $9.7 billion. As a percentage of overall U.S. revenue digital stood at 88.5% for 2020, versus 87.2% in 2019. The average retail price also declined slightly, down 2 cents on downloads to $1.22. and 18 cents on albums to $9.65.
Finally, the RIAA reported that synchronization fell 5.7% to $265.2 million from $281.1 million in 2019, likely due to the pandemic’s shutdown of movie and television production. As a percentage of revenue, that means synchronization accounted for 2.2% of U.S. revenue in 2020 versus 2.5% in 2019.
The RIAA calculates revenue based on sales reports from label and estimates for non-reporting labels, and then extrapolates wholesale revenue out to retail revenue, i.e. how much the consumer is spending. In addition, 2019’s revenue numbers may not match what was in fact reported last year, due to the RIAA updating its information when the labels provide updated numbers to them, subsequent to the release of their revenue report.
In any event, based on the RIAA's estimated consumer spending on music for 2020, RIAA senior vp research and economics Josh Friedlander estimated wholesale U.S. revenue came in at $8 billion, an 8% increase over the prior year, when it totaled $7.4 billion.