The RIAA released its 2019 year-end revenue numbers for the U.S. recorded-music business Tuesday (Feb. 25) and for the fourth straight year it was full of great news in the form of double-digit percent increases and a wealth of money coming in from paid streaming.
The U.S. recorded music business generated $11.1 billion in revenue in 2019, according to the RIAA’s annual year-end report, a 13% year-over-year increase from the $9.8 billion it reached in 2018.
But within those numbers are a few hidden gems that can be highlighted as trends to keep an eye on. Here are four key takeaways:
1. Streaming growth rate is falling
Revenue from streaming reached $8.8 billion in 2019, larger than the entire amount of revenue generated by the U.S. recorded-music business in 2017, just two years prior. But the rate of that growth dropped again, from 68.5% in 2016 to 43% in 2017 to 30.1% in 2018 to 19.9% in 2019. In absolute numbers, it’s a different story, as the revenue growth generated has been fairly steady: a jump of $1.6 billion in 2016, $1.7 billion in 2017 and $1.71 billion in 2018. But 2019’s jump was just $1.43 billion, suggesting that revenue growth may finally be tapering off a bit — we emphasize a bit, of course, as it’s still nearly a billion and a half dollars more than the year prior. But a curve in the graph is beginning to emerge as streaming continues to climb.
2. Subscribers up, paid subscription revenue up, but…
The RIAA significantly altered its number of paid subscribers for 2018 from last year’s report — it regularly updates its numbers from year to year as more information becomes available — dropping it to 46.9 million subscriptions from its initial 50.2 million figure. This year, it calculated the number of paid subs at 60.4 million, up 28.7% (and 13.5 million) over last year’s adjusted figures, while 2019’s $5.93 billion in revenue from paid subscriptions (subtracting the $829.5 million from limited-tier subs) is up 27.5% from the $4.66 billion (again, subtracting limited-tier subs) calculated in the prior year. That means the two are growing in near-lockstep — but that slight discrepancy in growth accounts for a $1-per-subscriber change in revenue generated, from $99.28 in 2018 to $98.25 in 2019. Those additional 13.5 million subscribers are bringing in around $94.67 per sub, in other words, meaning that there seems to be a significant amount of discounting bringing in those new streamers. The discrepancies aren’t huge yet, but it’s worth watching.
3. Digital downloads dip below ad-supported streaming
It’s no surprise that digital downloads of tracks and albums are drying up — they’ve been dropping faster than CD sales for a few years now, even as they still collectively bring in more than CD sales revenue in 2019. But for the first time since 2006, digital sales revenue dropped below the $1 billion mark, to $856 million — and it also fell below the the $908 million generated by ad-supported on-demand streaming from the likes of YouTube’s and Spotify’s free tiers, which is now likely to crack the $1 billion mark in 2020. They’re both in single digit percentages in terms of overall revenue — 7.3% for digital downloads and 8% for ad-supported on-demand streams — yet are headed quickly in opposite directions. Still, the RIAA pointed out that 500 billion of the 1.5 trillion on-demand streams in 2019 came from ad-supported services, meaning that 33.3% of total streams accounted for just 10.3% of total streaming revenue. And that mark hasn’t changed year-over-year at all.
It’s our favorite thing to point out every single time these reports are released. For the first time since 2004 (when the RIAA started tracking download singles and albums), vinyl revenue has surpassed that of album downloads and digital track downloads, with its $504 million representing its largest revenue total since 1988 and its 14th straight year of growth. Not only that, its rate of growth is accelerating even as its baseline revenue increases, too — its 19% growth in 2019 is more than double the 8% it grew in 2018, an impressive feat. So let’s do the math: If CD sales revenue declines at the same 12% rate in 2020 that it fell in 2019, and even if we assume that vinyl’s 19% growth rate was an anomaly and in 2020 its rate reverts to the 8% growth it saw in 2018, then vinyl sales revenue could pass CD sales revenue in 2020 for the first time since 1986. It’s possible and it could be right around the corner.