In a resounding declaration of the music industry’s vitality, the US recorded music sector surged, generating a staggering $8.4 billion in gross revenues during the first half of 2023. This robust performance is the standout statistic in the Recording Industry Association of America’s (RIAA) Mid-Year 2023 Report, underscoring the industry’s enduring resilience and growth.
Retail Revenue Surge
The RIAA’s report, released on September 18, revealed that recorded music revenues in the US, which encompass streaming subscriptions, physical music sales, and digital music, experienced a remarkable 9.3% year-on-year growth. This translates to a $600 million increase in revenue, reflecting a thriving market.
Wholesale Basis Success
When examining the revenues that flow back to record labels, distributors, and ultimately artists (wholesale basis), the US recorded music industry still impressed. It generated $5.3 billion in the first half of 2023, marking an impressive 8.3% year-on-year growth.
Streaming Dominance
Streaming, the powerhouse of the modern music industry, played a pivotal role in this success story. Revenues from streaming services surged by 10.3% year-on-year, reaching a staggering $7 billion. Notably, streaming contributed a significant 84% of the total recorded music revenues in the US for the first half of 2023.
This upward trajectory in streaming revenues demonstrates a remarkable acceleration compared to H1 2022, when total streaming revenues reached $6.4 billion, growing by $500 million year-on-year.
Paid Subscriptions Steal the Spotlight
Within the streaming realm, paid subscription services took center stage. Revenues from these services, including both full-premium and ‘limited-tier’ subscriptions, soared by 11% year-on-year, reaching $5.5 billion in H1 2023. This category accounted for nearly two-thirds of the US industry’s total revenues during this period and over three-quarters of total streaming revenues.
However, it’s worth noting that ad-supported music streaming services experienced a significantly slower growth rate compared to their subscription-based counterparts. Revenues from on-demand services like YouTube, the ad-supported version of Spotify, Facebook, and others grew by a modest 0.6% year-on-year to $870 million in H1.
Subscription Growth Decelerates
Despite the growth in paid subscriptions, the pace of expansion slowed in comparison to previous years. The average number of subscriptions for the first six months of 2023 was approximately 95.8 million, a year-on-year increase of 5.8 million. This contrasts with 90 million in H1 2022.
Trend of Slowing Subscription Growth
The data reveals a multi-year trend of declining growth in paid subscriptions. In H1 2020, subscriptions grew by 14.4 million year-on-year, reaching 72.6 million. This was followed by H1 2021, which saw 9.4 million new subscriptions, totaling 82 million. In H1 2022, 8 million new subscriptions pushed the total to 90 million. Now, in H1 2023, 5.8 million new subscriptions have brought the count to 95.8 million.
Factors Behind the Slowdown
The slowdown in subscription growth is potentially related to price increases implemented by major music streaming services in the first half of the year. Apple Music and Amazon Music raised their standard monthly subscription prices, while Spotify increased its Premium subscription to $10.99 in July.
While growth in new subscriptions eased in H1 2023, existing subscription accounts were paying more, likely due to these price hikes. However, this slowdown suggests the US music streaming market could be approaching saturation.
Embracing Recurring Price Increases
As the industry grapples with this trend, recurring price increases, advocated by many industry leaders, may become crucial in the coming years to sustain growth.
Beyond streaming, physical music formats, including vinyl LPs and CDs, saw revenues climb to $882 million in H1 2023, marking a 5% year-on-year increase. Vinyl records, in particular, contributed significantly to this segment, with revenues growing by 1% year-on-year to $632.4 million, representing 72% of physical format revenues.
Despite a modest revenue increase, it’s worth noting that fewer units of vinyl records were sold in H1 2023 compared to H1 2022. This suggests that vinyl prices are on the rise.
A Thriving Music Ecosystem
In conclusion, the RIAA’s Mid-Year 2023 Report paints a vivid picture of a thriving, evolving music ecosystem that continues to reach new heights and influence our culture. It underscores the collaborative efforts of artists, songwriters, labels, publishers, and services that contribute to this flourishing landscape. As Chairman & CEO Mitch Glazier aptly puts it, “This report describes a thriving, growing music ecosystem that continues to reach new heights and shape our culture.” It’s a testament to the enduring power of music in our lives.