The Recording Industry Association of America, which tracks U.S. music revenue, announced on Thursday that 2018 ended with 50.2 mn paid music subscriptions, up from 35.3 mn in 2017, a 42 percent increase.
According to the RIAA report, the U.S. music industry grew 11.9 percent to $9.846 bn in 2018 from the $8.797 bn in 2017, thanks to continuing explosive growth from streaming, which jumped 30.1 percent to $7.37 bn from the prior year’s total of $5.66 bn.
This marks the third consecutive year of double-digit growth for the industry, as music sales were up 16.5 percent in 2017 and 11.4 percent in 2016.
“Tremendous output from the artist community fueled a historic milestone of 50 mn subscriptions to music services, which in turn helped drive U.S. music’s third consecutive year of double-digit growth,” RIAA Chairman and CEO Mitch Glazier said in a statement.
Trailing in revenue growth, on-demand ad-supported streaming i.e. YouTube and Spotify only grew 15.3 percent to $759.5 mnfrom the prior year’s total of $658.6 mn. According to the RIAA, even though these services account for one-third of streams they only contribute 8% of total revenue.
Downloads fell 26 percent to $1.04 bn from the prior year’s total of $1.4 bn, with track downloads leading the decline falling to 400 mn downloads, and $490.4 mn in revenue from 553.5 mn downloads and $678.5 mn in the prior year; with both being down about 27.8 percent. Album downloads also declined to just under 50 mn units from 66.4 mn in the prior year, which means that revenue dropped to about $500 mn from $668.5 mn, about a 25.2 percent decrease for units and dollars.
Overall, net CD sales totaled 52 mn units, down a whopping 40.7 percent from the 87.7 mn in the prior year. While actual CD sales at the store level may have been larger than what RIAA shows, when returns are taken into account, it magnifies the format’s decline. Revenue wise, CD sales fell to just under $700 mn from nearly $1.06 bn in the prior year, a 33.9 percent decline.
Meanwhile, vinyl enjoyed 7.2 percent in growth to 16.7 mn units, up from 15.6 mn unit in the prior year, while corresponding revenue grew to $419.2 mn from $388.5 mn, a 7.9 percent increase.
Overall U.S. recorded music revenue now breaks out to 85.4 percent digital while physical is 11.7 percent and synchronization at 2.9 percent. That compares with 2017 when digital was 80.4 percent, physical was 17 percent and synch had the remaining 2.6 percent.
Surprisingly, even though the physical format is declining, the average list price is increasing. Last year, the average CD carried a list price of $13.43, up from the average 2017 list price of $12.06. Likewise, vinyl’s price also increased to $25.10 from the prior year average of $24.90 per long player.
The RIAA numbers represent U.S. recorded music revenue at retail, not the actual amount taken in by labels. According to the RIAA, wholesale revenue, the amount collected by record labels, grew to $6.6 bn last year a 12 percent increase from the prior year’s total of $5.9 bn.
Within streaming, on-demand models dominated revenue contributing nearly $6.163 bn, a 29.7 percent increase over the prior year’s total of $4.751 bn in the prior year; while programmed streaming and satellite broadcasts totaled $1.204 bn, up 28.9 percent from $934 mn in the prior year. These totals include SoundExchange distributions as designated in the RIAA press release, as well as direct payments to labels from services like Pandora.