The music industry in the United States has been humming a happy tune in H1 2023, according to the Recording Industry Association of America (RIAA). In their Mid-Year 2023 Report, the RIAA reveals that the US recorded music industry raked in a whopping $8.4 billion in gross revenues during the first half of this year.
This figure, reported on a retail basis (money spent on streaming subscriptions, physical and digital music), marks a substantial 9.3% year-on-year growth. Looking at the wholesale perspective (money flowing back to record labels, distributors, and artists), the industry generated $5.3 billion in H1 2023, representing an 8.3% YoY increase.
Streaming services emerged as the frontrunner in this musical race, contributing significantly to the retail revenue tally. In H1 2023, streaming revenues shot up by 10.3% YoY, equating to a cool $7 billion, making up a substantial 84% of total recorded music revenues in the US.
Paid Subscription Services Leading the Charge
Within the streaming arena, paid subscription services were the stars. Revenues from these services surged by 11% YoY, reaching $5.5 billion in H1 2023. This accounts for nearly two-thirds of the US music industry’s total revenues in the period and over three-quarters of streaming revenues.
However, not all aspects of streaming experienced such robust growth. Revenues from ad-supported music streaming services grew at a slower rate, crawling up just 0.6% YoY to $870 million in H1.
The number of paid subscriptions to on-demand music services continued to grow, although at a more sluggish pace compared to previous years. In H1 2023, the average number of subscriptions was 95.8 million, up by 5.8 million compared to H1 2022, which had 90 million subscriptions. This deceleration in growth has been a multi-year trend.
Possible Saturation Looming
The apparent slowdown in new subscription accounts in the US could suggest that the market is inching closer to streaming subscription saturation, especially given the consistent price increases implemented by major music streaming services. Apple Music, Amazon Music, and Spotify have all raised their subscription prices, a move that might have contributed to the acceleration in revenue generated from streaming in H1 versus the deceleration in the growth of paid subscriptions.
Nonetheless, this shift might signal that maintaining and increasing subscription prices is vital for sustaining growth in the coming years, particularly if the trend of slowing subscription account growth continues.
Physical Formats Still Holding Ground
Surprisingly, physical music formats, including vinyl LPs and CDs, also had a moment in H1 2023. Revenues from these formats reached $882 million in the US, marking a 5% YoY increase.
Vinyl records, in particular, saw a 1% YoY growth, accounting for 72% of physical format revenues at $632.4 million. Notably, despite the modest revenue increase, the number of vinyl records sold in H1 2023 was slightly lower than in H1 2022, suggesting that vinyl prices are on the rise.
Mitch Glazier, Chairman & CEO of the RIAA, celebrated these results, calling the music ecosystem “thriving” and “growing,” shaping culture and marking the dedication of all the industry players, from artists to labels to streaming services, in creating this harmonious symphony.
In summary, while the pace of paid streaming subscription growth in the US may be slowing, the music industry as a whole is far from hitting a sour note. With various revenue streams still thriving, it continues to evolve and adapt to the changing dynamics of the digital music landscape.