In the fast-paced world of the music industry, numbers tell the story. The US recorded music industry, in the first half of 2023, grossed a staggering $8.4 billion in revenue, a headline stat from the Recording Industry Association of America’s (RIAA) Mid-Year 2023 Report. This report, released on September 18, 2023, reveals the thriving state of the industry, with retail-based music revenues (money from streaming subscriptions, physical, and digital music) growing 9.3% year-on-year.
On a wholesale basis, which reflects the money reaching record labels, distributors, and artists, the US recorded music industry generated $5.3 billion in the first half of 2023, an 8.3% year-on-year increase. These numbers, as impressive as they are, tell a more intricate tale of the music industry’s evolution.
The Reign of Streaming
Streaming, the behemoth of modern music consumption, significantly contributed to these numbers. In H1 2023, streaming services’ revenues grew by 10.3% year-on-year, totaling $7 billion, and constituted a staggering 84% of total recorded music revenues in the US. Paid subscription services played a pivotal role, with revenues from this segment increasing by 11% year-on-year to reach $5.5 billion. This accounted for nearly two-thirds of the industry’s total revenues in the period, and over three-quarters of total streaming revenues.
However, ad-supported music streaming services experienced a far slower rate of growth. Revenues from on-demand services like YouTube and the ad-supported version of Spotify grew just 0.6% year-on-year to $870 million in H1.
The Subscription Slowdown
One noticeable trend in the report is the slowdown in the growth of paid subscriptions to on-demand music services in the United States. The number of paid subscriptions increased by 5.8 million year-on-year to reach 95.8 million in H1 2023, compared to 90 million in H1 2022. While still growing, this rate of growth has been steadily declining over the years.
In H1 2020, paid subscriptions grew by 14.4 million year-on-year. In H1 2021, paid subscriptions increased by 9.4 million year-on-year. In H1 2022, paid subscriptions saw an 8.0 million year-on-year growth. H1 2023 witnessed 5.8 million more subscriptions than the previous year. The deceleration of subscription growth is linked to the price hikes initiated by major streaming services. Apple Music, Amazon Music, and Spotify all increased their subscription prices in the first half of the year, a move that will likely have a more substantial impact on the market in H2.
Challenges and Saturation
While growth in new subscriptions has slowed, existing subscribers are paying more, a trend that could continue. However, this slowdown in subscription growth hints at a potential saturation point in the US market. To combat this, recurring price increases, advocated by industry leaders, will become essential to maintaining the industry’s health.
Despite these challenges, other segments like physical music formats, including vinyl LPs and CDs, showed resilience, raking in $882 million in the US, a 5% year-on-year increase. Vinyl records, in particular, grew by 1% year-on-year, totaling $632.4 million and accounting for 72% of physical format revenues.
In conclusion, the RIAA’s mid-year report paints a vibrant picture of the music industry’s present state. It’s a world of evolving streaming dynamics, subscription growth challenges, and resilient physical formats. As Mitch Glazier, RIAA’s Chairman & CEO, aptly put it, it’s a thriving music ecosystem that continues to shape our culture, driven by the tireless efforts of artists, songwriters, labels, and services.