Tuesday, March 2, 2021

US recorded music market grew 9.2% to $12.2bn in 2020

By Emmanuel Legrand

Despite the Covid-19 pandemic, which affected the music industry significantly through tour cancellations, retail store closures, and other disruptions, recorded music revenues in the United States grew 9.2% in 2020 to $12.2 billion at estimated retail value, marking the fifth consecutive year of growth for the sector, according to figures released by the Recording Industry Association of America (RIAA). Revenues from recorded music measured at wholesale value grew 8.9% to $8.0bn.




  The growth engine for the industry was streaming, and more specifically paid subscriptions to streaming services. The number of paid subscriptions to on-demand streaming services grew by 15 million from 60.4 million in 2019 to 75.5 million in 2020, the biggest ever increase in a single year.


  For RIAA Chairman and CEO Mitch Glazier, the strong growth in streaming reflects "music’s role in the broader online ecosystem as a key engine fueling tech platforms, online services, and apps." He also believes that the continuing shift to paid subscriptions reflects "the value that fans put on music and their willingness to sign up and pay for listening."

A paradigm shift

  In a blogpost, Glazier added: "Combined, paid streaming services added more US subscriptions in 2020 than in any previous year. That paradigm shift explains why record companies today are so determined and vigilant in fighting to ensure that the platforms that use music (and profit from its use) take a license and pay for it — standing up for a core first principle that creators should be fairly paid everywhere their work is used and reflecting consumers’ fundamental agreement with that principle."

  However, while rejoicing that the music industry captured revenues from Facebook as well as fitness apps like Peloton, Glazier noted that "ongoing holdout services — like Triller and Twitter— show just how hard some platforms will resist paying for the music that powers their own success. But record companies won’t stop fighting for the value of music and the people who create it."

  Revenues from streaming grew by over 13% to $10.1bn in 2020, accounting for 83% of total recorded music revenues in the US for the year. This category includes paid subscription services like SpotifyApple Music, and Amazon Music Unlimited, ad-supported on-demand services such as VevoYouTube and the free version of Spotify, and digital and customised digital radio like PandoraSiriusXM, and other Internet radio services.

Paid subscriptions revenues up 15%

  The RIAA said that for the first time, the streaming category includes music license revenues from Facebook and streaming fitness services (included for 2019 data as well).



  Revenues from paid subscriptions grew 15% to $7.7bn, accounting for almost two thirds of total recorded music revenues. In 2020, full service paid subscriptions grew 14.6% to $7.0bn. Additionally, limited tier paid subscriptions (described by the RIAA as "services limited by factors such as mobile access, catalogue availability, product features or device restrictions") grew 13.4% to $724m.

  Services like Amazon PrimePandora Plus, music licenses for streaming fitness services, and other subscriptions are included in this category. Combined, total paid subscriptions accounted for 64% of total revenues at estimated retail value.

Slower advertising growth

  The Covid-19 crisis did impact advertising revenue growth from ad-supported on-demand services (such as YouTube, the free version of Spotify, and Facebook), whose revenues grew 16.8% annually to $1.2bn in 2020, compared with an average of nearly 30% growth rate in the 3 years prior. These revenues only contributed 9.7% of total revenues.

  Revenues from digital and customised radio services (collected and distributed by neighbouring rights society SoundExchange from services like SiriusXM and Internet radio stations such as iHeartRadio, as well as direct payments by similar services) grew 3.9% to $1.2bn in 2020. Overall, SoundExchange distributions of $947m were up 4.3% versus year-on-year, while other ad-supported streaming revenues of $211m were up 1.9%.

  "Paid subscriptions to on-demand streaming services have contributed the majority of recorded music revenues each year since 2018," noted Joshua Friedlander, RIAA's Senior Vice President, Research and Economics. 

Vinyl outsells CDs

  Aside from revenues from streaming, accounting for 83% of the total, physical sales made for 9% of revenues, digital downloads 6% and syncs 2%.
  
  Revenues from digitally downloaded music were down 18% to $674m in 2020, with permanent downloads of albums down 13% in value to $320m, and individual track sales down 23% to $313m in 2020. 

The road to recovery

  Physical sales have continued their decline, down 0.5% to $1.1bn, but the drop was mitigated by a strong performance from vinyl sales, up 28.7% by value year-over-year to $626m 95.2% of total revenues), while revenues from CDs were down 23% to $483m. For the first time since 1986, revenues from vinyl records were higher than from CDs. Sync royalties were down 5.6% year-on-year to $265.2m.

  Reflecting on the Covid pandemic and its effect on the music community, Glazier said there's still "a long way to go before we reach the far side of the Covid-19 calamity. As a music industry — as a united community — the work of recovery, rebuilding, and relief must and will continue."

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.