Americans purchased how many new records in 2021? 40 million records totaling over $1 Billion in sales! That’s the highest revenues from vinyl sales in 36 years (non-inflation adjusted).
CD sales also rebounded for the first time in almost a decade proving what we’ve been saying for a very long time — consumers value the concept of “ownership” when it comes to their music collections.
Whether you listen on your smartphone, car, or home audio system, music is an integral part of our lives. It provides us with entertainment, we mark historical dates with it, sets a mood, and it often becomes a part of how we feel about ourselves and the world.
However, as important as music is on an artistic and emotional level, it’s also a business. This means that how much money music makes contributes to how we listen when we listen, and who we listen to.
RIAA 2021 Music Revenue Report Highlights
According to an annual report published by the RIAA (Recording Industry Association of America), U.S. retail revenue generated by recorded music grew an impressive 23% to $15 billion in 2021. Revenue from major digital and physical formats grew over 2020, with the curious exception of digital downloads.
Streaming
Streaming Music revenue grew 24% in 2021 to $12.4 billion (83% of total revenue music revenue).
The streaming category includes:
- Paid Subscription Services
- Ad-supported Free Services
- Digital and Customized Radio
- Licenses paid for the use of music on Facebook and Digital Fitness Apps. Also, for the first time, U.S. TikTok revenue is included.
Paid Subscriptions: These music streaming services grew 23% to $9.5 billion in 2021. This is about two-thirds of total music revenue, and 76% of streaming revenues.
Services like Amazon Prime, Pandora Plus, music licenses for music used in digital fitness apps, and other subscriptions are included in this category. In addition, limited-tier subscriptions (services limited by factors such as mobile access, catalog availability, product features, or device restrictions), are also included. This segment generated $907 million in revenue for 2021 which is 26% higher than for 2020.
Ad-supported Free Services: These services include on-demand streaming (YouTube, the ad-supported version of Spotify, Facebook, and TikTok) grew 47% in 2021 to $1.8 billion, compared with 18% growth and $1.2 billion in revenue in 2020.
Digital and Customized Radio: Revenue from digital and customized radio grew 4% to $1.2 billion in 2021. This category includes services such as SoundExchange which collects payments from SiriusXM and Internet radio stations, as well as payments directly paid by similar services labeled as “other ad-supported streaming”. Soundxchange then distributes digital performance royalties to recording artists and master rights owners’ accounts. SoundExchange distributions grew 5% to $993 million in 2021, while other ad-supported streaming revenues were down 1% to $209 million.
Digital Downloads
Despite increases in music streaming, digital download revenue decreased in 2021. The amount of the decrease was 12% to $587 million. In addition, digital album sales were down 12% to $282 million and individual track downloads decreased 15% to $256 million.
In total, digital downloads only accounted for 4% of recorded music revenue. For additional perspective, back in 2012, digital downloads accounted for 43% of recorded music revenues. This is definitely an indicator that streaming is much more popular with music listeners than digital downloads.
Physical Media
Revenue from CDs and Vinyl records both increased in 2021. This is the first year since 1996 that revenue from both CDs and Vinyl Records increased at the same time.
That being said, vinyl record sales increased for the 15th year in a row. For 2021, that increase amounted to 61% to $1 billion dollars. The last time records have seen that revenue level was in 1986.
After several years of decline CD sales grew 21% percent to $584 million. The last time CDs saw a year-over-year revenue increase was in 2004.
However, it is interesting that revenue from analog vinyl records is about double that of CDs. We remember the days when the CD was supposedly going to put an end to vinyl records.
Some Observations
It’s obvious that the music streaming juggernaut continues, but it’s also interesting that in addition to vinyl, there are indications that CDs may be starting a comeback. However, another physical media option: Audio Cassettes are not mentioned in this report.
According the chart above, the music industry has achieved its highest revenues ever, totaling $15 Billion (non-inflation adjusted). An accomplishment 23 years in the making after the Naspter debacle set the industry into a tail spin.
Check out our related articles:
Physical Media Sales are Booming: Ownership!
If you want to dig deeper into the above numbers in the report, you can check out the Official Year-End 2021 RIAA Revenue Statistics as well as commentary by Mitch Glazier, Chairman, and CEO of the RIAA.
Also, for a look at historical recorded music trends by format, check out the RIAA U.S. Sales Database.
