Two of the music industry’s most important barometers of power have been released recently: today the RIAA released its 2022 Year-End Music Industry Revenue Report, and last week Edison Research released the 2023 edition of its Infinite Dial consumer survey. has carried out now for 25 years. Both reports show that the growth the music industry has experienced since the mid-2010s is slowing.
Both of these reports reinforce what we’ve known for the past few years: Recorded music industry revenue—that is, the part of the music industry that includes recordings, as opposed to songwriting and live performances—is now defined by streaming. RIAA figures show that 84% of the industry’s $15.9 billion in total revenue now comes from streaming, down slightly from 83% in 2021. But streaming revenue growth has slowed: Adjusted for inflation, it grew just 7% in 2021, the first time growth has slowed to single digits since the financial crisis of the late 2000s. And the music industry’s overall recorded revenue is up 6.1% from 2021, but all of that growth has been destroyed by the inflation.
Numbers in the Infinite Dial survey similarly reflect a slowdown in growth. Infinite Dial, based on a telephone survey, is done by a research firm known for its rigor and consistency: Edison Research also conducts exit polling for national elections and feeds that data to most of the major television networks . Infinite Dial has been tracking the listening of the major online music services for many years. While the latest edition of the survey shows continued increases in monthly online audio listening—now at 75% of the population, up from 73% last year—it also shows that listening to online music services is now in slight decline, as shown in the figure below. Spotify continues to be the most popular “audio brand on the internet,” and YouTube Music, the paid subscription service YouTube launched in 2018, is not. 2, ahead of competitors like Apple Music and Amazon Music. (Infinite Dial doesn’t track “regular” YouTube music usage.)
Infinite Dial survey data also shows strong listenership growth in podcasts and audiobooks, suggesting that listeners are shifting their attention from music to these types of spoken word media. Monthly audiobook listening is at an all-time high of 53%, up dramatically from 45% last year, while monthly podcast listening is also at an all-time high of 42%, after a drop to 38% last year.
The RIAA’s annual revenue report contains some highlights beyond streaming. One is vinyl. Vinyl continues to grow at a steady pace: revenue topped $1.2 billion last year, up 18% from 2021. Vinyl now has more revenue than CDs and digital downloads combined, accounting for nearly 8% of total industry revenue. However, these numbers do not count used vinyl sales. The industry doesn’t track second-hand physical sales (labels and artists don’t profit from them), but marketplaces like Discogs, eBay and Amazon are likely to pull in hundreds of millions more. In other words, consumer spending on vinyl is a double-digit percentage of total music spending. One could argue that vinyl is the second leg of the recorded music industry, after streaming. Other evidence points to vinyl returning to its original status as the top format for albums.
This chart shows the industry’s inflation-adjusted revenue over the past half-century as tracked by the RIAA. It shows that the current streaming-powered industry has not yet reached the heights of the vinyl- and film-based industry of the 1970s, let alone the CD-based industry of the late 1990s. industry was $24.5 billion in 1999, compared to $15.9 billion in 2022.) If streaming growth continues to decline, then the recorded music industry will reach somewhere near the $17.8 billion cap it has adjusted for inflation during the vinyl and film era. With 75% penetration, streaming should have a few years of growth before the market becomes saturated.
The other notable element in the RIAA’s numbers concerns an “inside” corner of the music industry baseball that could lead to a next wave of revenue growth: sync. Synch (a/k/a synch) refers to the licensing fees producers of video, game, VR/AR, and other media content pay to use music with their content. Video-based services such as YouTube and TikTok, and gaming platforms such as Twitch, must pay for sync licenses to music that appears on them. (Whether the services themselves or their users should be responsible for these rights is a point of contention at the moment.)
The RIAA only started tracking sync revenue for recorded music in recent years, but it’s become important — and it’s the fastest-growing revenue category now. It is certainly the largest non-direct-to-consumer recorded music revenue bucket. Sync licensing brought in $382 million in 2022, up 26% from 2021. At this rate, synch will overtake both CD and download revenue by next year. And it has the potential to continue growing at a healthy rate for a while.
However, whether the industry is well positioned to tap into this potential is an open question. Unlike other parts of the industry, synch has very little in the way of organization or infrastructure: no collective licensing organizations (such as ASCAP or BMI to enforce composition rights), no standard royalty rate, and minimal common practice regarding licensing. It is a highly inefficient market in which each potential sync licensee must negotiate with each rights holder separately. Rights holders—in this case, major record labels—like it because it gives them negotiating leverage with potential licensees and allows them to enter into blanket licensing deals with video, game, and AR/VR services that are confidential. But as more users migrate to these newer platforms and consume music there, labels may realize they can grow sync revenue faster if they make their sync licensing processes scalable.
Synchronization licenses also help increase revenue on the music publishing side of the market, in the songwriter and composition segment. they become relevant whenever a producer of a TV show, TV commercial, movie, etc., uses a cover of a tune instead of the original artist’s recording. The opportunity for increased revenue from song sync licenses is one of the main reasons prices for legacy artists’ song catalogs are being driven into the stratosphere. Whether all of this will add enough revenue to keep the music industry growing beyond streaming is one of the big questions for the next several years.