New RIAA Numbers Show That CDs Are All But Dead And Downloads Are On Life Support

The Recording Industry Association of America (RIAA) just released its midyear compilation of recorded music industry sales data for 2020. Although the numbers follow trends that have existed in the industry for a few years, they hit a couple of important milestones: music downloads now bring in less revenue than physical products, and CDs are all but dead.

CDs represent the most astonishing change since last year. In 1999, at the music industry’s all-time revenue peak, CDs garnered $13 billion in sales, or almost 90% of music industry revenue. As file-sharing began to take its toll on the industry and revenues fell, CDs were the main casualty. Last year CDs only brought in $614 million or 5.5% of total revenue.

CDs’ year-over-year decreases in revenue hovered around the 20% from the mid-2000s until last year. But the downturn from the first half of 2019 to the first half of 2020 was 48%; CD sales were cut almost in half over the last year. CDs brought in only $130 million during the first half of this year; that’s only 2.3% of total industry revenue. CDs are now worth less to the industry than every category of music distribution other than tiny ones like ringtones and music video downloads.

As for paid downloads (mostly iTunes, now part of Apple Music), their decline continues at about the same pace as in the last few years. Downloaded albums and singles are down to $330 million for the first half of 2020; that’s 23% less than last year. Downloads hit their peak in 2012, during the music industry’s worst period since the RIAA started keeping sales records in the early 1970s. It’s clearer now than ever that paid downloads were merely a stopgap between physical products and streaming that did not help the industry recover from the file-sharing era.

Vinyl, on the other hand, appears to have plateaued. Its $232 million in revenue for the first half of this year is 3.6% ahead of last year—keeping up with inflation but slightly behind overall industry revenue growth of 5.6%. Vinyl’s peak relative to total industry revenue came in 2015, when it represented 5.5% of the total; now it’s at 4.1%.

This contrasts with other industry figures about vinyl from Discogs that suggest major growth. Discogs.com is an online database of information about physical recordings (vinyl and CD); its Discogs Marketplace is the largest online seller of vinyl in the world. Record stores and individual collectors buy and sell millions of recordings on the site every year. It overtook eBay as the number one online vinyl seller around 2017.

Last month, Discogs released its own midyear report on the Marketplace, which stated that vinyl sales were up 34% over the same period last year. (The best-selling title? David Bowie’s Ziggy Stardust.) Some in the industry misinterpreted this to mean that vinyl sales in general were up 34%. But that’s not the case. Since the pandemic started, many record stores started listing their inventories for sale on Discogs Marketplace, or listed more items than they had in pre-pandemic times. (Listing albums on Discogs is quite time-consuming due to the site’s rigorous standards for metadata quantity and quality.) And with physical record stores closed or only open in restricted ways, vinyl fans bought more discs online.

Vinyl continues to grow in revenue, but the overall music industry is growing faster. And of course the bulk of that growth is in streaming. Paid subscription streaming services—Spotify Premium, Apple
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Music, Amazon Music Unlimited
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, Napster, Tidal, Deezer, etc.—brought in $3.35 billion in the first half of this year, representing 59% of total revenue. Somewhat surprisingly, free ad-supported interactive streaming—YouTube, Spotify Free—only grew 2.7%, lagging the overall industry as Spotify continues to convert many free listeners to paid and Google’s
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YouTube Music, the successor to Google Play Music, starts to gain traction. Meanwhile, digital radio—Pandora, Sirius XM
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, iHeartRadio—kept pace with overall industry growth.

The overall outlook for the music industry is positive, but the RIAA’s newly released numbers represent a downturn from the previous few years. It’s not possible to compare 2020 with the entirety of previous years yet; the second half of each year is always bigger for the music industry than the first half because of the holiday season. But total revenue for the first half of 2020 is only 5.6% higher than the first half of 2019. That compares with 13% overall growth from 2018 to 2019 and similar growth the year before that. Even though the industry is virtually all digital, the pandemic has had its effect regardless.