As Nielsen Music trickles out their annual music sales figures, the tiny amount spent on digital streaming services and vinyl has been revealed.
Whilst the average music consumer spent $109 on music, only 3% of that was spent on digital streaming services, and 2.5% on vinyl and cassettes. In comparison, 35% was spent on admission to live concerts (this is good for artists) and 12% was spent on CDs.
These stats throw the analysis of last week’s stats out the window. Last week, some suggested the increase in demand for digital steaming services was leading the recovery of record labels. Instead, these figures suggest the turnover generated from digital streaming services is minimal, and record labels are still relying on CD sales for the bulk of their profits.
Turnover is an important figure in the music industry because most of their expenses are upfront and fixed. Whilst the sale of a CD has the added cost of manufacturing, this cost is minimal when compared to the hundreds of thousands of dollars spent on the recording, production and marketing of an album. It is these costs which need to be recouped in order for labels invest in future releases.
With this in mind, whilst much of the press was downplaying the rapid increase in vinyl due to its minimal share of total sales, it would seem vinyl’s contribution to turnover is almost equal to that of digital streaming. This is particularly true when you consider that record labels will only see a faction of an online digital subscription through royalties.
What is interesting is that these two formats sit side-by-side. Whilst one is lauded as the future and the other dismissed as nostalgia, it seems that at this point at least their contribution is the same. And whilst there is little doubt that different types of consumers are attracted to each format, it is perhaps symbolic of the increasingly eclectic nature of music.