Why Vinyl made US$422 million in revenue in 2015, beating ad-based streaming services

“The consumption of music is skyrocketing, but revenues for creators have not kept pace. In 2015, fans listened to hundreds of billions of audio and video music streams through on-demand ad-supported digital services like YouTube, but revenues from such services have been meagre —  far less than other kinds of music services. And the problem is getting worse”

RIAA CEO Cary Sherman statement following the company’s release of the 2015 numbers

Jamaican artiste, Music is slowly dying. Cause of death; ad-based streaming services. On the plus side, now is a good time to press your album as a vinyl record.

According to the RIAA (Recording Industry Association of America), vinyl sales generated more revenue than all on-demand streaming services in 2015 as reported in the article “Vinyl Sales Eclipsed Every Ad­based Streamer In 2015”, published March 23, 2016 by Parker Hall, Digitaltrends.

The RIAA stats make this glaring obvious:

1.      17 million vinyl copies sold

2.      US$422 million in revenue from vinyl sales

3.      US$385 million in sales from ad-based streaming services e.g. YouTube, Spotify, VEVO and Soundcloud

Streaming has been on the rise as Physical Digital Music Purchases and Digital Downloading took a nosedive in 2014 as noted in my blog article entitled “RIAA says Streaming beating CD Sales  - Why HD Audio Physical Digital Music comeback progresses as Piracy is the Problem”.

However both platforms have enjoyed growth when 2015 revenue figures are compared to 2014 revenue figures year-on-year:

1.      30% increase in ad-based streaming services

2.      32% increase in vinyl sales

However, there is more to the numbers than meets the eye.

Ad-based streaming services vs Vinyl - Broken Music Industry model needs paid streaming

Vinyl is more efficient in generating revenue, bringing in a lot more revenue from fewer people than ad-based streaming services, which is basically free streaming.

In fact, paid streaming is where most streaming services such as YouTube, Spotify, VEVO and Soundcloud make the bulk of their money, averaging some 10 times more revenue than free ad-based streaming.

Ironically, the main purchasers of vinyl records, Millennials, make their purchases only to support the artiste, as they do not actually play them at home. They instead prefer to frame them in their beautifully designed album covers as one would do to a painting as noted by ICM Unlimited research in the article “Streaming Drives Vinyl Sales, Not Necessarily Vinyl Listening”, published April 14, 2016 By Parker Hall, Digitaltrends.

This distorted earning profile of the music industry is striking; an obsolete music format is generating more revenue than billions and billions of on-demand free streams, to quote RIAA CEO Cary Sherman: “Need further proof that some fundamental market distortions are at play? Last year, 17 million vinyl albums, a legacy format enjoying a bit of a resurgence, generated more revenues than billions and billions of on-demand free streams”.

This would explain in part why content publishers and advertisers have rolled out ad-blocker detecting software to combat the growing phenomenon of ad-blockers on smartphones as noted in my Geezam blog article entitled “How Ad-blocker Detecting Software protect US$22 billion Advertising Industry”. 

They're trying to protect their revenue coming from free ad-based streaming, even as the vinyl LP and EP formats makes more revenue as evidence by Taylor Swift's 1989 vinyl version making more revenue for the artiste than all of her streaming deals as pointed out in my blog article entitled “Taylor Swift and Vinyl – Why Female Hipsters diggin’ her New Groove as Vinyl Sales Rise”.

Clearly the Music Industry model is broken as Musical artiste cannot survive on ad-based streaming; paid streaming is the answer in the long run.