You might be annoyed by all those hipsters buying vinyl records, but give them some credit: They’re helping to keep a struggling industry afloat, according to a new report.
Far more people consume music online than buy it in stores. But sites like YouTube generated less money for the music industry than vinyl records in some of the biggest music markets in the world last year, according to an annual report Tuesday from the International Federation of the Phonographic Industry.
A couple factors are mixing together here.
One, vinyl is simply hot right now. On the back of surging interest in electronic dance music, vinyl is making more money than it has since 1988, according to the figures from a U.S.-based trade group RIAA.
In Tuesday’s study, IFPI looked at how much money funnels into the music industry from vinyl records compared with sites like YouTube, which stream music free and pay labels and artists a cut of advertising revenue.
Here’s how it breaks down.
- In the US, the retail value of vinyl albums was $416 million, beating that ad-based streaming there of $385 million.
- In the UK, vinyl trade revenues beat YouTube-like sites by about a million: $38.5 million versus $37.6 million.
- In France, the two categories were virtually tied: $12.6 and $12.7 million.
That backs up data released last month by the group’s sister organization in the U.S., the Recording Industry Association of America. It said 17 million vinyl albums drummed up revenue of $416 million last year, beating the $385 million that sites like YouTube generated from billions of free streams.
Stu Bergen, the CEO of international and global commercial services at major label Warner Music, said in IFPI’s report that almost half of the label’s physical sales come from vinyl in countries like Norway.
The founder of an indie label there, Jørn Dalchow of daWorks, said walking around Olso, “you will not find any CD stores any more, but you will see vinyl stores popping up all over the place.”
Why is the vinyl trend good for artists? Because vinyl records simply pay more upfront for labels and artists than streaming does. It makes sense, right? Once you buy a record, you can listen to it as much as you like, so the format necessarily needs to load up all the payment to artists and labels in the sale.
With streaming, artists get a smaller slice of a payment for one listen, and the payments build progressively as streams accumulate, spreading the money over a long period.
YouTube argues that the revenue share it pays to labels and artists is essentially what you could call “found money.” Traditionally, the majority of people have listened to music without paying for it — be it on the radio or now through sites like YouTube.
YouTube argues that by sharing the advertising revenue it generates from its views, YouTube is helping artists and labels make money on an audience that previously didn’t pay. Terrestrial radio doesn’t pay any royalities.