AC/DC, The RIAA Report, Inside Billie Eilish's Glass House, and More!

Mar 29, 2024

Good for them; but the better information was learning that AC/DC turned down an exclusive with Live Nation to honor decades-long relationships with indie promoters. AC/DC also refused to do VIP packages or use dynamic pricing.

In an era when most artists use LN/TM as a convenient scapegoat while doing snow angels in mountains of cash, AC/DC takes steps to ensure their fans aren’t completely fucked over. Sure, they’re still torturing fans with whatever passes for Brian Johnson’s vocals, but I digress.

I remember when another band used to protect their fans, but those days are long gone.

Navigating the Future Beyond Music Subscription Dominance

I’ve seen many celebrating the RIAA’s revenue report. Maybe my brain works differently than others, but I saw emerging trends that should be addressed.

As the subscription model shows signs of saturation and fatigue, it's time for the music industry to embrace revenue diversification.

Currently dominating 59.3% of total revenues, the subscription model seems to have reached its peak. This situation highlights the complex challenge of sustaining growth and expanding the subscriber base.

According to the 2023 RIAA data, streaming services have already acquired most of the potential new customers they could attract with their current products. The chart I threw together illustrates this point in ways even the most archaic music industry exec should understand:

Due to the fewer new subscribers in 2023 than in previous years, the record labels were fortunate that Spotify increased its standard individual plan price. In 2022 and 2021, the US market added 7.6 million and 8.5 million subscribers, respectively, but in 2023, only 5.2 million new subscribers were added. This is a significant decrease from the 15.1 million new subscribers gained in 2020 due to the pandemic restrictions, which caused an increase in music and video on-demand streaming services.

Spotify's July and Amazon Music's January 2023 and August price increases helped average monthly revenue per user improve to $8.74, up from $8.35 in 2022.

Ad-Supported Streams and the Untapped Potential of Social Media

Ad-supported streaming, once the beacon for premium conversion, is now facing stagnation, growing only 2.3% in 2023. This presents an opportunity for these platforms to reinvent their user value proposition. Concurrently, social media platforms, especially TikTok, are growing but struggle to capture a proportionate share of revenue. UMG and TikTok issues aside, this juxtaposition gift wraps an opportunity for the music industry to harness the viral power of social media while navigating the complexities of revenue generation.

In 2023, the highest growth rate was observed in the "other ad-supported streaming" category, including relatively new players like TikTok. This category experienced growth of 21.5%, reaching $317.7 million, making it almost 75% as valuable as the declining download and ringtone (ringtones!?) category (which saw a decline of 12.2% last year).

Great, right? The downside is that this category still constitutes a small part of the labels’ business. In 2023, the revenue from other ad-supported streaming accounted for less than 5% of the total revenue growth, about 6% as much as the subscription services.

The Enduring Charm of Physical Sales

Amidst the digital frenzy is the continued resurgence of vinyl and CDs, mainly driven by superfans. Yes, physical formats have an enduring appeal, emphasizing the importance of catering to various consumer tastes and experiences. However, the growth in physical music formats is not as explosive as in recent years.

LPs and CDs had double-digit growth in 2023 — 10.3% for LPs and 11.3% for CDs — as physical formats benefitted from enthusiasm for vinyl collectibles and K-pop and Taylor Swift fans’ penchant for buying multiple variants of new releases. Total physical revenue increased by $181 million, or 10.5%, to $1.91 billion, which has grown 66% since 2018. That compensated for the $60 million decline in legacy digital formats such as track and album downloads and ringtones. Ringtones!?

People purchased 43 million vinyl records and 37 million CDs last year.
37 million CDs!?

Although vinyl tends to be more expensive than the “newer” format, it far outstripped CDs in actual money made, generating $1.4 billion compared to $537 million from CDs. The RIAA's report shows that CD revenue was up too, but in terms of physical products sold, people purchased about 700,000 fewer CDs in 2023 compared to the previous year. Additionally, nearly half a million cassettes were sold last year.

Still, vinyl and CD sales accounted for 14.8% of 2023’s revenue gains compared to subscriptions’ 79.4%.

The U.S. Music Market: A Narrative of Resilience and Untapped Potential

The RIAA's recent findings paint a picture of a market experiencing robust growth of 7.7%, reaching a staggering $17.12 billion and eclipsing the golden era of CDs. This resurgence marks the ninth consecutive year of growth. That’s nice, but as we see subscription fatigue in other industries, it doesn’t take a genius to see contraction hitting music subscriptions, too.

That is why we need more dynamic and diverse revenue models. Music seems to always be at the crossroads of tradition and innovation and typically clinging to the past. However, the music industry's awkward flirtation with AI and social media ventures hints at the potential for a diversified future. The real question is not if but how swiftly the industry can pivot to embrace these new horizons.

PS: The answer is not selling $1k boxsets or VIP subscriptions to superfans.

Billie Eilish Blasts Artists Who Release Multiple Vinyl Variants

Billie Eilish spends most of her interview extolling how incredible she is at environmental stuff. I’ll spare you those details and skip to the music.

From Billboard:

Eilish: We live in this day and age where, for some reason, it’s very important to some artists to make all sorts of different vinyl and packaging … which ups the sales and ups the numbers and gets them more money.

Eilish:[S]ome of the biggest artists in the world making fucking 40 different vinyl packages that have a different unique thing just to get you to keep buying more. It’s so wasteful, and it’s irritating to me that we’re still at a point where you care that much about your numbers and you care that much about making money — and it’s all your favorite artists doing that shit.

THE NEWS DESK

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Tech, Web3, & AI

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Overheard

“I definitely found myself on nun TikTok, which is a vast, vast place to be.”

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The Guest Who Wouldn’t Leave
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