My latest animated “bar chart race” visualization above shows the format shares of recorded music sales annually from 1973 to 2020 based on new year-end sales data that were released this week by the Recording Industry Industry Association of America (RIAA) for 2020 (see previous visualization here with data through the end of 2019). The RIAA reports this summary for music sales last year:

United States recorded music revenues grew 9.2% in 2020 to $12.2 billion at estimated retail value. This is the fifth consecutive year of growth for the industry, as paid subscription services continued to be the primary driver of revenue increases, and reached a record number of subscriptions. Streaming music’s share of total revenues grew to 83%. Covid-19 affected the industry significantly through tour cancellations, retail store closures, and other disruptions. Revenues from recorded music measured at wholesale value grew 8.9% to $8.0 billion.

In the visualization above you can see the following:

• the dominance of vinyl records from 1973 through the early 1980s with more than a 50% market share in every year until 1984, and at least a two-thirds market share until 1980
• the fall of 8-track tape sales from about a 25% market share between 1973-1976 to 0% by 1982 as cassette tapes entered the market
• cassette tapes outsold 8-track tapes for the first time in 1980 and then outsold LPs in 1984 for the first time and maintained at least a 50% market share between 1984 and 1989
• the gradual rise of CDs starting in 1983 when they were only 0.50% of recorded music sales, overtaking LP sales in 1987 and then cassette sales in 1991 before reaching a peak market share of 95.7% in 2002.
• the rise in the market share of downloaded music (singles and albums) from 1.5% in 2004 to a peak market share of 41% in 2012 when it surpassed the CD market share for the first time
• the rise in the market share of paid digital subscription/streaming services starting from only a 1.2% market share in 2005 to surpassing the market share for CDs by 27.4% to 26.6% in 2014 and then surpassing the digital download music share 34.7% to 33.7% the following year on the way to a majority market share in 2016 (52.4%) and then the 83% record-high market share last year
• the modest comeback in vinyl records from an all-time low market share of 0.2% between 2005-2007 to a market share above 1% in 2013 for the first time since 1991, rising to a 5.1% share in 2015 (highest since 1988) before falling below 5% from 2016-2019 and then rising to 5.4% last year (highest since 1988)

The rise and fall of music formats over the last half-century for vinyl records, 8-track tapes, cassette tapes, CDs, digital downloads, and now streaming music is a good example of the economic concept of “creative destruction” in the recorded music business. According to economist Joseph Schumpeter the “gales of creative destruction” describe the “processes of industrial mutation that continuously revolutionize the economic structure from within, incessantly destroying the old ones, incessantly creating new ones.” Physical music formats (LPs, tapes, CDs) have been “destroyed” and have now pretty much all been replaced with streaming music. And in each successive destruction and mutation, the music formats got better, cheaper, more widely available, and more convenient.

Record music sales were $12.2 billion in 2020, which is roughly half of the peak music sales of $22.7 billion (in constant 2020 dollars) in 1999. What that means is that consumers today spend much less out-of-pocket today for recorded music than consumers in decades like the 1970s (who were buying vinyl records) and 1990s (buying CDs) with one remarkable difference: Consumers today have convenient, low-cost streaming access to almost the entire collection of music that has ever been recorded with a Spotify subscription that costs only $5 per month for students, $10 for individuals and $15 for families (or even free with ads). And music listeners today aren’t burdened with large collections of physical LPs or CDs that take up lots of physical space and are time-consuming to keep organized. Nor do they have to buy expensive stereo equipment (turntables, amplifiers, CD players, and speakers) like in the past.

It’s another example of why it’s such an amazing time to be alive, especially if you’re a music lover. Recorded music today is cheaper, more abundant, and more convenient than ever before in human history. For $10 per month, you can conveniently access an unlimited amount of high-quality music. Think about it — for about 30 cents a day, the world’s entire music library is at your fingertips — what a tremendous bargain! (The great what?)

The abundance of low-cost (almost free) music also illustrates one of the shortcomings of GDP accounting when it comes to measuring our economic well-being or standard of living. Americans’ “music well-being” is clearly at an all-time high for the reasons discussed above. But according to official GDP statistics that include retail music sales, the nation’s “music well-being” today (measured by $12.2 billion in sales) is about half of what it was in 1999 when music sales were $23 billion (in 2020 dollars)! According to official GDP accounting, the “Golden Age of Music” was back in 1999 during the era of CDs, when it’s obvious that we’re experiencing the most miraculous music renaissance in history that isn’t remotely being captured by national income accounting.

Speaking of recorded music, here’s a recording of Oscar Peterson and what I think is a musical masterpiece — “Sax No End” — that is possibly the greatest piano solo of all time, and you can listen below for free:

The post Animated chart of the day: Recorded music sales by format share, 1973 to 2020 appeared first on American Enterprise Institute – AEI.