My latest animated “bar chart race” visualization above (click the arrow to start) shows the format shares of recorded music sales annually from 1973 to 2022 based on new mid-year sales data that were released today by the Recording Industry Industry Association of America (RIAA) for the first half of 2022. The RIAA reports this summary for music sales during the first half of this year:

U.S. recorded music revenues in the first half of 2022 rose 9% to $7.7 billion at estimated retail value, building on the strong growth experienced the prior year. The number of paid subscriptions grew to a record high of 90 million, with revenues up 10% to $5.0 billion and comprising almost two-thirds of the first half total. At wholesale value, revenues grew 8% to $4.9 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 remarkable resurgence of vinyl record sales in the first half of 2022, which have exceeded the market share of CDs for the first time in 2020 (5.4% vs. 4%), 2021 (6.6% vs. 2.9%), and the first half of 2022 (7.4% vs. 2.6%). The 7.4% format share for vinyl records in the first half of this year was the highest share for LPs since 1988.
• 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. This year CDs sales represented only 2.6% of recorded music sales, the lowest share since 2.4% in 1984, and CDs only accounted for 26% of physical sales revenues, while vinyl accounted for nearly 3/4 of physical format revenues.
• 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. Through mid-year 2022, the market share for downloaded music fell to 3.3%, the lowest since a 1.5% share in 2004 when iTunes were first available
• 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 in 2014 (by 27.4% to 26.6%) 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 new 84.2% record-high market share this year through June.

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 are on track to reach $15.4 billion by the end of the year, which is just a little more than half of the peak music sales of $26 billion (in constant 2022 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 (when vinyl records dominated) and the 1990s and 2000s (when CDs were more than 90% of recorded music sales) 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 $4.99 per month for students, $9.99 for individuals and $15.99 for families, or even free with ads (with no price increases since last year). 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 $9.99 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?)

Related: The abundance of low-cost (almost free) music also illustrates one of the shortcomings of traditional 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 $15.4 billion in projected sales this year) is about half of what it was in 1999 when music sales were $26 billion (in 2022 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 with streaming music that isn’t remotely being captured by national income accounting.

The post Animated Chart of the Day: Recorded Music Sales by Format Share, 1973 to 2022 appeared first on American Enterprise Institute – AEI.