The U.S. Recorded Music Business Is Surging — Can It Return to Double-Digit Revenue Growth in 2023?

Thanks to Taylor Swift, Morgan Wallen, K-pop, vinyl sales and stronger streaming numbers, the U.S. recorded music business was on a hot streak in the first 20 weeks of 2023. Through May 18, U.S. music consumption was up 13.8% compared to the same period a year ago, according to Luminate. That’s a marked improvement from the 9.2% increase for the full calendar year 2022 and the 9.7% gain through the same 20-week period in 2022.

No single format can take credit for this year’s improvement. Through the 20th week, every format of sales and streaming had a higher growth rate compared to the same period a year ago. (Luminate tracks sales and streaming activity, not revenue generated from the activity.) Streaming’s growth carries the most weight, however, because it accounted for 89.2% of total consumption, a slight increase from 88.5% in the prior-year period. This year, on-demand streaming — in terms of album equivalent units — improved 14.7% through week 20, a more than two-percentage point gain from the 12.5% growth in calendar 2022.

Consumption is measured by combining album sales, digital track sales and audio and video streams. Luminate converts track sales into albums at a 10-to-1 ratio and converts streams into equivalent album units using different ratios for on-demand audio, on-demand video, programmed audio and user-generated video streams.

Album sales improved 10.2% to 39.3 million units, a turnaround from an 8.2% decline in 2022. Physical albums jumped 17.1%, to 32.3 million units, after declining 3.5% in 2022. Vinyl LP sales increased 27.4%, to 18.8 million units, a vast improvement from the 4.2% gain in 2022. CD sales improved 5.2% to 13.3 million units after declining 11.6% in 2022.

This year, 13 albums sold more than 100,000 units in the first 20 weeks compared to six albums in the prior-year period. Some of the improvement stems from K-pop groups’ ability to market multiple versions of CDs and vinyl LPs for their rabid fan bases. The top physical album of 2023, Tomorrow X Together’s The Name Chapter: Temptation (Big Hit Music/Imperial/Republic Records), more than doubled the sales of last year’s top physical album, 30 by Adele. After Swift’s album Midnights, the next three best-selling physical albums were from K-pop artists: Ready to Be by Twice (JYP Entertainment/Entertainment/Imperial/Republic Records) at No. 3, Seventeen 10th Mini Album ‘FML’ by Seventeen (Interscope Geffen A&M) at No. 4 and D-Day by Agust D (Interscope Geffen A&M) at No. 5. FACE by BTS member Jimin (Big Hit Music/IGA) was No. 9.

Even the parts of the business in long-term decline are performing better — albeit still in negative territory — in 2023. Digital album sales fell 22.8% in calendar year 2022 but declined just 13.1% in the first 20 weeks of 2023. Similarly, digital tracks were down 13.3% year-to-date after posting a 25.1% decline in 2022.

Gains came from both current and catalog music in almost equal amounts. Catalog, which accounted for 72.7% of total equivalent album units — up slightly from 72.4% a year earlier — gained 14.2% overall on the strength of a 15.1% increase in on-demand streaming. Current music posted lower — albeit strong — growth: total album equivalent units rose 12.6% and on-demand streaming improved 13.5%. Current CD sales performed especially well by gaining 17.1% while catalog CD sales dropped 2.3%. Catalog vinyl LP sales rose 32.8%, exactly twice the growth rate of current vinyl LP titles.

This year’s consumption gain cannot be attributed to any single artist — although the top artists are clearly leading the charge. The consumption of the top 10 artists of 2023 was 47.6% greater than the top 10 artists of the prior-year period. Swift, this year’s top artist, has 89.6% more album equivalent units than last year’s top artist, Drake, while this year’s No. 2 artist, Wallen, bested Drake’s 2022 numbers by 55.5%. Even Drake is doing better this year: His album equivalent units were up 7.5%, although he dropped to No. 3 from No. 1.

If the industry can maintain this pace through the end of the year, the momentum gained through week 20 should boost industry revenues and, possibly, bring a return to double-digit revenue growth. In 2022, the 9.2% growth in consumption, according to Luminate, came with 6.2% revenue growth, according to the RIAA — the lowest revenue gain since 2016 when the popularity of streaming helped reverse a 15-year industry-wide decline. Higher growth in the number of streams could be augmented by higher subscription fees: Amazon Music hiked rates in February 2023 and Apple Music followed suit in October. Spotify CEO Daniel Ek has also signaled a desire to do the same — a change that could go a long way in keeping up the momentum.