In the 20th century, people largely bought albums, a dozen songs handpicked by artists and packaged by their labels. Even the so-called singles came with bonus tracks and remixes. Artist releases were basically bundles.
The $0.99 iTunes single represented the unbundling of the music industry.
Introduced in 2003 with the iTunes Store, the digital single broke down commercial music into its smallest business unit. Most iTunes singles are only $0.99. Most albums sold for $9.99. It was the perfect financial arrangement for Apple’s iPod, but the music industry as a whole suffered. The industry went from its peak of $24 billion in revenue in 1999, adjusted for inflation, to a nadir of $7.7 billion in 2014 (with iTunes.)
But digital downloads peaked in 2012, grossing nearly $3 billion, or 41% of US music sales revenue, according to the Recording Industry Association of America (RIAA). But digital downloading is now a relic according to new data from the RIAA. Digital albums and singles combined brought in just $500 million last year, or just 4% of US music sales revenue.
Digital downloads are complete, streaming and vinyl are in
The American music industry managed to revive its fortunes. Although revenues (adjusted for inflation) peaked in 1999, the industry brought in $15 billion last year, up 23% from 2020 and its best year in more than a year. decade. He can thank the streaming services. Spotify and Apple Music account for around 60% of industry revenue. (Even Apple, the face of digital download, pivoted to a streaming strategy around 2015.)
Paid subscriptions to these music streaming services accounted for $8.6 billion. Another $1.8 billion came from ad-supported streaming, including licensed music for social media apps like TikTok. The entire category, which also includes digital radio, brought in $12.4 billion in 2021, or 84% of the market.
Almost every music format had a banner year in 2021. Streaming revenue grew 24% year over year, slightly outpacing the industry as a whole. Physical media topped that: CD sales rose 21% to $584 million and vinyl sales jumped 61% to $1 billion. Last year was the first vinyl to surpass CD sales since the company, formerly Nielsen SoundScan, began tracking music sales in 1991, MRC Data reported in January.
But digital downloads, the dominant music format as recently as 2015, appear to be in terminal decline. It was the only major category to drop year-over-year, down 12% to $587 million in 2021.
We are entering an era of music consolidation. Audiences no longer pay for individual songs or albums, but buy subscriptions to nearly endless catalogs of music, while ownership has returned to physical formats, the big, clunky plastic discs of the previous century.
Turns out, the digital downloads were a one-hit wonder.