Vinyl: The New Billion Dollar Music Business

 

Vinyl records are projected to sell 40 million units in 2017, with sales nearing the $1 billion benchmark for the first time this millennium. This impressive milestone has been untouched since the peak of the industry in the 1980s. While explosive by today’s standards, according to Deloitte, in its heyday (‘81), total vinyl album sales surpassed 1 billion units in just that year alone.

 

The record industry’s hunters and gatherers have been busy collecting. According to Deloitte, new vinyl records and revenue will enjoy a seventh consecutive year of double-digit growth in 2017. But the slice of the pie is still a very small one – with broader music industry revenues projected to be approximately $15 billion this year, vinyl will account for only 6%.

I spoke with Toddrick Spalding, the Director of Music at the trailer production agency Mob Scene – a music expert by trade, and avid record collector in Los Angeles. At 37 years old, Spalding listens to vinyl daily. His “modest” collection is a very highly-curated mix of 2,000 albums, both old and new. Other collectors have over 10,000 albums, completing discographies and aggregating every album from a specific record label, so he feels his is relatively small. Anytime he travels somewhere new, Spalding takes a dedicated day to find the record store and add to his collection.

For Spalding, there are countless reasons why vinyl is superior to any other music listening format, but above all comes the fidelity, romanticism and ritualistic nature of the experience. “Listening to vinyl is a physical act – it’s an active choice to go to the rack and pull out a record from the sleeve and then eventually flip the side to continue listening. It physically forces you to interact, contrary to telling Alexa to play a playlist on Spotify.”

Many of today’s consumers just want to own something that they can hold in their hands. The 12 x 12 artwork is another massive draw. Spalding continues, “You can go into a record store, buy the first Velvet Underground record and bring home a Warhol!”

Will future generations care for vinyl? Spalding’s 7-year-old son, Salinger, may be a great indicator for continued growth. He has his own record player and collection. It’s easy to purchase a record player today, so the barrier of entry isn’t a big one.

Salinger Spalding and a David Bowie “Rebel Rebel” 45 (Courtesy of Toddrick Spalding)

There are also growing subscription-model businesses like Vinyl Me, Please, which delivers a new special edition vinyl album to your door every month. Another modernization on the classic industry is the annual Record Store Day (April 22 this year), which is hosted by local record labels and record stores across the country to celebrate and sell vinyl.

For those looking forward to perusing a record store, finding what they want, unwrapping the plastic, taking a dedicated moment to listen to music, reading the “Thank You” section and admiring the artwork, vinyl provides an unmatched and intimate experience. Despite the sustaining massive CD sales in Japan, I don’t believe cassettes and CDs carry the same sentimental weight. Vinyl records offer a nostalgic listening journey for every generation, whether it was previously a favorite pastime, or a time capsule for those discovering it for the first time.

It may not be a coincidence that the vinyl resurgence in 2008 coincides with the launch of Spotify. In many ways, vinyl is like the print industry. As streaming continues to grow (and change), there will always be a market for the powerful emotional impact of something tangible, especially with a nostalgic tie.