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Vinyl Is Bigger Than We Thought. Much Bigger: Forbes






Vinyl Is Bigger Than We Thought. Much Bigger: Forbes



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https://www.forbes.com/sites/billrosenblatt/2018/09/18/vinyl-is-bigger-than-we-thought-much-bigger/#16062c8c1c9c
 
Vinyl Is Bigger Than We Thought. Much Bigger.
Bill Rosenblatt
Used record seller at Brooklyn Flea in New York City.
A used record seller at Brooklyn Flea in New York City.Bill Rosenblatt
Music industry watchers know that vinyl records have been enjoying a resurgence since their near-death in the mid-2000s, and the market continues to grow. But vinyl sales are actually much larger than what industry figures report, because they don't count used vinyl sales. Now, thanks to some new data, we know that with used sales taken into account, the true size of the vinyl market is at least double those industry figures.
Revenue from sales of used records is particularly significant in the digital era, now that most of the attention is on streaming, where users can't "resell" music. The music industry doesn't bother to count used sales because no revenue from used sales goes to record labels, artists, or songwriters. "Given the size of the overall market, I am always shocked that these numbers are ignored when reporting sales," says Ron Rich, SVP of Discogs Marketplace, one of the two largest online marketplaces for used records, along with eBay.
In honor of eBay's first-ever Vinyl Obsession Week this week, the company has offered a rare glimpse into its vinyl sales data. Discogs also supplied data for this story. A household name among record collectors, Discogs is an online database of detailed info about physical music products — mostly vinyl — that launched in 2000 and started its e-commerce marketplace in 2007.
Both Discogs and eBay have very large catalogs of used vinyl available. Discogs lists 5.7 million used vinyl items in its marketplace from U.S. sellers (Discogs doesn't distinguish between new and used; it only lists items by condition. The 5.7 million figure doesn't count a million items rated as "Mint"). eBay lists 2.3 million used vinyl items from U.S. sellers. Amazon is likely the third-largest player in this space; it lists about 900,000 used vinyl records on its U.S. site. If those numbers seem small compared to streaming catalogs like those of Spotify and Apple Music, bear in mind that Amazon is the largest online seller of new vinyl but lists "only" about 300,000 new titles.
Vinyl record unit volume sales, 2007-2010. Sources: RIAA (new), eBay (used), Discogs (used; estimates).
Vinyl record unit volume sales, 2007-2010, millions of units. Sources: RIAA (new), eBay (used, 2007-2017), Discogs (used, 2010-2017).GiantSteps Media Technology Strategies
These online marketplaces also sell several million vinyl records per year. As this figure shows, unit sales numbers from eBay and estimates based on Discogs data added up to about 6 million last year. Compare that to new vinyl sales, which reached 16 million units and $395 million in revenue last year, according to RIAA figures. (Skeptics counter that this is a far cry from vinyl's early 1980s market peak, when vinyl pulled in $2 billion from 300 million units.)
Note that Discogs' sales are growing at roughly the same rate as new vinyl sales, while eBay's sales have stagnated. Discogs is becoming the preferred marketplace for serious record buyers and sellers. That's because Discogs requires that sellers submit highly detailed metadata about music releases — including such things as identifiers, country of release, pressing information, artist credits, and conditions of both discs and sleeves — whereas eBay has looser metadata standards to encourage more casual sellers and buyers (and, of course, supports auctions). It takes more effort to list your records on Discogs, but collectors like having all that information.
Meawhile, beyond eBay and Discogs' 6 million, Amazon and other specialized online vinyl marketplaces (like these and these, which focus on classical, jazz, world music, rarities, and so on) probably account for one or two million more. That gets us to about half of the RIAA's 16 million figure.
But these figures don't count offline sales — of which there are likely at least as many as online. Discogs' Rich says that their online sales represent only "a fraction of what is out there in the used market, considering the amounts of used inventory selling through local record stores."
To make a stab at offline sales volume, consider that there are over 2000 record stores in the U.S., the vast majority of which are indie stores that sell used as well as new vinyl. If each of those stores sold just one piece of used vinyl every hour, that would add roughly another 6 million total annual units sold. If we add in sales at thrift shops, garage sales, and flea markets, we probably get to the RIAA's new-vinyl figure of 16 million. In other words, the overall vinyl market is likely about double the size that the RIAA reports in unit sales, possibly more. 
It's also interesting to note that used vinyl prices are almost as high as new — and new vinyl is quite a bit more expensive than new CDs. In fact, as this chart shows, average used vinyl prices (currently $22.80) are 92% of new ($24.73) and have been mostly tracking at that percentage since 2010. Meanwhile used CD prices are a much lower percentage of new CD prices.
Average prices of new and used vinyl records. Sources: RIAA (new), eBay (used).
Average prices of new and used vinyl records. Sources: RIAA (new), eBay (used).GiantSteps Media Technology Strategies
That's because vinyl albums have become collectibles, while CDs haven't really (apart from special editions, box sets, and so on). This chart shows that this happened around 2009-2010, when the average price of used vinyl on eBay almost doubled. Prices have risen steadily since then; even adjusting for inflation, used records have appreciated 9% in price since 2010. And the turntable market is growing too: NPD reports that revenue from turntables with prices over $250 grew 135 percent from 2016 to 2017. That's the market for quality vinyl-enthusiast machines like this, not novelty/nostalgia items like this.
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Revenue from vinyl records, 2007-2017, $millions. Sources: RIAA (new, left Y-axis), eBay (used, right Y-axis).GiantSteps Media Technology Strategies
Finally, here's a revenue chart that shows eBay's revenue from used vinyl juxtaposed with RIAA new vinyl figures on apples-to-apples scales. It shows that while revenue from new vinyl sales grew at a fairly constant rate since 2007, used vinyl sales jumped dramatically between 2011 and 2012. That's remarkably consistent with music industry trends at that time. 2011 was the year when the music industry began its big shift to streaming. Spotify launched in the U.S. in July 2011, and the major record labels concluded license agreements with YouTube by the end of that year. Revenue from on-demand music streaming started to skyrocket, while revenue from digital downloads started to decline and then plummet.
In other words, 2011-2012 was the time when music fans found that the best way to hear music digitally was on demand from an enormous online library, for $10/month or free with ads, rather than through permanent downloads at $9.99 per album or 99 cents per single; and by then, the collectible nature of vinyl had grown into a sizable movement.
Vinyl fans have various reasons for their love of black discs, but audio quality is the one heard most often. "Despite the broad availability of digital today, the unique sound qualities of vinyl are resonating more than ever,” says Michael Mosser, General Manager of Lifestyle, Media & Toys at eBay. While no one will argue that vinyl is any threat to streaming services like Spotify, Apple Music, and YouTube, now we know that vinyl is still a stalwart presence in the music market and will likely remain so for years to come.
 

 

Jim Eigo Jazz Promo Services T: 845-986-1677 E-Mail: jim@jazzpromoservices.com
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