In another year of growth, albeit less robust in the U.S. than in recent years, the biggest surprise in Luminate’s year-end report on how the music business fare in 2022 is a story that has been developing before our eyes each week since May. The official coronation of Bad Bunny’s “Un Verano Sin Ti” as the year’s most consumed album in America marks the first time ever that honor has been achieved by a collection recorded in a language other than English.
It’s just the latest feat by the artist who had already scored the first No. 1 on the Billboard 200 chart with a non-English album, achieved in December 2020 by his “El Último Tour del Mundo.” Eight months ago, his next album became only the second to do so, and if you want to appreciate what a big story that collection has become, Luminate’s report also notes that since its release, roughly one in every 14 Latin audio or video streams have come from this collection.
As for the report card on the state of the industry, the numbers are healthy, even if U.S. growth is expectedly more modest than that seen in some other recent years. Total album consumption in the U.S., which measures album sales plus the equivalent value of song streams and sales, rose by 9.2% in 2022, compared to an 11.3% gain in 2021. Global on-demand audio streams rose by 22.6%, compared to the 26.3% swell seen a year ago, but combined audio and video streams rose by 25.6% to 5.3 trillion, fueled by a 31.2% uptick in video song streams.
“We continue to grow in the States, albeit at slower growth,” says a top executive at one major label. “For the global increase in streams, the cautionary tale in that is that in most areas, there’s a much smaller rate per stream, if you were to devise that formula. The money is less so the growth is slightly misleading.”
But Larry Miller, director of the music business program at NYU Steinhardt, is heartened by streaming’s international view. “If you look at where the growth is coming from, are we near saturation in the so-called undeveloped countries and territories? I don’t think so; I think we have a long way to go.
“The first decade is behind us, the early adopters are all in and the latecomers are finding their way to these platforms,” says Miller. “But I think that there’s a lot more growth in developed markets, and there’s just enormous growth in the developing world that used to be a zero in music revenue and now is definitely a positive number. And it’s only going to become a bigger positive number. I think that that is something investors understand.”
Streaming accounted for 84% of U.S. revenue in the Recording Industry Assn. of America (RIAA) mid-year report, and the new Luminate report underlines its status, reporting 2022 as the first year that American consumers played more than 1 trillion streams. That benchmark was reached in late November, with the year-end total reaching 1.1 trillion.
“As streaming has evolved, I remember when 50 million (paid subscribers) was considered the dream,” notes Josh Friedman, senior VP of research & economics at the RIAA. “But artists and labels have continued to meet fans where they are, and in our mid-year reporting, that number hit 90 million paid subscriptions. Even with this high level of penetration, we are still seeing growth.”
Notable for the industry watchers who last year were startled to find that catalog repertoire — product that has been on the market for 18 months or longer — accounted for 69.8% of U.S. consumption is that 2022 saw catalog rise past a 70% share, landing at 72.2% for 2022. (Initially, Luminate had reported a 74.5% share for catalog at the end of 2021, but after that report’s publication, the share was recalculated.)
The 703.9 million equivalent units that catalog tallied last year marked a 12.9% increase in volume, while the 270.9 million units achieved by currents represents a modest 0.5% gain.
Catalog share has actually increased every year since streaming became the U.S. industry’s main revenue machine, because we’re now measuring what people are actually listening to, while the album charts that guided the business for all of its prior history only measured what consumers bought. While some pundits in early 2022 saw catalog’s swell as an indictment of industry priorities, a senior executive at one major label sees no cause for concern.
“I think it’s good that music fans are discovering great music, regardless of the era it came from. We should be agnostic as an industry to how someone want to attach to something. It cannot always be about a new release,” he says. “If they decide to spend five minutes or four minutes on a song, or 30 or 40 minutes on an album from a particular artist, regardless of when it came out, it’s a good thing for the business.
“Our time is valuable; we’ve got 24 hours a day. I always say to our team, if a fan’s going on to Spotify or Apple Music and they’ve got 15 minutes to spend, I want them to spend 15 minutes with our repertoire. Now, do I care if it’s catalog or frontline releases? Absolutely not, because it all ties in to the overall eco system and we’re competing with the attention economy. You’ve got Netflix, you’ve got sports, you’ve got TikTok.”
Says another major label exec, “The thing that jumps out at me is the same thing we’ve been talking about all year: catalog growth versus currents. As much as it would be convenient to change how we define currents, that feels like wanting to solve a problem to help ourselves, but I don’t think it is a problem. It doesn’t concern me.”
Both note that with streaming enabling record-breaking streaks on the Billboard Hot 100 for hits like the Weeknd’s “Blinding Lights” and Glass Animals’ “Heat Waves,” the parameters for what constitutes catalog means less than they did in all those years when the business was driven solely by sales. Some executives have come to cheer a niche they describe as “shallow catalog,” titles slightly older than 18 months that still enjoy viable traction.
“I’ve never understood why it’s such a big talking point; I’m guessing that senior, senior-level people at music companies must get bonused based on current record share,” says one of the executives who spoke to Variety. “Habits have probably changed far less than the narrative calls for. The reality is that shallow catalog in particular is really a sweet spot.”
Adds the other exec, “To our retail partners, catalog might be six months; Billboard’s rule is 18 months, and a record company might say 36 months or something like that. I just look at it like, your album cycles are longer, and the way that things work at TikTok these days is some old title could just pop off pretty quickly and then you have to jump into it. If you’ve got a young kid on TikTok who hears a song for the first time, to them, that’s not a catalog song. To them, that’s a brand-new release.”
The slight uptick in current album volume can be attributed in large part to new albums by Bad Bunny (3.4 million album project units), Taylor Swift (3.3 million) and Harry Styles (2.2 million).
Bad Bunny’s “Un Verano Sin Ti,” Swift’s “Midnights” and Style’s “Harry’s House” ranked first, second and fourth respectively among the most consumed albums of 2022, while country king Morgan Wallen ranked third with a holdover album, “Dangerous: The Double Album,” at 2.4 million equivalent units. That Wallen set was the top U.S. album of 2021, when it posted 3.2 million equivalent units.
Albums released in 2022 by the Weeknd (“The Highlights,” 1.9 million), Future (“I Never Liked You,” 1.46 million) and Lil Durk (“7220,” 1.36 million) ranked fifth, seventh and ninth, respectively on the consumption chart. Albums released in 2021 round out the top 10, with the soundtrack from Disney’s “Encanto” ranked sixth (1.8 million), followed by Olivia Rodrigo’s “Sour” (No. 8, 1.44 million) and Drake’s “Certified Lover Boy” (No. 10, 1.3 million).
On sales alone, Swift’s “Midnights,” released Oct. 21, was the absolute top dog, moving 1.8 million physical copies and downloads combined in barely more than two months. She more than doubled the 757,000 copies posted by the second-best seller, Style’s “Harry’s House.” Three other 2022 titles were among the year’s 10 best sellers, with Beyonce’s “Renaissance” (No. 5, 335,000) joining two K-pop acts: BTS’ anthology “Proof” (No. 3, 422,000) and Tomorrow X Together’s “Minisode 2: Thursday’s Child” (No. 10, 229,000).
Two big titles from 2021 were among the 10 top sellers, including Rodrigo’s debut set at No. 4 (354,000) and Adele’s “30” at No. 7 (296,000). The other three came from earlier decades, with Fleetwood Mac’s often-synced 1977 album “Rumours” at No. 6 (310,000), Kendrick Lamar’s 2012 set “Good Kid, m.A.A.d City” at No. 8 (278,000) and Michael Jackson’s 40-year old “Thriller” at No. 9 (236,000).
After a year in which Adele’s “30” and multiple Swift releases spurred a surprising 6.3% gain in album sales — including the first year-over-year gain by CDs in a decade — U.S. labels reverted to the norm in 2022. Physical and digital albums combined moved 101.1 million units, down 8.2% and similar to the 9.2% decline that Luminate reported from the pandemic-impacted 2020.
The report also highlights how radio has lost traction with fans of hip-hop, Latin and R&B, even as it remains relevant among pop consumers, and especially those drawn to country or rock. A country fan is 12% more likely to listen to radio than the average music consumer, with pop and rock fans 9% more likely, but in other genres, radio trails short videos, audio streams and video streams.
“Notable, but not surprising, is the severely diminished importance of radio in most formats except country and rock,” says Richard James Burgess, president and CEO of indie trade group American Association of Independent Music (A2IM). Asks one of the major label executives who spoke to Variety: “Which goes first, CDs or radio? Because I’ve been hearing for 10 years that they’re both going to go away but they both seemingly hang on.”
For the second year in a row, vinyl outsold CDs in the U.S., this time by a score of 43.5 million to 35.9 million. In 2021, LPs only led CDs by 1.1 million copies.
After barely leading 2021 sales in Luminate’s mid-year 2022 tally, when vinyl was only up by 1%, the configuration ends up beating 2021 numbers by 4.2%. That’s in stark contrast to the 51.4% increase that LPs saw in 2021, when mass merchants like Walmart and Target added the configuration, thus expanding that product’s store base.
Not surprisingly, Swift’s “Midnights” led the vinyl pack, totaling 945,000 — and why not, considering it was also the year’s top selling CD (640,000) and digital album (219,000). Swift’s 2021 release “Folklore” was the seventh best-selling vinyl of 2022 (174,000), while Tyler the Creator is the only other act to park two LPs in the vinyl sales top 10, with “Call Me If You Get Lost” at No. 6 (211,000) and “Igor” at No. 8 (172,000). Style’s “Harry’s House” was the second-best selling LP with 480,000.
If vinyl’s resurgence in the 2000s made you feel nostalgic, we’re here to tell you that another configuration of days gone by saw growth in 2022, with cassettes posting a 28% swell over 2021. Before you get too excited, the 440,000 units posted by all titles in the cassette format combined falls short of what the “Harry’s House” LP did by itself.
“It’s not vinyl 2.0,” says a senior executive at one major label of the cassette mini-boom. “It is a novelty without the traction of vinyl, because there are so many intangibles that go along with vinyl, the collector’s piece and all the equipment that goes with it. There’s the high-tech element to vinyl; there’s no such thing in cassette. It’s a tchotchke, basically. Nobody is saying ‘I can’t wait to listen to the warmth of the cassette’.”
“Cassettes are fan-driven,” adds another label exec. “If you’re a fan, you want to show your super fandom; that and even vinyl are ways to express that. I think it’s a talking point for fans, a limited edition 1,500-unit that just rolls off that way.”
While streaming remains music’s dominant driver, Luminate’s report hones in on three of 2022’s biggest debut weeks to highlight the difference in consumption that happen from one artist to the next. Bad Bunny’s “Un Verano Sin, Ti” was an all-digital affair when it posted 273,000 equivalent units in May, with 95.8% of that coming from streams and the remaining 4.2% from digital albums. Album sales accounted for more than half of Beyonce’s 332,000-unit start when “Renaissance” rolled out in late July, with CDs earning 36.6%, digital albums at 12.9% and vinyl at 7.9%, while streams accounted for 42.6%.
Swift had an even smaller streaming percentage than Beyonce posted, 27.7%, when her “Midnights” racked up 1.5 million units in the biggest album week posted by any artist since 2015. Vinyl was her biggest bucket at 36.4%, with CDs doing 25%, album downloads at 10.2% and cassettes posting 0.6%.
The performance of the “Midnights” LP catches the attention of NYU’s Miller. “There’s the enormous impact of maybe the biggest vinyl-intensive fan base getting dropped a new record, and I don’t mean ‘vinyl-intensive’ to imply that Taylor’s fans are more about playing records on turntables than anybody else. But I think that that is the perfect example of certain music fans — and her fan base, for sure — using vinyl as a way to express their fandom, whether they own a record player or not.”
To Miller’s point, among the details shared in Luminate’s report is the finding that only 50% of vinyl buyers own record players, which raises interesting questions about the other half of LP buyers who don’t own turntables. “I wish we had metrics to see how many people actually unwrap the vinyl and play it, versus collect it,” says one of the label executives surveyed by Variety.
Digital downloads continue the downward spiral that began even before streaming became the U.S. industry’s leading revenue source in 2015. Digital tracks moved 151.9 million units in ’22, down 25.1% after a 13.2% drop in 2021. Digital albums scanned 20.2 million, down 22.8%, similar to the 23.9 decline measured in 2021.
“I expected a dramatic drop in digital album sales and the decline in sales overall, with the exception of vinyl and cassettes,” says A2IM’s Burgess. “It would be interesting to see how the sales divide between independent labels and the majors, because independents report a significantly higher percentage of sales than the majors do.”
Beyond the broad strokes, Luminate’s various resources pack the year-end report with lots of fun facts about music consumers, like radio losing traction with fans of hip-hop, Latin and R&B, even as it remains relevant among pop consumers, and especially those drawn to country or rock. A country fan is 12% more likely to listen to radio than the average music consumer, with pop and rock fans 9% more likely, but in other genres, radio trails short videos, audio streams and video streams.
Among other nuggets, hip-hop fans are 26% more likely to buy music merch online from a separate brand, while country fans are 31% more likely to get theirs at a live music event… Children’s, world, electronic/dance and classical have joined Latin as genres growing faster than the industry pace… Mental health is the cause most top-of-mind among fans of hip-hop, country, rock and Latin… And one of the snapshots on synch is that in late December, the catalog of British singer Labrinth was still streaming 37% ahead of how it performed before the second season of HBO show “Euphoria” premiered almost a full year earlier.
NYU’s Miller applauds the Luminate report for the manner in which it describes the how sync business and the sale of artist and songwriter catalogs are impacting the finances of music. “It’s a great accomplishment to be able to describe a trend that is inherently complex to explain. They did an outstanding job of making the drivers of the financialization of music understandable to most people who will read the report, and they also talked about the impact of interest rates.”
The report includes a deep dive on Gen Z, which show that particular demo spending 19% more time with music per week and 10% more money on music per month than the average consumer. “The view of what big music fans Gen Z are speaks positively to our future,” says the RIAA’s Friedman. “If Gen Z is listening via subscription more than the generations before them, that’s reassuring.”