Basically, blue represents traditional vinyl and tape sales. Orange represents CDs. Purple represents digital downloads. And green represents streaming. You can find a more detailed legend for the color coding on the RIAA website. Here’s the story behind the figures.
The Invention of CDs
The development of the CD fueled a revenue explosion starting in the 80s. Two factors influenced this surge. First, people replaced music they previously or already owned on vinyl or tape. Second, record labels charged a lot more for CDs, even though CDs were not more expensive to produce. Greed, in other words, pure and simple.
Napster and the Internet Alter Buying Habits
Napster came along in 1999, offering a way to get music without buying it. You can see revenue begin to take a hit. While Napster was shut down for music piracy in 2001 (before its reincarnation as a legitimate streaming service), it was too late. Our habits had changed. We expected music to be free, or at least a lot cheaper. Digital downloads broke up the monopoly of the album. You could pick and choose which songs you wanted to buy. There was also a backlash against the greed of record labels, which had become bloated and complacent after riding the wave of the 80s and 90s. Even though the prices charged for CDs fell during the 90s, a lot of resentment had built up in the public.
Streaming Supplants Purchasing
We no longer buy or own music the way we used to. You can see that fact in how much the blue and orange bands have shrunk. Even the purple bands have shrunk in the past few years as the green bands (streaming) have exploded. The good news is that streaming has pushed overall revenues higher recently. The bad news is that streaming services pay musicians at a far lower rate than they would have earned from sales. (For a detailed description of how songwriters and recording artists earn income, see Explaining Music Royalties and Other Confusing Revenues.) Furthermore, the graph does not show the explosion of independent artists. This means that the overall revenue pie must be shared by an ever-increasing body of people releasing their own music.
The End of Buying Music?
The graph on the left shows volume of music by units “sold.” Contrast it with the first graph, and you’ll see even more dramatically how buying habits shifted from albums to singles around 2007. But whether counting albums or singles, notice that fewer units are sold today than in 1973—even as the population has swelled. We’re less interested in owning music, whether physical CDs or digital downloads. How far will this trend continue? And does it mean we value music less, not willing to pay what we used to in order to support artists? Those are interesting questions that only time will answer.
With the RIAA interactive graphs, you can isolate revenues by each category or change the years of comparison. Keep in mind these are not the only revenue sources for musicians. The graphs do not reflect performance rights, concert and tour revenue, merchandising, and other assorted incomes.