Vinyl is here to stay....
The pandemic has spurred a new wave of growth for the vinyl market. With a booming demand on a global level, vinyl is set to reach the status of ‘forever format’, driving long-term value to the music market by becoming a true fan-product.
The vinyl market has been experiencing healthy levels of growth since it started a revival in the 2010s, but the pandemic has significantly accelerated this trend, with consumers having more time and more disposal income to spend on vinyl. Lockdowns have created particularly favourable market conditions for vinyl sales, with fans looking to engage with and support artists during a time without live events. In addition, consumers have been upgrading their audio systems and buying turntables to improve their comfort at home, whilst record stores, artists and labels have been developing their online channels.
This resulted in a significant uptake of vinyl sales in 2020, with global consumer spend on vinyl growing 23% to $1.7 billion according to Futuresource’s recently published Vinyl Market Outlook Report. This performance has however been primarily achieved during the second half of 2020. As a result, 2021 is set be an even stronger year for vinyl, as consumers are still spending a lot of time at home, but are also returning to record stores as well as attending concerts and festivals, driving vinyl demand even further.
Additionally, more artists and labels now want to release their music in vinyl, having witnessed consumers’ rising interest for the format. Some of them have developed their own direct to consumer channels, with vinyl sales helping to drive healthy revenues thanks to a higher retail price than any other music formats. This creates a virtuous circle, with more artists releasing in vinyl and a wider demographic being introduced to the format. New vinyl buyers also build new record collections, which drives demand across new release and catalogue titles.
2021 has already seen the release of several major artist albums, notably from Billie Eilish and Olivia Rodrigo, whilst the release of albums from Ed Sheeran and Adele in Q4 are set to generate huge vinyl sales. This will help drive global consumer spend on vinyl to $2.2 billion in 2021, an impressive 34% increase compared to 2020 according to Futuresource’s latest forecast.
Consumer uptake has been even more impressive given the supply challenges in the industry. This influx of new orders, coupled with supply chain challenges brought by the pandemic and other external factors, has created significant disruptions within the vinyl market. Shortages of raw material such as PVC, cardboard and paper, coupled with labour shortages, transport and shipping disruptions, long lead-times to produce new pressing machines, and the overall limitation of the global vinyl production capacity, has meant that delays have accumulated and retail prices have increased. Nevertheless, the players within the vinyl supply chain are all investing to increase their capacity and mitigate the disruptions, notably to avoid missing out on these exceptional market conditions and take the risk to deter new vinyl buyers from engaging with the format, especially if the prices are too high and delays too long.
Longer term, Futuresource anticipates vinyl to become a ‘Forever Format’, which would complement streaming listening. More and more consumers are attracted to vinyl for what the format offers in terms of listening experience, but also due to the engagement with the artist and the lifestyle and community that comes with it. Vinyl has become more than just a music format, it is a key physical piece of fan merchandise that is increasingly resonating with fans in a digital world. While other physical formats such as CD are expected to progressively decline, vinyl is poised to maintain healthy levels of growth in the next few years, overtaking CD in value term by 2022, especially as supply challenges are expected to stabilise.