CDs
In May, Taylor Swift notched her 14th No. 1 album on the Billboard 200 with the help of 14 different vinyl versions of The Tortured Poets Department, which sold an astounding 859,000 units in the album’s debut week. She has now stayed atop the Billboard 200 for eight consecutive weeks by rolling out additional variants, proving the pop megastar has mastered the art of giving superfans what they want.
Swift isn’t alone in upping her variant game. Luminate looked at the number of physical variants — defined as distinct UPCs per project — in the top 10 of the Billboard 200 albums chart each week since the beginning of 2019 and found that the amount has trended upwards since that year, when the average number of physical variants in the top 10 was 3.3 per week, according to data shared with Billboard. While that number fell to 2.8 per week in 2020 due to the COVID-19 pandemic and its effect on release schedules and supply chains — physical album sales also fell, from 73.5 million units in 2019 to 68 million units in 2020 due to a sharp drop in CD sales — the average number of physical variants in the top 10 has increased sharply in the post-pandemic years.
Trending on Billboard
Making albums available in different colors, formats and packages has proven to be a shrewd move for prominent artists aiming for the top of the chart. In 2021, Adele’s 30 debuted atop the Billboard 200 with a Target-exclusive CD, vinyl exclusives at Amazon and Walmart, and three items sold through her official webstore: a cassette and two deluxe boxed sets.
Like she did with The Tortured Poets Department, Swift has frequently topped the Billboard 200 with the help of physical variants. Her 2022 album Midnights had the biggest week for an album in nearly seven years. And in 2023, her 1989 (Taylor’s Version) had the biggest week in nearly a decade with the help of 15 collectible physical formats.
Also in 2023, Travis Scott’s Utopia reached No. 1 thanks to 84 variants, as the album was made available in three different track lists and multiple CD and LP variants including zine and merchandise bundles. The same year, Fall Out Boy’s So Much (for) Stardust had a whopping 116 physical variants, according to Luminate, although it reached only No. 6 on Billboard 200.
CD variants have helped numerous K-pop artists achieve high Billboard 200 debuts. K-pop fans have long clamored for collectibles from their favorite artists, and in South Korea, labels employ lottery-style marketing strategies and package CDs with merchandise — even though many fans don’t own a CD player. In March, With YOU-th by TWICE debuted atop the Billboard 200 with the help of 14 CD variants. “To the fans, it’s not just an issue of buying music,” Bernie Cho, the head of DFSB Kollective, a Korean music export agency, told Billboard in 2020. “You’re showing your loyalty.”
But physical variants aren’t the exclusive domain of albums popular enough to land in the top 10. “For certain records, multiple variants can support a chart position, but it’s not the main driver for Concord,” says Joe Dent, executive vp of operations at Concord Label Group.
“Fans want to support their favorite artists of course, but oftentimes they want to support a particular shop or webstore that they love as well,” Dent continues. “We strive to meet those fans wherever they are.” For example, Concord’s Rounder Records made vinyl variants of Sierra Ferrell’s Trail of Flowers available as exclusives to indie record stores, Magnolia Record Club and Spotify Fans First, while several other vinyl variants sold through her website and the Rounder Records webstore, says Dent.
AWAL, home to such indie artists as Laufey and JVKE, has a similar mindset. “The way we look at physical never starts with the commercial opportunity,” says CEO Lonny Olinick. “It starts with how the artist wants to express themselves and what the fans are likely to love. And what it really comes down to is how an artist can deepen the connection they have with their fans.”
Variants can also be a marketing strategy for catalog albums that aren’t likely to achieve a high chart position. “We use the variants as an opportunity to excite the market,” says Rell Lafargue, president/COO at Reservoir Music. “For example, if we have something that has been out of print for decades, we might want to do a color variant to reintroduce it into the marketplace as a new, distinct and fun physical product.” Reservoir’s Tommy Boy Records took this approach for the upcoming reissue of Afrika Bambaataa & Soulsonic Force’s 1986 album Planet Rock by opting for a limited edition pressing with a three-color splatter.
Each additional variant adds to the complexity of releasing an album. That challenge was exacerbated by COVID-related supply chain issues, leading to longer lead times and searches for alternate manufacturers. But while logistical challenges remain, says Lafargue, they aren’t as persistent. “While it can be challenging to manage multiple variants or exclusives instead of a singular version, it is worth the extra effort to expose the record to different retailers and get it into the hands of even more fans,” he says.
The proliferation of physical variants doesn’t come as a surprise. Streaming has made music both plentiful and easily accessible — almost to a fault. Some artists are now releasing physical albums a week or two before making them available on streaming platforms. So while chart position remains a big motivator for many, there’s also something to be said for the way physical variants can foster a feeling of closeness between artists and fans.
Artists “look to cut through the volume of digital music being released,” says Olinick. “Bringing that connection into the real world, whether through live shows or physical products, is hugely impactful.”
Halfway through 2023, the U.S. recorded music industry has set a record for first-half retail revenue, generating $8.4 billion, according to the new RIAA mid-year 2023 report released Monday (Sept. 18). But within that headline number, there are several trends and statistics that are worthy of their own exploration, from increasing revenue to slowing growth figures and the factors behind them. Digging deeper into the numbers, here are four takeaways (and a bonus fifth) from the mid-year report.
Ad-Supported Revenue Flatlines
The RIAA reported that ad-supported on-demand streaming revenue came in at $870.1 million — just a 0.6% bump over the $865 million it generated in the first half of 2022. Looking at the 2022 mid-year report, the ad-supported revenue figure was $871.5 million, up 16.4% from $748.5 million midway through 2021. (The RIAA regularly adjusts and updates figures each year as more data becomes available, hence the discrepancies.) What it points to, at best, is a stagnant advertising market; and at worst, one that risks going backwards.
On one hand, it’s not surprising, given the adverse advertising market across the board in 2023 so far. On the other hand, it’s yet another blow to a part of the model for services like Spotify and YouTube that has been maligned for years and considerably detracts from the value of music. Still, revenue from the “other ad-supported streaming” category grew 56.8% year over year for an increase of $58 million after a few years of negligible growth at best.
The Big Pricing Shift
In the past two weeks, a lot of conversation in the industry has revolved around how royalties from streaming services should be divided moving forward. But the broader issue that many executives are, and have been, pointing to has been about pricing. Music streaming services have fallen behind the times in keeping the price of a monthly subscription largely static over the past decade-plus, while video streamers (with fractionalized offerings) have raised prices regularly.
That’s now starting to change — and it’s being reflected in the numbers. Apple Music and Amazon Music both raised prices for their streaming services at the turn of the year, and that has translated into paid subscription streaming revenue growing 12.4% in the first half of 2023 — even as the average number of subscriptions grew at a much slower rate, increasing just 6.4% from 90 million to 95.8 million. With YouTube Music and, most critically, Spotify increasing prices over the summer — numbers that were not reflected in the first half of this year — the additional value realized will be something to keep an eye on moving forward.
But It’s Not Just Streaming
Those streaming service price hikes get a lot of attention — and rightly so. But the industry is seeing increased revenue from consumers in more than just streaming. The physical product market has continued to grow in revenue, up 5% overall, with vinyl revenue rising 1.3% year over year (up $8.2 million) and CD revenue growing 14.3% (up $29.6 million). What’s more interesting — apart from, perhaps, the winding down of the “vinyl explosion” double-digit increase narrative of the past several years — is that both formats grew in revenue while being down in unit counts.
Vinyl, overall, seemed to be a little static year over year. The number of records sold dropped by about 400,000 or so, even as revenue ticked up. But the discrepancy in CDs was stark: despite the type of double-digit revenue growth that’s been associated with vinyl in years past, there were actually 3.2 million fewer CDs sold in the United States in the first half of 2023 compared to 2022. Whether that’s a reaction to the hyper-fandom of artists who tend to do well in the physical market raising prices significantly or a marker of an industry-wide price hike there, it’s another example of how pricing is shifting across the industry and changing the revenue picture as a result.
Subscriptions Slowing Down?
As noted above, the average number of paid music streaming subscriptions grew by 5.8 million in the first half of the year to 95.8 million. That represents the slowest level of growth — both in raw numbers and in percentage — since at least 2015, when the U.S. streaming industry was still in its nascent phases. The growth in the number of subscribers has been slowing down now for about five years straight, as those who haven’t already gotten on board with paid music streaming slowly sign on. But it’s unclear how much room for growth remains — and, either way, the focus will continue to shift from acquisition and retention to growing value.
As subscriptions continue to near critical mass in the United States, the industry will need to continue its growth rate by convincing digital service providers to get more from the subscribers they already have. Whether that comes from price hikes or finding new ways to monetize fans on platforms — or, more likely, some combination of both — is an area to watch.
And, Finally…
A last word for our favorite sector of the RIAA report each year: ringtones and ringbacks. U.S. consumers spent $6.0 million on them in the first half of 2023 — down slightly from $6.2 million halfway through last year — while the unit count also slightly declined. We are a long way away from the Billboard Ringtones Chart of 2004, yet they continue to hang on as a line item year after half year. What a blessing.
Ingram Entertainment, the second largest U.S. music wholesaler, has begun telling its accounts that it will begin shutting down its music operation, with plans to close by the end of this year, sources tell Billboard. Sources suggest that Ingram’s music operation generates about $200 million a year in revenue. Beyond music, there are indications that the […]
Jerry Moss once spent a day in Athens, Greece, screaming at the heads of the world’s top electronics companies during a Billboard music-industry convention. It was 1981. Sony’s Norio Ohga and Philips’ Jan Timmer were trying to persuade record executives to switch from their beloved LP to this new, high-tech “compact disc,” and Moss, co-founder of storied indie A&M Records, which would break Janet Jackson, Sting, Soundgarden and Blues Traveler, led the opposition.
Moss, who died Thursday at 88, believed CDs “would kill the industry because the perfect digital master would invite and facilitate piracy,” according to John Nathan‘s 1999 book, Sony.
As I was researching this subject for my own book, Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age, I had to verify this claim. Nathan described a mob of outraged record execs chanting, like soccer hooligans, a “slogan that sounded like a Madison Avenue nightmare”: “The truth is in the grooves!”
This was the generous and magnanimous sales expert who was endlessly patient with his artists, willing to lose money on an album to advance a long-term career, whom Sting would describe as an “elder brother, a wise head, a man’s man and a mensch”?
I was sure Moss would be too embarrassed to rehash this history, because, eventually, the CD helped him and his partner, trumpeter Herb Alpert, become super rich, selling A&M to PolyGram for $500 million in 1989. (That’s $1.23 billion in today’s dollars.) But the exec who co-founded A&M with Alpert in a garage in 1962, after selling the master for Alpert’s Tijuana Brass instrumental “Tell It to the Birds” for $750, quickly agreed to a phone interview – and a wonkier follow-up later.
“I made a bit of a small statement at the meeting,” understated Moss, who at the time of our interview was running his post-A&M label, Almo Sounds, which had signed Gillian Welch as well as Garbage and Imogen Heap. “I liked the hardware and the whole ease of the CD, and I generally applauded the idea that Sony and Philips were getting together on this one piece of machinery.
“But,” he added, “I thought they could have done something to stop piracy.”
On Second Thought…
What finally turned Moss around was the economics of the CD. The price of vinyl records was stuck at $8.98 — and after Tom Petty threatened to affix a huge “$8.98!” sticker on his 1981 album, Hard Promises, his own label, MCA, and the rest of the industry were blocked from raising prices. The CD allowed A&M to “charge a multiple for this thing,” Moss said. Also, retail stores were charging labels for advertising — a “mighty blow,” Moss called it. After disco crashed in 1979, LP sales plunged. “Retailing and selling became very pinched,” he added.
“The retailers wanted more and artists and producers wanted more for what they were doing. The record companies were getting squeezed further and further,” Moss went on. “And here comes the CD.”
The shiny, futuristic format was in high demand, and retailers were willing to buy it from labels for $10 wholesale, far higher than the LP, then sell it to customers for $16.
“So A&M, after just a tiny bit of study, decided this was going to be our future,” Moss said.
Like the bigger labels, A&M had to find plants to manufacture the CD, quickly making a deal with a German company. And the CD, to which Moss had been so screamingly opposed in 1981, made A&M profitable beyond anything Alpert and Moss had once imagined: “The company was a different company from 1979 to 1989, certainly.”
A Bittersweet Sale
Alongside Alpert and the late Gil Friesen, then the day-to-day operations exec who referred to himself as the ampersand in A&M, Moss decided they had no choice but to sell the company they loved. Music stars in the late ’80s and early ’90s were demanding multimillion-dollar advances, and, as an indie, A&M couldn’t compete with bigger labels for the up-front guarantees. The trio stayed on for a couple of years after the sale, but PolyGram had a mandatory retirement age of 61. In 1991, Moss found himself with a new boss, Alain Levy, who became PolyGram’s worldwide president and CEO, and, Moss recalled, “wasn’t laughing at my jokes.”
(In 1998, PolyGram was sold to Seagram, which merged it with Universal Music Group, today the world’s biggest label.)
“I don’t regret selling, because I felt we had nothing but to do that. There was no alternative. We would have had to have gotten a lot smaller, and gotten our investment in different, other ways,” Moss told me. “I can’t say I’m sorry I sold A&M. I will say I’m sorry I had to leave.”
CD Baby has mostly exited the physical distribution business: “Going forward, we won’t have a warehouse, we won’t stock CDs, we’re no longer doing mail orders and that sort of thing,” says Scott Williams, president of CD Baby.
“We don’t take a decision like this lightly,” he adds. “But it’s just not as not as relevant for us and not as valuable to the artists that we serve. And so it’s time has come.”
That said, CD Baby isn’t exiting the physical business completely: Artists can still get CDs and vinyl manufactured through the company, CD Baby just won’t warehouse them. “We will still sell them, but those will be shipped to the artists that have purchased them,” Williams explains. “They can use Bandcamp; they can set up their own Shopify site. We have a lot of overlap today with Bandcamp — a lot of people that use us for digital distribution prefer to do their own physical distribution through Bandcamp, and they can still do that.”
CD Baby was founded roughly 25 years ago to sell compact discs for independent artists. (Downtown Music acquired CD Baby’s owner in 2019.) But CD sales started to decline in the 2000s, falling for 17 years straight until experiencing a small uptick in 2021. Sales of vinyl, the other primary physical music product, have traced the opposite path, recently celebrating their 17th consecutive year of growth.
In the first 10 weeks of 2023, CD sales ran slightly ahead of 2022 — 6.8 million in 2022 to 6.9 million, according to Luminate. CD prices are more affordable than vinyl, which often pushes past $30, executives say, and there are fewer production delays. Stars often sell them as a collectible item, and for touring acts, CDs are easier to take on the road to sell at shows.
Some distributors have seen the growth of the vinyl market as an opportunity to get into the physical distribution side of the business. Symphonic Distribution announced that it was adding physical distribution capabilities in partnership with AMPED in 2020. Pieter van Rijn, CEO of FUGA, told Billboard last year he was excited about the company’s recent entry into the physical distribution space. (Downtown also owns FUGA.)
But Williams says the CD has “fade[d] in relevance” for many of CD Baby’s acts. “Operating the fulfillment side of it isn’t going to be part of our core strategy going forward,” he continues. “I think we have better opportunities and things to focus on on the digital side.”
On March 4, hundreds of metalheads stormed into Pierce the Veil’s pop-up store in Glendale, Calif., scooping up T-shirts, hoodies and other merchandise. In the process, they helped boost sales for an ostensibly dying product: compact discs. “Kids would look at the display and pick every single one of our records on CD,” says Michele Abreim, the band’s manager. “It definitely felt like CDs were a merch item, not just a means to listen to music.”
A relic of the record industry’s pre-Napster boom period thanks to megastars like *NSYNC, Britney Spears and Eminem, U.S. CD sales accounted for $13.2 billion in 2000, their peak year, according to the RIAA. But though the format has been in steady decline throughout the streaming era, retail, manufacturing and management sources say the digital discs have gained in popularity as keepsakes. More portable than vinyl albums and less affected by manufacturing delays due to supply chain issues, CDs are once again becoming merch table mainstays, and in the first 10 weeks of 2023, sales are up slightly over the same period last year, according to Luminate — 6.8 million in 2022 to 6.9 million, a 2.5% increase.
This growth could be a sign of a growing coolness factor, similar to the unexpected, and sustained, vinyl revival that began in the early 2000s, which is fueled by limited-edition releases pressed on colored vinyl and other bells and whistles. Taylor Swift took a page from that playbook when she put out Midnights CDs in different collectible colors last year, and BLACKPINK is among the many K-pop acts to sell elaborate CD box sets.
“There are ways to do CDs that are incredibly impactful,” says Carl Mello, brand engagement director for Newbury Comics. “You can get more revenue out of it, so it’s not like a ‘Will this do $7.99?’ thing. You’re selling a $30 thing that a customer will be really happy with.”
Bill Wilson, senior vp of operations and innovation for MNRK Music Group, which oversees 50 independent labels, says specialized CD-buying audiences are keeping the format afloat. “There are still pockets and subgenres of music [fans] — like metal — who like holding and cuddling CDs — and they’re not vinyl collectors,” he says.
For those who can’t afford box sets or to spend upwards of $20 for a standard-issue vinyl album, “the CD is a much more budget-friendly item,” says Tony van Veen, CEO of New Jersey-based vinyl/CD manufacturer Disc Makers, who crunched the latest RIAA sales data and found that vinyl album prices rose last year by 13.5%, to $29.65, while CD prices went up 15.3%, to $14.45. “Music fans are deciding with their wallets.” He adds that his company’s CD sales stabilized in 2022 after years of decline.
CDs are generally far cheaper than vinyl albums — especially classic-rock catalog releases, which labels occasionally put on sale in the format. Creedence Clearwater Revival’s Chronicle: The 20 Greatest Hits goes for $13.99 on Amazon, compared with $28.31 for vinyl; a Foo Fighters Greatest Hits CD sells for $11.49, slightly more than half the $21.91 vinyl price.
Although pandemic-related manufacturing delays for vinyl are easing, they have prompted touring acts to stock their merch tables with CDs. “I had a conversation with somebody yesterday, and they’re about to go on tour,” says Ric Sherman, owner of The Production Department, a consulting company that works with artists, labels and record plants. “Trying to get vinyl on time was impossible, and they defaulted to CDs immediately.”
The profit margin for vinyl albums is slightly higher than CDs — a $15 CD would yield roughly $13.50 in profit; a $30 vinyl album, $15 — but Sherman adds: “Vinyl’s expensive to manufacture.” According to van Veen, 100 CDs cost $150 to manufacture, compared with $1,500 for 100 vinyl albums.
“If artists are touring, it’s easier to cart those around than vinyl,” says Mello. “There are utilities to it, for sure.”
Despite the small sales uptick so far in 2023, the 20-year decline in CD sales shows no sign of dissipating: Sales dropped from 40.6 million units in 2021 to 35.9 million last year, an 11.6% decrease, compared with a 4.2% rise in 2022 vinyl sales, according to Luminate. (That said, vinyl’s sales growth has slowed considerably from the 51% increase it logged in 2021.) Major labels are also reluctant to bet on CDs to drive significant revenue in the future. Says a major-label source: “I haven’t heard of the idea that somebody’s so committed to buying a physical product that they’re just going to move over to the CD if they can’t get a vinyl product.”
Then again, 35.9 million in annual sales is not nothing, and CDs will probably be around for a long time. “They’re highly valued and sought-after,” Mello says.
For over a decade, Taylor Swift has been offering fans a multitude of options when it comes to purchasing her albums across physical formats with exclusive editions available through a longstanding partnership with Target. But with her new album, Midnights, out Friday (Oct. 20), she’s truly outdone herself.
There are over 20 different versions of the album available on CD, LP and cassette in various colors, with different cover artwork, censored and uncensored, with and without autographs. That plethora of options is great for fans who may want a different version than their friends, or who — as many seem to — feel driven to collect them all. It’s also great for Swift, who’s earning more money from increased sales that will impact her performance on the Billboard charts and likely add up to one of the year’s best album debut weeks.
Few artists, if any, attract as much attention as Swift does for her promotion and sales strategy, thanks largely to her close relationship with her fans. In turn, she is brilliant at developing physical goods they want to buy, in addition to just streaming her music. Last year, following the release of her re-recordings of Fearless and Red, she accounted for one out of every 50 albums sold in the U.S., according to Luminate. She knows Swifties are collectors, and is now providing not only the multiple Midnights versions but elaborate containers to put them in, like a $39 CD clock or vinyl clock for $49, which display the four albums in a timely format, or $79 faux-leather vinyl collector’s case.
In today’s streaming-centric music industry, physical albums have become collectible tokens of fandom, and artists have been responding to growing demand. BTS and other K-pop megastars regularly rack up huge numbers by selling CDs and LPs with different colors and exclusive postcards and photos sold as collectible items, with the music as a secondary benefit. When South Korean boy band Stray Kids’ MAXIDENT topped the most recent Billboard 200 chart for the week of Oct. 22, it did so with 10 CD versions, including autographed CDs and exclusive Barnes & Noble and Target releases. Increasingly, it’s becoming a mainstream strategy for acts in the U.S., too. Such disparate acts as Denzel Curry and Slipknot have recently released various physical versions of their new albums as well. It just so happens that these sales all count towards an album’s Billboard chart performances. So by offering four different versions of Midnights per format, Swift is at least quadrupling her revenue from some super fans, as well as their impact on the charts.
Based on Billboard‘s research, here is a full rundown of the different Midnights versions fans can buy:
CDs:Moonstone BlueBlood MoonMahoganyJade Green
Signed CDs:Moonstone Blue (Webstore Exclusive)Blood Moon (Webstore Exclusive)Mahogany (Webstore Exclusive)Jade Green (Webstore Exclusive)
Clean-version CDs:Moonstone BlueBlood MoonMahoganyJade Green
Vinyl LPs:Moonstone BlueBlood MoonMahoganyJade Green
Signed Vinyl LPs:Moonstone Blue (Webstore Exclusive)Blood Moon (Webstore Exclusive)Mahogany (Webstore Exclusive)Jade Green (Webstore Exclusive)
Cassettes:Moonstone Blue
Target Exclusives:Lavender Deluxe CD (With Three Bonus Tracks)Lavender Vinyl LP
Digital:Moonstone Blue (Webstore Exclusive)Moonstone Blue (Clean) (Webstore Exclusive)Standard – 13 TracksStandard – 13 Tracks (Clean)Standard – 14 TracksStandard – 14 Tracks (Clean)
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