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Luke Combs has made a habit out of making history during his near-decade in the spotlight since breaking through with his multi-week No. 1 Billboard Country Airplay hit “Hurricane” in 2017. Explore Explore See latest videos, charts and news See latest videos, charts and news Now, the two-time CMA entertainer of the year winner has […]
AI has incredible promise and music creators are first in line exploring just how far these tools and innovations can take us.
At the same time, like every new technology, AI has risks and music creators are also first in line working to ensure it develops in lawful, responsible ways that respect individual autonomy and extend human creativity and possibility.
Yet today, a year and a half after the first mass market AI services were released, we still don’t know whether the promise or the peril of AI will win out.
Too many developers and investors seem to see a zero sum game – where AI behemoths scrape artists’ and songwriters’ life’s work off the internet for free and without any opportunity for individual choice, autonomy, or values. Where most of us see music, art, and culture to be cherished, they see soulless data to copied, “tokenized,” and exploited. Where most of us look to collaborate and reach for new horizons, they prefer to exploit art and culture for their own narrow gains. On the road to society’s AI future, it’s their way or no way.
At the top of the list of irresponsible developers are two music generation services, Suno and Udio, who claim to offer the ability to generate “new” music based on simple text prompts – a feat that’s only possible because these models have copied and exploited human-created music on a mass scale without authorization. Both have clearly chosen the low road of secretive, unconsented scraping and exploitation of copyrighted creative works instead of the high road of licensing and partnership.
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To address this egregious conduct, a group of music companies have today filed lawsuits against Suno and Udio in federal court in Boston and New York City, respectively. These lawsuits seek to stop the companies’ industrial scale infringement and steer generative AI back onto a healthy, responsible, lawful path.
Suno and Udio clearly recognize the business risks they are taking, going to extreme lengths to avoid transparency and refusing to disclose even the most obvious facts about how they have exploited copyrighted works or to even show us what works they have copied and used. If they really believed their own “fair use” rhetoric, if they really believe what they are doing is legal, would they work so hard to hide the ball?
The worst part is, these are multi-million dollar companies funded by the deepest pockets in the world who know the long term value music brings to their projects and who can well afford to pay fair rates for it; they just don’t want to. They willingly invest mass sums in compute and engineering, but want to take the most important ingredient – high quality human creativity – for free.
It’s a deeply shortsighted gamble – and one that has a track record of failing to deliver. Early internet services who relied on similar arguments and failed to get permission before launching are the ones who flamed out most spectacularly. Meanwhile digital streamers that partnered with artists and rightsholders to gain permission and innovate a healthy, sustainable marketplace together are today’s leading global music services.
And it’s totally unnecessary. Music creators are reaching out and leaning into opportunities in AI that support both innovation and the rights of artists and songwriters and have extended the hand of partnership and licensing to responsible AI companies.
In the last year, Sony, Warner and Universal have used creative AI tools to deliver breathtaking new moments with iconic artists including The Beatles, Roberta Flack, and David Gilmour and the Orb, all with appropriate partnership and consent. Music companies have partnered with ethical cutting-edge AI firms like BandLab, Endel and SoundLabs. And singer/songwriter Randy Travis used AI to record his first new song since largely losing his voice after a 2013 stroke.
But AI platforms should not mistake the music community’s embrace of AI as a willingness to accept continuing mass infringement. While free-market partnerships are the best path forward, we will not allow the status quo scraping and copying of artists’ creative legacies without permission to stand unchallenged. As in the past, music creators will enforce their rights to protect the creative engine of human artistry and enable the development of a healthy and sustainable licensed market that recognizes the value of both creativity and technology.
Generative AI has extraordinary promise. But realizing it will take collaboration, partnership, and genuine respect for human creativity. It’s time for AI companies to choose – go nowhere alone or explore a rich, amazing future together.
Mitch Glazier is Chairman and CEO of the Recording Industry Association of America (RIAA).
The three major music companies filed lawsuits against AI music companies Suno and Udio on Monday, alleging the widespread infringement of copyrighted sound recordings “at an almost unimaginable scale.” The lawsuits, spearheaded by the Recording Industry Association of America (RIAA), arrive four days after Billboard first reported the news the labels were seriously considering legal action against the two start-ups.
Filed by plaintiffs that include Sony Music, Warner Music Group and Universal Music Group, the lawsuits allege that Suno and Udio have unlawfully copied the labels’ sound recordings to train their AI models to generate music that could “saturate the market with machine-generated content that will directly compete with, cheapen and ultimately drown out the genuine sound recordings on which [the services were] built.”
“Building and operating [these services] requires at the outset copying and ingesting massive amounts of data to ‘train’ a software ‘model’ to generate outputs,” the lawyers for the major labels explain. “For [these services], this process involved copying decades worth of the world’s most popular sound recordings and then ingesting those copies [to] generate outputs that imitate the qualities of genuine human sound recordings.”
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“Since the day it launched, Udio has flouted the rights of copyright owners in the music industry as part of a mad dash to become the dominant AI music generation service,” the lawsuit against Udio reads. “Neither Udio, nor any other generative AI company, can be allowed to advance toward this goal by trampling the rights of copyright owners.”
The lawsuit is seeking both an injunction to bar the companies from continuing to train on the copyrighted songs, as well as damages from the infringements that have already taken place. Neither Suno nor Udio immediately returned requests for comment on Monday.
Suno and Udio have quickly become two of the most advanced and important players in the emerging field of generative AI music. While many competitors only create instrumentals or lyrics or vocals, Suno and Udio can generate all three in the click of a button with shocking precision. Udio has already produced what could be considered the first AI-generated hit song with the Drake diss track “BBL Drizzy,” which was generated on the platform by comedian King Willonius and popularized by a Metro Boomin remix. Suno has also achieved early success since its December 2023 launch, raising $125 million in funding from investors like Lightspeed Venture Partners, Matrix, Nat Friedman and Daniel Gross.
Both companies have declined to comment on whether or not unlicensed copyrights were part of their datasets. In a previous interview with Billboard, Udio co-founder David Ding said simply that the company trained on “good music.” However, in a series of articles for Music Business Worldwide, founder of AI music safety nonprofit Fairly Trained, Ed Newton-Rex, found that he was able to generate music from Suno and Udio that “bears a striking resemblance to copyrighted music. This is true across melody, chords, style and lyrics,” he wrote.
The complaints against the two companies also make the case that copyrighted material was used to train these models. Some of the circumstantial evidence cited in the lawsuits include generated songs by Suno and Udio that sound just like the voices of Bruce Springsteen, Lin-Manuel Miranda, Michael Jackson and ABBA; outputs that parrot the producer tags of Cash Money AP and Jason Derulo; and outputs that sound nearly identical to Mariah Carey’s “All I Want For Christmas Is You,” The Beach Boys’ “I Get Around,” ABBA’s “Dancing Queen,” The Temptations’ “My Girl,” Green Day’s “American Idiot,” and more.
In a recent Rolling Stone profile of Suno, investor Antonio Rodriguez admitted that the start-up does not have licenses for whatever music it has trained on but added that it was not a concern to him. Knowing that labels and publishers could sue was just “the risk we had to underwrite when we invested in the company, because we’re the fat wallet that will get sued right behind these guys… Honestly, if we had deals with labels when this company got started, I probably wouldn’t have invested in it. I think that they needed to make this product without the constraints.”
Many AI companies argue that training is protected by copyright’s fair use doctrine — an important rule that allows people to reuse protected works without breaking the law. Though fair use has historically allowed for things like news reporting and parody, AI firms say it applies equally to the “intermediate” use of millions of works to build a machine that spits out entirely new creations.
Anticipating that defense from Suno and Udio, the lawyers for the major labels argue that “[Suno and Udio] cannot avoid liability for [their] willful copyright infringement by claiming fair use. The doctrine of fair use promotes human expression by permitting the unlicensed use of copyrighted works in certain, limited circumstances, but [the services] offe[r] imitative machine-generated music—not human creativity or expression.”
News of the complaints filed against Suno and Udio follow up a previous lawsuit that also concerned the use of copyrighted materials to train models without a license. Filed by UMG, Concord and ABKCO in October against Anthropic, a major AI company, that case focused more specifically on copied lyrics.
In a statement about the lawsuits, RIAA CEO and chairman Mitch Glazier says, “The music community has embraced AI and we are already partnering and collaborating with responsible developers to build sustainable AI tools centered on human creativity that put artists and songwriters in charge. But we can only succeed if developers are willing to work together with us. Unlicensed services like Suno and Udio that claim it’s ‘fair’ to copy an artist’s life’s work and exploit it for their own profit without consent or pay set back the promise of genuinely innovative AI for us all.”
RIAA Chief Legal Officer Ken Doroshow adds, “These are straightforward cases of copyright infringement involving unlicensed copying of sound recordings on a massive scale. Suno and Udio are attempting to hide the full scope of their infringement rather than putting their services on a sound and lawful footing. These lawsuits are necessary to reinforce the most basic rules of the road for the responsible, ethical, and lawful development of generative AI systems and to bring Suno’s and Udio’s blatant infringement to an end.”
The Weeknd, Madonna and Playboi Carti‘s “Popular” just got a whole lot more popular: The song has been certified platinum by the Recording Industry Association of America. According to the RIAA, platinum certification for a song recognizes 1 million units certified in the U.S. for a song, and one unit equals either one permanent download […]
Latin music revenues in the United States continue to hit an all-time high, exceeding the $1 billion mark for a second year in a row on the wings of 16% growth that outpaced the overall market.
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According to the RIAA’s year-end Latin music report for 2023, total revenue jumped from $1.1 billion in 2022 to $1.4 billion in 2023, with the genre’s overall share of the total music market lifting from 7.3% in 2021 to 7.9%. In 2021, the revenue totaled to $881 million with an overall share of 5.9%.
“Latin music has exploded in the U.S. over the last decade as a new generation of stars boosts the genre and streaming puts this dynamic sector at everyone’s fingertips,” says Rafael Fernandez Jr., RIAA senior VP of public policy & Latin music. “No longer limited by language, access or outdated assumptions – Latin artists are shaping our culture as fans gravitate towards the spirit of this music, propelling faster growth than all other listening and expanding our horizons further every year.”
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Months earlier, the RIAA’s mid year report had already suggested that Latin music revenues would reach a record high, driven by the success not only of Karol G — who made history last year with Mañana Será Bonito — but also a new wave of música mexicana acts such as Peso Pluma, Fuerza Regida and Eslabon Armado who have also helped usher in a record year for regional Mexican music.
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“At the same time, there are opportunities for more fans to subscribe to paid streaming services and Latin vinyl sales to spin up even higher, finding different ways of connecting and inspiring unforgettable moments together as artists and labels offer up new sounds and songs,” adds Fernandez Jr.
Streaming makes up a stunning 98% of Latin music revenue, accounting for more than $1.3 billion, up 17% over 2022. Within that, paid subscriptions were the biggest growth driver, contributing more than two thirds of total revenues and posting growth of 21% to $915 million; last year, the total earnings from streaming was $758 million.
Another big contributor to growth was ad-supported on-demand streams (from services like YouTube, Vevo and the free version of Spotify), underscoring how important video is to the Latin fan. Revenue from this space grew 10% to $336 million.
Revenue from digital services like Pandora and SiriusXM increased 5% to 77 million, making up 6% of streaming earnings for Latin music. Conversely, permanent downloads yielded a mere 1% of revenues for Latin music in 2023, falling 15% versus the year prior to $10 million, comparable to the 12% drop for digital downloads in the market overall.
Although physical format sales slightly increased in 2022, this time CDs dropped down 49% to $2 million while vinyl albums decreased 25% to $7 million, the latter accounting for less than 1% of Latin music revenue in the U.S.
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Rihanna‘s 2012 smash “Diamonds” is staying true to its title 12 years later by earning diamond certification from the Recording Industry Association of America (RIAA) on Monday (April 22). Roc Nation officially announced the news via X on Monday morning, revealing that the single has accumulated 10 million equivalent song units. According to the RIAA, […]
Woop-woop, that’s the sound of a lifetime achievement honor! Make that two.
Late last week, President Joe Biden honored hip-hop pioneers KRS-One and Kurtis Blow with the President’s Lifetime Achievement Award at the National Hip-Hop Museum in Washington, D.C.
According to AllHipHop, 300 guests attended a ceremony at the RIAA headquarters, where the Rev. Dr. George Holmes delivered a rousing speech in celebration of the two icons. “There are two ways for a leader to go through life: as a thermometer or as a thermostat,” Holmes declared. “The thermometer merely measures the climate, but the thermostat sets the tone and creates it. That’s who you are, KRS-One and Kurtis Blow.”
In the absence of a physical appearance from President Biden, a letter from the White House addressed to the two hip-hop pillars was read.
“As it is with Kurtis Blow, as it is with you, America’s story depends not on any one of us, not on some of us, but on all of us,” read the note. “On behalf of the American people, President Biden extends his heartfelt appreciation to you for your volunteer leadership, and he encourages you to continue to answer the call to serve. The country is still counting on you.”
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In addition the groundbreaking careers and contributions to American music and culture, KRS-One and Kurtis Blow were also honored for their commitment to community service and leadership.
The honors come less than a year after hip-hop celebrated its 50th anniversary, with 2023 boasting a bevy of specials celebrating hip-hop’s history, including A GRAMMY Salute To 50 Years Of Hip-Hop, to which KRS-One turned down a personal invite from LL Cool J.
“I was asked about two months ago; they asked me to do it and I turned them down,” he told Harold St. Louis. “And reason being is because I know people don’t understand this — and I say this respectfully. KRS-One is a Hip Hop extremist. I’m not violent, a violent extremist. I’m insane with this culture. I know I must have lost my mind in this.”
Kurtis Blow also did not attend the telecast, but he, like KRS-One, celebrated Hip-Hop 50 with other institutions.
KRS-One has earned three career entries on the Billboard Hot 100: 1994’s “Sound of da Police” (No. 89), 1995’s “MC’s Act Like They Don’t Know” (No. 57) and 1997’s “Step Into a World (Rapper’s Delight)” (No. 70). On the Billboard 200, he’s notched eight entries, including his sole top 10 title, 1997’s I Got Next (No. 3).
Kurtis Blow landed a pair of Hot 100 hits over the course of his career: 1980’s “The Breaks (Part I)” (No. 87) and 1985’s “Basketball” (No. 71). He has also sent six titles onto the Billboard 200, reaching as high as No. 71 with his eponymous 1980 LP.
Click here to watch a clip of the ceremony.
Recording Industry Association of America (RIAA) COO Michele Ballantyne has been promoted to president, the organization has announced. She will continue to serve as COO, running daily operations and managing RIAA’s 56-person team.
A 2024 Billboard Women in Music honoree, Ballantyne serves on the RIAA executive leadership team alongside chairman/CEO Mitch Glazier while spearheading daily operations and helping lead advocacy efforts across the industry. During her tenure, she’s played a key role in the passage of the landmark Music Modernization Act as well as the PRO-IP Act, which established the first U.S. intellectual property enforcement coordinator in the executive office; and the Higher Education Opportunity Act, which provided colleges and universities with tools to reduce the illegal downloading of copyrighted works on campuses.
“I love my job, and I feel really lucky to have it,” Ballantyne tells Billboard in an exclusive interview (full Q&A below). “Music is something that is so important to everyone, and there are obviously lots of challenges…AI, TikTok, COVID. But one thing I’m really proud about is that at RIAA we’re nimble and we punch above our weight and I think that speaks a lot to the team we have in place. I really feel grateful to be at the helm with Mitch and see where we can take things.”
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Mitch Glazier, Busta Rhymes and Michelle Ballantyne
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More recently, Ballantyne has focused particular attention on the growing use of artificial intelligence in music and its ethical implications for creators. Under her leadership, the RIAA became a founding member of the Human Artistry Campaign, a coalition of music and entertainment organizations supporting ethical standards around AI that launched in August. The organization also supported the ELVIS Act, the landmark law designed to protect creators from AI deep fakes that was signed into law in March. On the federal level, the RIAA is supporting bills including the No AI FRAUD Act in the House and the NO FAKES Act in the Senate.
“Michele and I have had the privilege of guiding RIAA and supporting our member companies through amazing celebrations and challenges in the industry,” said Glazier in a statement. “I am grateful for her remarkable leadership and genuine care for people. Our playlists may not always be in sync, but our determination for a thriving and equitable community for music creators is.”
Ballantyne earned her law degree from the Georgetown University Law Center and started her career in government, serving in roles including general counsel for Sen. Tom Daschle, special assistant for President Bill Clinton and special counsel for former White House chief of staff John Podesta. She joined RIAA in 2004 as senior vp of federal government and industry relations. A Black female executive, Ballantyne’s work at the organization has also focused on social justice advocacy, including mobilizing RIAA members to support police reform bills, guiding the implementation of members’ social change commitments and managing the most diverse RIAA board of directors in its history.
On the occasion of her promotion, Billboard spoke with Ballantyne about her new role, the importance of combatting AI deep fakes, Universal Music Group’s dispute with TikTok and the possible implications of the upcoming presidential election.
You’ve been COO for several years now, but you’ve now added “president” to your title. How will your purview at the RIAA change?
It will change a little bit, but maybe not that much. It does catch up to the way we’ve been working, especially Mitch and I, who sort of approach things as a partnership. But the COO part, which is the sort of the nuts and bolts of running the organization and dealing with the internal stuff, it’s not all that I do. I do a lot of industry relations and coordinating with outside groups and coordinating with our member companies and making sure everything runs smoothly, that people are communicating. And so I think it reflects that piece of it too. I’m grateful for the recognition because I enjoy the work, and the title makes it clear to everybody.
You’ve been with the RIAA for around two decades now, and you’ve helped tackle some of the biggest issues in recorded music over that time. What do you see as some of the biggest issues facing the RIAA and its members currently?
No question it’s AI. AI has sort of supercharged everyone’s work. I am not the lead on it, but it’s everybody’s issue. We’re out talking about it and thinking about it and trying to figure out, “How are we gonna meet the challenges that it brings for artists and for labels and everyone in music?” It’s such a challenging time and everything is moving so fast. We’re just trying to figure out how we’re going to navigate all of it. And it’s an exciting time. It brings a lot of innovations to the table.
I think that the music industry in general is usually, in the time that I’ve been at RIAA, in the front. We’re the — I’m not fond of the saying — but the canary in the coal mine. All of these issues are ones that we confront first, the same as with file-sharing or any of those other issues that happened way back when. And the policymakers are grappling with how to handle these changes confronting society with AI, so it’s so multifaceted and very challenging.
We’ve been working on the deep fakes issue. That is one thing that pretty much everyone can come together around. We had that bill pass in Tennessee last week [the ELVIS Act] and we’re working on some federal bills as well. So, this is, I think, where all the focus is going to be. But in general, I think things are good, the industry is moving in a positive direction. You probably saw our revenue numbers came out earlier this week. One of the things that we’re so excited about, and I think that music companies have really embraced, is offering so much choice to fans. And I think that’s really positive.
I was curious about the year-end report. One interesting takeaway is that the record labels may have become almost too reliant on paid subscriptions for revenue and revenue growth. Do you think that revenue mix needs to be more dynamic? And if so, how do you feel labels can get there?
That’s a very tricky question. I’m not sure I can really answer that one. There are a lot of different components that go into it. And a lot of the pieces that are business issues, we aren’t at RIAA going to be able to see into those. It is a concern, for sure, and something that our folks are paying attention to.
I will say that one of the things that I have noticed that has changed most over the time that I’ve been at RIAA is this willingness to innovate and pivot. When I first came to RIAA in 2004, the focus was on how do we address file sharing? It was the Grokster case, and I think that within the companies, the old guard has sort of shifted out and the folks who are there now and have come in have very successfully navigated those challenges to the place we are today.
Today, everyone streams and anybody can get the music they want, whenever they want it. And it is not something that even occurs to young folks. I have a 16-year-old. He doesn’t even think about like, “I can just go on Spotify and listen.” To me, watching that change has been really impactful. And I’m just trying to think about it, like, something exciting will happen next. I’m not sure what it is. But I think it will happen.
One of the other big stories in the last few months was UMG pulling its catalog from TikTok and the ripple effect that that’s had on the industry. What do you think needs to happen to resolve that dispute?
I don’t know. TikTok has has grown so fast, and even among our companies and among policymakers, there’s differing opinions on how to handle that. Universal certainly put their marker down, and we haven’t commented because our companies aren’t all in the same place about it. So I don’t know how that’s going to resolve and I also don’t know what’s going to happen with the federal bill that policymakers are pursuing to say that they’re going to ban TikTok. I mean, it passed the House. It’s very tricky.
We have a big election coming up. What should RIAA members be on the lookout for when either candidate wins, whether it’s Trump or Biden?
We used to go, Mitch and myself, to our companies and board meetings and we would talk to them about what’s happening in D.C. and how it’s all gonna shake out and what we think will happen based on what we know and our experiences working both in the House and the Senate. It’s really hard to tell now. We gave up some years ago on doing our own punditry. The polling doesn’t seem to be as reliable and, as a D.C. person, even some of my colleagues from prior administrations or from the Hill, they’re like, “It’s really hard to tell.”
The good news for everyone in the music industry, not just RIAA, is that largely music issues are bipartisan, and on the committees that handle intellectual property, policy and copyright issues, the Judiciary Committee, they are dealing with many more complex issues such as guns and immigration and reproductive rights and so on. So a lot of times they are more willing to come to the table to talk about music issues, for a variety of reasons. One is that they can get to an agreement, there can be some bipartisan action, and, you know, music touches everyone. And policymakers are no different.
I think that hopefully we can get some action on making sure that we continue to protect the rights of artists and labels and songwriters and others in the music community, and not roll back any rights. We’ll be paying particular attention to AI and deep fakes and making sure that their rights are protected there. But it’s not clear how things will go, either from the standpoint of the election, but also getting bills passed is really hard nowadays. But can we get some engagement? Yes, we’ll get engagement. A lot of times what we try to do too, is if members feel like bills won’t pass, there are other ways to get them to engage, to help bring parties, stakeholders to the table to talk through issues and see if we can get some resolutions and things like that. I expect that to continue. But, you know, D.C. is…it’s tricky.
This interview has been edited and condensed.
The RIAA’s release of 2023 revenue figures show U.S. record labels are increasingly reliant — possibly too much so — on paid subscriptions for both revenue and revenue growth. While consumers continue to pay for premium streaming services, ad-supported on-demand streaming is languishing and newer platforms like TikTok provide more promotion than they do royalties.
The top-line takeaway of the RIAA’s 2023 report is that the U.S. market grew 7.7% to $17.12 billion, an improvement from the 6.6% uptick seen in 2022. Without adjusting for inflation, 2023 revenue was about 17% above the CD-era peak of $14.6 billion set in 1999, marking the ninth straight year of revenue growth after the U.S. market bottomed out at $6.95 billion in 2014. After nearly a decade of gains, the record business is healthy and stable.
But look over the RIAA’s report and you’ll see the U.S. market is missing the dynamism it could — and wants to — have. The revenue mix doesn’t have the diversity of past years. It’s not for lack of effort: Record labels are partnering with AI startups, licensing music to social media platforms and looking for new ways to engage with big spending superfans. But emerging categories remain just that — emerging — while other categories don’t yet provide much of a revenue boost. On-demand streaming turned around the industry, made music into an appealing asset class for investors and allowed handfuls of companies to go public. But where does it go from here?
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Here are five takeaways from the report.
The U.S. market is more reliant on paid subscriptions than ever.
Revenue from paid subscriptions from premium music streaming services such as Spotify and Apple Music totaled $10.15 billion and accounted for 59.3% of total recorded music revenues in 2023, an increase from 57.8% in 2022 (and far higher than percentages seen during the preceding years: 57.2% in 2021, 57.4% in 2020, 53.4% in 2019 and 47.3% in 2018). But U.S. labels were even more reliant on subscriptions for revenue growth, with paid subscriptions accounting for 79.4% of that growth in 2023. Ad-supported streaming — services such as TikTok and Facebook — grew 21.5%, or $56.2 million, but accounted for only 4.6% of annual growth.
New subscribers are harder to find.
For all the growth attributable to subscription services over the last decade, it might not be enough for some markets. As Billboard noted on March 15, SNEP, France’s recorded music trade group, warned that revenue growth from subscriptions “is slowing down here while our market is far from having reached maturity.” Fortunately for the United States, subscription penetration has surpassed 50% of U.S. internet users, according to MusicWatch. But the 2023 RIAA figures suggest streaming services have already picked the low-hanging fruit and will need new products to attract new customers. With far fewer new subscribers in 2023 than in previous years, labels were fortunate that Spotify raised the price for its standard individual plan in 2023. After adding 7.6 million subscribers in 2022 and 8.5 million in 2021, the U.S. market added just 5.2 million in 2023. That’s a sharp drop from the 15.1 million new subscribers gained in 2020 when pandemic restrictions caused an uptick in both music and video on-demand streaming services. Price increases by Spotify in July and Amazon Music in both January 2023 and August helped average monthly revenue per user improve to $8.74, up from $8.35 in 2022.
Advertising has stumbled.
A few years after advertising revenue surged, ad-supported streaming’s strength is probably its potential to convert some free users into paying customers. Ad-supported, on-demand streaming revenue rose just 2.3% in 2023, an even worse showing than the 3.5% improvement in 2022. Things looked much better a couple of years ago after ad-supported, on-demand streaming revenue jumped 46.7% in 2021 following a slowdown in 2020 due to the COVID-19 pandemic. Ad-supported on-demand streaming actually did better in pandemic-stricken 2020, rising 32.2% even though the bottom fell out of the ad market when brands braced for a recession by curtailing their ad spending. It was a remarkable turn of fortune for the promise of ad-supported music; after Spotify’s ad-supported revenue jumped 81% in 2021, CEO Daniel Ek said the growing online ad market bode well for India, Indonesia and other developing markets where Spotify operates. Since then, however, subscriptions — especially in mature markets like the United States — have carried the load for Spotify and others.
Social media is growing fast but remains small.
The highest growth rate of any category in 2023 came from “other ad-supported streaming,” which includes relative newcomers to licensing agreements such as TikTok. Other ad-supporting streaming jumped 21.5%, to $317.7 million, making the category about 75% as valuable as the fast-declining download and ringtone category (which was down 12.2% last year). The downside is that the category remains a small part of labels’ business:. Last year, other ad-supported streaming accounted for less than 5% of total revenue growth — about 6% as much as subscription services.
Physical sales were dependable, not explosive.
Both LPs and CDs had double-digit growth in 2023 — 10.3% for LPs and 11.3% for CDs — as physical formats benefitted from enthusiasm for vinyl collectibles and K-pop fans’ penchant for buying multiple CD variants of new releases. Total physical revenue increased by $181 million, or 10.5%, to $1.91 billion, and it has grown 66% since 2018. That more than compensated for the $60 million decline in legacy digital formats such as track and album downloads and ringtones. Still, vinyl and CD sales accounted for 14.8% of 2023’s revenue gains compared to subscriptions’ 79.4%.
Recorded music revenue in the United States grew 7.7% in 2023 over the prior year, reaching a high-water mark of $17.1 billion at retail, according to the RIAA. Within that headline number, $14.4 billion — or 84% — was driven by streaming, a figure that was also up 8% over 2022.
It’s the eighth straight year of revenue growth for the U.S. business, and the rounded 8% growth over last year’s $15.9 billion represents an uptick from 2022, when the business grew 6.1% over the prior year. And while the headline figure marks the third straight year that the business has set a record for revenue — previously set in 1999, when revenue hit $14.6 billion prior to Napster taking hold — when adjusted for inflation, it still falls far below that 1999 figure, which would be $26.9 billion at current rates.
Still, the U.S. business has been growing steadily over the past several years, and streaming has settled into being a fairly consistent piece of the revenue pie: This marks the fourth straight year that overall streaming accounted for between 83% and 84% of revenue, showing that streaming and the overall revenue picture are growing in lockstep. Within the streaming category, paid subscription streaming accounted for $11.2 billion, or 78% of all streaming revenue, up 9% over the $10.2 billion it accounted for last year; and the average number of full-tier U.S. subscriptions grew 5.7% to 96.8 million, up from 91.6 million last year.
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However, limited-tier subscription revenue — the bucket into which Amazon Prime, Pandora Plus, fitness services and other paid subscriptions that don’t include access to full, on-demand catalogs falls — dropped 4% to $1.0 billion. Meanwhile, ad-supported streaming service revenue grew 2%, to $1.9 billion, up from $1.8 billion in 2022; and digital and customized radio revenue, which includes services like SiriusXM and SoundExchange distributions, picked up 8% year over year, to $1.3 billion. Synch revenue grew by a similar rate, up 7.4% to $411 million.
In terms of sales, digital downloads continued their slide, with revenue down 12.2% year-over-year to $434.1 million, now representing just 3% of the overall industry. On the flipside, physical sales once again surged, up 10.5% to $1.91 billion (from $1.73 billion last year). That was largely driven by vinyl sales growth, which was up 10.3% year over year to $1.35 billion in revenue — an increase from $1.22 billion in 2022, as units jumped to 43.2 million from 40.5 million. CD sales revenue also grew by double-digit percentages, increasing 11.3% to $537.1 million from a $482.6 million mark in 2022, even as the number of CDs sold fell. The format saw 37 million sales in 2023, down from 37.7 million the year prior, suggesting a rise in average price per unit year over year.
Overall, the percentage breakdown between digital revenue and physical revenue — 89% to 11% — remained essentially the same as it has since 2018, only fluctuating 1% one way or the other in the intervening years. At wholesale, overall revenue grew by 7%, up to $11 billion from last year’s $10.3 billion, marking the second straight year that metric crossed the $10 billion plateau.