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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.
Taylor Swift is continuing the rollout for 1989 (Taylor’s Version), which is set to release on Oct. 27, and the star announced on Wednesday (Sept. 13) that an exclusive bonus track will be available on the tangerine edition of the vinyl. Explore Explore See latest videos, charts and news See latest videos, charts and news […]
In September 1947, Ahmet Ertegun and Herb Abramson founded Atlantic Records with a $10,000 loan from Ertegun’s dentist. In 1948, Atlantic began putting out its first releases. Seventy-five years later, Atlantic remains one of the most storied labels in American history as home through the decades to such artists as Ruth Brown, Ray Charles, Aretha Franklin, Led Zeppelin, Genesis, Stevie Nicks, Matchbox Twenty and Crosby, Stills & Nash; and, more recently, Twenty One Pilots, Bruno Mars, Ed Sheeran and Lizzo.
This year, Atlantic is paying homage to its rich heritage with a multi-pronged, year-long campaign that celebrates some of its most iconic titles. Already started is the release of 90 classic titles, many on crystal clear, colored or recycled vinyl, curated by Atlantic Records chairman/CEO and noted audiophile Craig Kallman.
Among the releases in the 75th-anniversary commemoration are John Coltrane’s Olé Coltrane, Yes’ Fragile, Dusty Springfield’s Dusty in Memphis, Phil Collins’ No Jacket Required, Hootie & the Blowfish’s Cracked Rear View and Crosby, Stills & Nash’s self-titled album. More recent titles in the collection include Mars’ 24K Magic, Gucci Mane’s Mr. Davis, Lizzo’s Cuz I Love You, Sheeran’s Divide and Gayle’s A Study in the Human Experience. All titles are for purchase through Atlantic Records’ site and a number are available through various brick-and-mortar retailers.
Kallman began working on the project, which is running in conjunction with Rhino Entertainment, a number of years ago, printing out spreadsheets highlighting every significant title of the past 75 years. “It was stacks of paper making sure we didn’t miss anybody. It was painstakingly done. There was a lot of internal debating,” he says.
His mission was to cover the “breadth and scope of Atlantic’s history by genre,” he says. “We tried to include records that were culturally significant, that were groundbreaking for the company, that were blowout sales successes. It was about records that defined the label and the culture of the company.”
Though painstaking and extremely time-consuming, Kallman says the process “was a lot of fun and brings back a lot of memories because I was here for 32 years of it.” Kallman joined Atlantic in 1991 when the company purchased his dance label, Big Beat Records, and, in many ways, he had unintentionally been preparing for this moment. When he started at Atlantic, “I thought part of my responsibility was to really know and understand the history and legacy of the company so I can’t think of any [release] I didn’t already know about, but we wrestled with making sure that the depths of the early catalog were there,” he says. “My DJ’ing background also came in handy in making the selections.” Kallman’s personal collection numbers more than 2 million LPs.
While titles started rolling out a few months ago, forthcoming releases include Coldplay’s A Head Full of Dreams (including The Chainsmokers and Coldplay’s 2017 hit, “Something Just Like This,” as a bonus track) on Oct. 20 and Led Zeppelin’s Led Zeppelin IV on Oct. 27. The collection includes a number of titles that have been out of print, like Lil Uzi Vert’s Luv is Rage 2, as well as releases that have never come out on vinyl. All releases are tagged with a 75th-anniversary logo.
Kallman tried to keep the releases to 75, but ultimately, he could only whittle it down to 90. “We’re like, ‘Oh my God, this is too tough to narrow down,’ and we figured we could err on the side of going beyond 75 titles,” he says.
Courtesy Photo
The anniversary has several other components. Atlantic has partnered with high-end audiophile label Acoustic Sounds to release 75 classic titles in 180-gram, 45RPM black vinyl and SACD versions. That offering includes such Genesis albums as Selling England by the Pound and The Lamb Lies Down on Broadway, Coltrane’s Giant Steps and My Favorite Things, Otis Redding’s The Dock of the Bay and Buffalo Springfield’s self-titled set.
Another tie-in is with vinyl subscription service Vinyl Me Please (VMP), through which Atlantic will offer several titles through VMP’s record of the month program. Five titles will be available to VMP members as November selections, including Charles’ Ray Charles in Person, Lupe Fiasco’s Food & Liquor and Stone Temple Pilots‘ No. 4. Kallman says the deal could extend beyond the initial five titles depending upon the response.
Another component is a collection of remixes, available exclusively for streaming via DSPs. Among the selections are DJ Nora En Pure’s fresh take on Donna Lewis’ “I Love You Always Forever,” DJ Spinna’s remake of Roberta Flack’s “Killing Me Softly” and Italian DJ Luca Olivotto’s version of Yes’ “Owner of a Lonely Heart.”
The anniversary also includes a coffee table book from luxury art book publisher Taschen, which is expected to come out in 2024. “That’s been a labor of love,” Kallman says. “We’re excited to have a fitting chronicle of the history of the company with extraordinary photos and great essays.”
In August, Travis Scott fans on Reddit sprang into action. “$5 VINYL GO!” one user wrote in r/travisscott (234,000 members). The call-to-arms post came with a photo of a discount code that made buying the rapper’s double-LP Utopia — once $50 — about as costly as a gallon of milk in New York City. That price point proved irresistible: “This gon be my first vinyl why tf not,” one devotee responded. “Travis … gonna be selling 100k [in] his 4th week,” another added.
That fan wasn’t far off: Scott sold 88,500 vinyl copies of Utopia — 161,000 album-equivalent units overall — in the U.S. through his web-store in his fourth week atop the Billboard 200 albums chart, according to Luminate. Between the July 28 release of Utopia and Sept. 7, fans have snapped up more than 331,000 double LPs.
Vinyl album sales have been growing for 17 straight years, and in 2022 they accounted for $1.2 billion in revenue in the U.S., according to the RIAA. As the format has become more popular, a growing number of stars have moved to capture fan demand by releasing LPs of their own, often leading to eye-popping first-week numbers. What made Scott’s record rollout unusual was that some Utopia vinyl was available for $5 — both through bundle deals, where fans could get a record at that low price if they bought more than $120 worth of merchandise, and some stand-alone copies via discount codes.
At that price, many in the industry believe the rapper was not making a profit. One manager who spoke on the condition of anonymity says he was recently quoted around $7 a unit to manufacture an order of double vinyl. In a senior executive’s experience, “it costs $4 to make a single LP if it’s super bare-bones and you’re making a high quantity,” and more for a double LP. Throw in mechanical royalties, typically paid out on records at a rate of 12 cents per song, and it’s hard to imagine that a $5 double-record could make any money.
Even if Scott were selling some records at a loss, he’s not losing money overall: The rapper is famous for moving mountains of merch, some of which goes for a good deal more than $50. But the ability to offer up some records at $5 — $4.99 is the lowest price an album can be sold at and still count towards the Billboard 200 — shows the extent to which stars with fervent fan bases and formidable merch operations operate in a different world than most artists. And since an album’s streaming numbers usually dip as listener enthusiasm begins to wane after debut week, it’s possible that more artists might start to mark down records to help bolster demand and chart placement.
Luminate only receives data on total record sales, not the number of Utopia LPs sold at different price points. Scott’s label partner, Epic Records, directed questions about the rollout to the rapper’s manager, David Stromberg. Stromberg declined to comment on the record about vinyl pricing or sales strategy.
Executives say that selling some copies of Utopia at a 90% discount makes sense in certain circumstances. “We’ve lost money on individual album sales for chart position,” notes one marketer at a rival major label. A star could “spend $200,000 on ads and hope they convert [into streams],” the marketer continues. Alternatively, he suggests, “sell discounted albums, you lose money on those, figure it out on the back end, and hope the chart visibility helps with the overall story.”
“It’s a marketing exercise: In a genre [hip-hop] where streams dominate, be the only one to have a huge physical number,” adds another senior label executive not involved with Scott’s rollout. The price cut leads to a “sales bump and fan engagement.”
Sure enough, many rappers have ignored the vinyl wave. Steve Harkins, vp of sales and marketing at the distributor Ingram Entertainment, told Billboard earlier this year that “labels have said they’ve had challenges convincing artists and management to release their titles physically in some cases,” leading to a shortage of new albums on vinyl from rappers.
There are exceptions to this rule: Tyler, the Creator, has sold more than 360,000 LPs from across his catalog already this year, according to Luminate, while Kendrick Lamar has sold close to 270,000. But Luminate data show that at more than half a dozen rap albums that earned more than 500,000 album-equivalent units in 2022 had no vinyl component, including a pair of Drake releases, Lil Durk’s 7220, and Polo G’s Hall of Fame.
In August, Stromberg explained to Billboard that rap faces “inherent disadvantages” when it comes to “manufacturing physical music product.” “Due to the fluid nature of rap collaboration, leak culture and last-minute changes, vinyl lead time always far exceeds album delivery dates for rap,” he continued. “Pop artists are usually able to turn in their albums five to six months early and manufacture a significant amount of vinyl with a robust retail plan in place. Vinyl often ends up accounting for well over 50% of these pop artists’ first-week totals, whereas hip-hop is judged entirely on streaming.”
Key components of the Utopia rollout, Stromberg added, were “manufactur[ing] our own vinyl” and crafting “an e-com plan to leverage day-and-date physical music for the first time in modern mainstream rap.” So far, so good: Utopia recently passed Taylor Swift‘s Midnights (around 318,000 copies) to become the second biggest-selling vinyl album of 2023, behind only another Swift release, Speak Now (Taylor’s Version) (roughly 368,000).
And the big discount on Utopia helped some first-time vinyl buyers pull the trigger, according to their Reddit comments. “I am such a cheap ass,” one fan wrote on r/travisscott, “… but I actually bought a vinyl today because you can’t even get crappy vinyls for $5 nowadays. What a steal.”
“I don’t even buy vinyls,” another fan responded. “But $5 is $5.”
Greatest hits albums were once a key facet of the record business — a way for labels to repackage existing copyrights, for artists to make a statement about a body of commercial success and for consumers to get all their favorite hits by an artist in one collection.
The development of streaming hobbled that format. If a fan can create a playlist of all their favorite songs, why would they need to buy an album of those hits?
Best-of albums, though, are quietly hitting back — especially in the country format. MCA Nashville released Josh Turner’s Greatest Hits on Sept. 8, and Valory has Thomas Rhett’s 20 Number Ones scheduled for Sept. 29. Encore Music Group likewise issued Ricochet’s Then & Now on Aug. 18, with rerecordings of its four top 20 singles from the 1990s among the package’s 16 tracks.
“It’s kind of a milestone moment for me,” Turner says.
Indeed, in the old-school music business, hits albums carried a certain status. In their original, purest form, they signified that an artist had accrued enough successful individual titles that they could fill both sides of a vinyl release with familiar music. They sometimes expanded a fan base, too, as consumers who hadn’t necessarily kept tabs on a specific act suddenly recognized their accomplishments more fully.
“The greatest-hits aggregate, whether it’s physical or even just a digital collection, is kind of a marketing banner for the body of work,” says Fisher Entertainment Consulting founder Pete Fisher.
If the hits package has a throwback vibe, that’s appropriate since nostalgic vinyl is the format that’s most likely driving its return. Fans who want to hear the hits from the turntable at home can’t mix and match the songs for a 12-inch disc as they could on Spotify. The disc needs to be manufactured in a fixed order, and the best-of package offers real value.
“We’ve been selling a lot of vinyl on the road at my shows, so that’s a good sign to show that people really want the physical product,” Turner says. “Everybody’s familiar with the digital stuff now. Sometimes it’s kind of cool to just unplug and go to the record.”
There’s an irony to the development. Producers have been known to add programmed needle scratches to digital music to give it a ’60s or ’70s atmosphere. Avoiding those pops and crackles were one of the supposed benefits of shifting to CDs. The digital disc’s rise pretty much ended a 30-year reign for 12-inch pressings around the early 1990s. Now the sonic imperfections add a new dimension to several generations of music.
“Vinyls are making a comeback, and [they’re] making a comeback among the younger generation,” says Ricochet founder Heath Wright. “It’s the thing now.”
That shift is opening up new possibilities for most of the music from the last three decades as it appears on a warmer, less brittle configuration.
“It’ll be the first time I’ve heard Ricochet music on vinyl,” Wright says, anticipating the release of the band’s material on black and yellow plastic.
Plenty of recent hits projects marked the first time the songs were available in the format. Among the best-of collections unveiled in the last two years are Heads Carolina, Tails California: The Best of Jo Dee Messina, Luke Bryan’s #1’s Vol. 1 and Vol. 2 and a Justin Moore Greatest Hits originally offered in translucent red vinyl at Walmart. Much of Dolly Parton’s Diamonds & Rhinestones: The Greatest Hits Collection — including “Jolene,” “9 to 5” and “Coat of Many Colors” — was initially issued on vinyl back in the day.
But vinyl isn’t the only point. Digital service providers have created their own playlists dedicated to specific artists. However, that same act may prefer a different set of songs as a career overview, and the makeup of those titles on a hits compilation aren’t subject to revisions by DSP managers.
“It’s a nice way to roll up an era and curate the hits from a label-centric perspective for all time,” 615 Leverage + Strategy partner John Zarling says. “Apple constantly updates their Essentials playlists and prominently features those for every artist of note. But if you think about 10, 20 years removed, are those playlists going to properly document a specific era for an artist?”
Hits projects also give the act’s team a chance to elevate a song that was overlooked publicly. “Desperado,” for example, was never a charting single for The Eagles or Linda Ronstadt, but it rose in significance after being featured on both acts’ best-of compilations.
“Think about the songs that might have been important,” says Zarling, “but were never big chart successes, that because they were placed on greatest-hits records, it became a part of that artist’s repertoire.”
Plenty of artists who would have qualified for best-of albums in a previous era have never issued one during the last 20 years. That includes Brad Paisley, Cole Swindell, Taylor Swift, Chris Stapleton and Miranda Lambert. As the hits album hits back, a template has been established that makes a best-of compilation a good bet again.
In addition to making a statement about the act, it’s also a good way to enhance the experience with fans. Turner and Rhett are both offering special packages that combine hits albums with other merchandise. Rhett’s 20 Number Ones can be purchased in two different collectible versions, including one with an autographed box set with a booklet for $125. Turner’s Greatest Hits is available in several configurations, including signed copies and/or Turner-branded clothing for up to $185.
“That’s a trend that’s not going to go away,” Fisher suggests. “The entertainment industry as a whole is just continuing to try and find very high-touch experiences and high-quality products for that premium consumer. There’s profit opportunities with the superfan, and I don’t think they’re disappointed to pay that way. It’s a way they vote in support of their favorite artists.”
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Tyler, the Creator’s Call Me If You Get Lost finds its way back to No. 1 on Billboard’s Top Album Sales chart (dated Sept. 9), as the album vaults 76-1 following a new vinyl release of the set. It’s the album’s third week at No. 1 in as many years, following one-week visits to the top in 2022 and 2021.
The album’s return is owed to the Aug. 25 release of the first vinyl pressing of the deluxe edition of the album, dubbed Call Me If You Get Lost: The Estate Sale. The deluxe edition was originally issued via streamers and digital retailers in March 2023. The triple-LP set was pressed on blue-colored vinyl. In total in the U.S. in the week ending Aug. 31, all retail versions of the album combined – old and new – sold just over 29,000 copies (up 1,397%), according to Luminate. Vinyl sales comprised nearly all of that sum.
Call Me If You Get Lost previously hit No. 1 for one week in 2022 (April 30-dated chart) after the original album’s release on vinyl, and for one week in 2021 (July 10, its debut frame).
In total in the U.S. through the week ending Aug. 31, Call Me If You Get Lost has sold 328,000 copies on vinyl across its multiple vinyl editions.
Elsewhere in the top 10 of the latest Top Album Sales chart, Zach Bryan’s self-titled set launches at No. 3, and The Turnpike Troubadours’ A Cat In the Rain debuts at No. 5.
Billboard’s Top Album Sales chart ranks the top-selling albums of the week based only on traditional album sales. The chart’s history dates back to May 25, 1991, the first week Billboard began tabulating charts with electronically monitored piece count information from SoundScan, now Luminate. Pure album sales were the sole measurement utilized by the Billboard 200 albums chart through the list dated Dec. 6, 2014, after which that chart switched to a methodology that blends album sales with track equivalent album units and streaming equivalent album units. For all chart news, follow @billboard and @billboardcharts on both Twitter and Instagram.
Travis Scott’s chart-topping Utopia falls to No. 2 after four weeks at No. 1 (selling 29,000 copies; down 68%), while Bryan’s self-titled album bows at No. 3 with 17,000 sold (all from digital downloads, as it has yet to be released on any physical format). NewJeans’ former No. 1 2nd EP ‘Get Up’ rises 7-4 with 13,000 (down 17%), while The Turnpike Troubadours’ A Cat in the Rain starts at No. 5 with nearly 13,000 sold.
Taylor Swift’s former leader Speak Now (Taylor’s Version) rises 8-6 (nearly 13,000; down 19%), NCT DREAM’s ISTJ: The 3rd Album falls 6-7 (12,500; down 49%), and J-Hope’s Jack in the Box falls 2-8 (12,000; down 74%). Swift’s former No. 1 Midnights climbs 11-9 (10,000; down 12%), and JIHYO’s Zone (The 1st Mini Album) falls 4-10 (10,000; down 73%).
In the week ending Aug. 31, there were 1.666 million albums sold in the U.S. (down 12.6% compared to the previous week). Of that sum, physical albums (CDs, vinyl LPs, cassettes, etc.) comprised 1.333 million (down 15.3%) and digital albums comprised 334,000 (up 0.1%).
There were 552,000 CD albums sold in the week ending Aug. 31 (down 18.9% week-over-week) and 773,000 vinyl albums sold (up 12.6%). Year-to-date CD album sales stand at 23.283 million (up 1.8% compared to the same time frame a year ago) and year-to-date vinyl album sales total 31.147 million (up 20.4%).
Overall year-to-date album sales total 67.201 million (up 6.9% compared to the same year-to-date time frame a year ago). Year-to-date physical album sales stand at 54.788 million (up 11.6%) and digital album sales total 12.414 million (down 10%).
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 […]
LONDON — Located around 65 miles outside London, Bicester in leafy Oxfordshire is far removed from the bustling world of rock and roll. Despite its lack of star power, the historic market town is nevertheless set to play a key role in the British record industry as home to the United Kingdom’s biggest distribution warehouse for physical music and home entertainment.
Due to begin trading today (Aug. 29), the new 25,000-square meter facility is being opened by Swiss-based Utopia Music as part of a £100 million ($125 million) long-term deal with international logistics company DP World. With handling capacity of up to 250,000 units per day, operators say the state-of-the-art warehouse will distribute over 30 million CDs, vinyl records and Blu-ray discs a year across the United Kingdom and export markets on behalf of clients, including Universal Music Group, Sony Music Entertainment and [PIAS].
For Utopia Music, the opening of the Bicester site provides a much-needed boost after a troubled 12 months that has seen the company undergo multiple rounds of job cuts, executive departures, office closures, legal action over a stalled acquisition deal and the offloading of three of its businesses — Absolute Label Services, U.S.-based music database platform ROSTR and U.K.-based publisher Sentric.
For the wider music industry, the new warehouse facility acts as further proof of the continued demand for physical music formats, driven by the ongoing vinyl boom.
Last year, vinyl sales climbed 2.9% to 5.5 million units in the United Kingdom, marking the 15th consecutive year of growth, according to labels trade body BPI. In contrast, CD sales fell 19% year-on-year to 11.6 million units in 2022, though the format still accounted for more than two-thirds (67%) of all physical music purchases. Total revenue from physical music sales stood at £280 million ($352 million) in the United Kingdom last year — down 3.8% versus 2021 but up £9 million ($11 million) on 2020’s total, according to trade organization the Entertainment Retailers Association (ERA).
The latest year-to-date figures from BPI, meanwhile, show slight growth across the U.K. physical music market in 2023 compared to last year, while vinyl sales are up by around 15% versus the first 33 weeks of 2022 in volume terms. The trade body says that physical music revenues are on track to record double-digit percentage growth in 2023.
“A lot of people were too quick to write off physical and maybe now realize there is still a large and viable business here,” says Utopia Music vp of distribution Drew Hill on the eve of the new facility opening.
Fintech firm Utopia Music has owned a large stake in the U.K. physical music distribution business since January 2022, when it acquired Proper Music Group, the United Kingdom’s biggest independent physical music distributor, for an undisclosed sum. Eight months later, Utopia bought up the assets of Cinram Novum — which provides warehouse, fulfillment and distribution services to music labels and home entertainment companies — and renamed it Utopia Distribution Services (UDS).
Drew Hill
Utopia Music
Over the summer, stock has been transported from UDS’ previous warehouse in Aylesbury to the new Bicester site, which will handle 70% of all U.K. physical music sales, as well as 35% of domestic physical video (DVD and Blu-ray discs) sales each year, according to Utopia. Proper Music Group, which trades as a standalone entity within the Utopia group and provides distribution to over 5,000 indie labels and service companies, will continue to operate from its existing warehouse in Dartford.
Hill says the multi-million-pound investment that UDS is making in physical music will help ensure the survival of CD and vinyl formats for future generations. “Lots of other distributors have either gone to the wall or they have been massively underfunded. The physical music business is still a quarter of a billion-pound industry, and it really needed someone to come in and upgrade the infrastructure to be able to support that,” he says.
Utopia Music co-founder and interim CEO Mattias Hjelmstedt says the Bicester facility “marks a new beginning for the U.K.’s physical distribution market.”
The continuing shift away from physical formats toward streaming does, however, present considerable challenges to any company operating in the physical market. In 2022, Proper Music Group recorded revenue of £30.1 million ($38 million) for the nine-month period ending Dec. 31, down from £42 million ($53 million) in the prior 12-month accounting period, according to its latest financial records. The company says lower sales and increased operating costs were behind the £1.9 million ($2.4 million) net loss it posted last year.
In response to inflationary pressures, Proper raised its prices for the first time in over 15 years in late 2022, with UDS also increasing prices on what Cinram Novum was previously charging clients. Hill declines to reveal how much prices have increased but is confident that the measures taken will help Proper return to profitability in 2024, while the new Bicester facility will enable UDS to grow its client base through increased capacity and a greater focus on direct-to-consumer sales.
By tapping into DP World’s global network, which spans 75 countries on six continents, UDS will also be looking to grow physical music exports outside the United Kingdom. It also, says Hill, has long-term plans to replicate its centralized distribution model overseas, possibly in North America or Europe.
Commenting on Utopia’s well-publicized recent difficulties, Hill says support from the Swiss-based tech firm has been “unwavering” and both Proper and UDS have been “ring-fenced” from the cuts Utopia has implemented elsewhere over the past year.
“[CEO] Mattias [Hjelmstedt] has talked internally about how physical distribution is the engine room of Utopia. We provide a funnel through which it can present and sell its other products and services,” says Hill, who has worked for Proper for more than 15 years.
Hill adds that he has no concerns about the financial stability of Utopia and points to the growing popularity of vinyl, deluxe boxsets and special edition releases among music fans as a thriving growth area for the physical music business.
“Over time, maybe we will start to shift fewer units, but they will be units of higher value,” he says. “As long as you create a beautiful package with valuable content in it, people will always want to buy it.”
1989 (Taylor’s Version) is the gift that keeps on giving. Taylor Swift revealed another limited edition vinyl colorway via Instagram on Monday (Aug. 21), this time a soft aquamarine green color. Similar to the yellow “Sunrise Boulevard” vinyl she announced last week, Swift’s newest vinyl will be available to pre-order for just 48 hours on Swift’s […]
Celebrations are in order for Lady Gaga, as her debut album The Fame, turned 15 years old on Saturday (Aug. 19). To celebrate the occasion, the pop star — who formally launched her pop career with the record and became one of the genre’s most formidable forces following its arrival in 2008 — released a […]