Streaming music made up 83 percent of the record industry's revenue in 2020

The record industry is making more money than ever, but who is it going to?

stockcam via Getty Images

The coronavirus pandemic may have made it nearly impossible to check out live shows last year, but the music industry still found a way to grow despite all the hardships. According to the Recording Industry Association of America’s annual year-end report, overall recorded music revenue increased by 9.2 percent to $12.2 billion in 2020. That growth was primarily sustained by more money coming from streaming services, with the format generating $10.1 billion in revenue in 2020, up from $8.9 billion in 2019. 2020 marked the fifth consecutive year of growth on that front.

Of the major streaming platforms, Spotify and Apple Music were the biggest contributors, generating $7 billion in revenue between the two of them. At the same time, the average number of US subscriptions increased to 75.5 million, up from 60.4 million in the previous year.

When you put all those numbers together, streaming accounted for 83 percent of the industry’s total revenue. Sales of CDs and digital downloads continued to decline, but if there’s a silver lining, it’s that vinyl had another strong year. Sales of the format increased by 29.2 percent year over year to $619.6 million. That’s particularly impressive when you consider record shops had to close for most of the year.

One crucial question the RIAA’s report doesn’t answer is where all that money is ending up. The streaming model pays out generously to the world’s biggest acts but makes it difficult for smaller and independent artists to make a living off their music. In some ways, that’s always been the case with the industry, but the problem has become more pronounced with the coronavirus pandemic. There’s an entire subsection of professionals who haven’t been able to participate in the economic growth the industry saw this year because it’s been impossible for musicians and bands to tour. That’s something platforms like Bandcamp have tried to address, but it will take other companies turning to more equitable business models before the problem gets better.