Vinyl Sales Aren't Dead: The 'New' Billion Dollar Music Business

Photographer: Noriko Hayashi/Bloomberg

Vinyl records are projected to sell 40 million units in 2017. This will bring the past seven years’ collective sales to the $1 billion benchmark for the first time this millennium. This impressive milestone has been untouched since the peak of the industry in the 1980s. While explosive by today’s standards, according to Deloitte, in its heyday (‘81), total vinyl album sales topped $1 billion in just that year alone.

The record industry’s hunters and gatherers have been busy collecting. According to Deloitte, new vinyl records and revenue will enjoy a seventh consecutive year of double-digit growth in 2017. But the slice of the pie is still a very small one - with broader music industry revenues projected to be approximately $15 billion this year, vinyl will account for only 6%.

I spoke with Toddrick Spalding, the Director of Music at the trailer production agency Mob Scene – a music expert by trade, and avid record collector in Los Angeles. At 37 years old, Spalding listens to vinyl daily. His “modest” collection is a very highly-curated mix of 2,000 albums, both old and new. Other collectors have over 10,000 albums, completing discographies and aggregating every album from a specific record label, so he feels his is relatively small. Anytime he travels somewhere new, Spalding takes a dedicated day to find the record store and add to his collection.

How vinyl revival makes it harder on small local labels

Photo courtesy of Clint Billington, Victory Records

A decade of skyrocketing vinyl record sales has had unintended consequences for a key constituent: It is much harder for small local labels to get records made.

The data show more and more records selling, but those numbers represent only a small part of total music sales, around 5 percent in 2015. And that proportion is not enough to justify an expansion for the companies that press records using an expensive, old-fashioned industrial process. So the small number of record presses in the U.S. (there are fewer than 20) operate around the clock sometimes to keep up with demand. And local labels are feeling the pressure.

Los Angeles-based Rainbo Records runs its presses 24 hours a day, typically six days a week, according to Steve Sheldon, president of the company. Their newest press is 40 years old. If a part breaks and they don't have a replacement stored on their shelves, it has to be made, which is costly. Rainbo said it presses about 7 million records a year, compared with five years ago, when it was half of that.