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.