Last Saturday saw countless music fans and hi-fi aficionados around the country flock to their local independent record stores to celebrate Record Store Day – an international celebration of vinyl.

The annual event – last year spread across three days due to the pandemic – is big business. Between August and December 2020, special Record Store Day RSD releases (colloquially known as ‘drops’) accounted for 34% of all independent record store sales. 

That’s in a year when new record sales in the US grew 29.2% to hit USD $619.6 million, with more than 27 million new records sold.

It’s a sharp improvement on the roughly $30 million inflation-adjusted sales achieved in 2006, when the industry was at its lowest point with only 900,000 new records being purchased by consumers.

Closer to home, data from the Australian Recording Industry Association (ARIA) show vinyl sales in the land down under grew 32% in 2020.  

Second-hand sales bore out a similar pattern, with global online marketplace Discogs recording a 40.75% increase in sales across its platform.

What’s old is a new business opportunity

The resurgence in vinyl’s popularity has brought with it a spate of start-ups all tied back to a  nearly 100 year-old technology.

New pressing plants – where machines stamp the grooves and labels onto blank vinyl – are opening around the world including in Melbourne, where Program Records launched in 2020 (marking the first new pressing plant in the country in three decades).

But whether or not the growth in sales and slew of new businesses represent new investment opportunities is perhaps more complicated.

While vinyl sales have skyrocketed in the past 15 years, they’re still coming of a relatively low base – in the US, physical music sales account for only 9% of music industry revenues, while in Australia the figure is closer to 11%.

The bulk of the music industry’s growth is still rested firmly on the shoulders of streaming services like Spotify (with a market capitalisation of USD $46.36 billion at the time of writing).

Although there may be plenty of opportunities for savvy investors to capitalise on the ‘vinyl revival’, it might be easier just to sell the records you have in storage.

Who knows, one of them could even be worth a few hundred dollars.

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Sources:

• Yahoo: Spotify Technology S.A. (SPOT)
• Aria: Australian recorded music industry figures for 2020
• RIAA: YEAR-END 2020 RIAA REVENUE STATISTICS
• Beat: Meet Melbourne’s Program Records, Australia’s first new vinyl pressing plant in 30 years
• Bloomberg: The Latest Startups in Music Are Banking on Analog Technology
• Time toast: history of vinyl records
• Discogs: The State of Discogs 2020: End-of-Year Report
• Media week: ARIA releases Australian recorded music industry figures for 2020
• Statista: LP/vinyl album sales in the United States from 1993 to 2020
• RIAA: U.S. SALES DATABASE
• Pitchfork: Vinyl Record Sales Increased Almost 30% in 2020, RIAA Says
• Billboard: Record Store Day 2020 Drops Helped Sell Nearly 2 Million Albums at Indie Retail