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Play it again, Sam: Vinyl industry continues to rally after near-death experience

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.
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.   Investing is not suitable for everyone. There is a risk that you can lose more than the value of a trade or its underlying assets. Past returns do not always indicate future returns, and it is also possible to make significant losses. There is always a risk of loss when trading and investing. Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our  Reach Markets Financial Services Guide including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment. Please click here to read our full warning.   Sources:  

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General Advice Warning

Any advice provided by Reach Markets including on its website and by its representatives is general advice only and does not consider your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This might mean that you need to seek personal advice from a representative authorised to provide personal advice. If you are thinking about acquiring a financial product, you should consider our Financial Services Guide (FSG)

including the Privacy Statement and any relevant Product Disclosure Statement or Prospectus (if one is available) to understand the features, risks and returns associated with the investment.

Please click here to read our full warning.

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