Retailers, Covid-era nostalgia revives vinyl record industry
A stack of gold vinyl records freshly pressed at United Record Pressing.
This story is part of CNBC’s new quarterly series Cities of Success, which examines cities that have been transformed into business centers with an entrepreneurial spirit that has attracted capital, companies and workers. draw
Once considered a dying industry, the vinyl record industry has undergone a remarkable multi-million dollar revival in the past decade. It is inspired by popular artists such as Taylor Swift and top sellers including Target and Walmartalong with a growing wave of consumers re-loving the nostalgic format during the Covid pandemic.
“I never thought in a million years that it would be, as a market and as a business, what it has become today,” said Mark Michaels, CEO and chairman of United Record Pressing, the press center North America’s largest vinyl record label, according to CNBC. Andrea Day in the upcoming primetime special “Cities of Success,” which airs Dec. 6 at 10 p.m. ET.
United Record Pressing CEO Mark Michaels examines a vinyl record.
The global vinyl record market was valued at $1.98 billion in 2022 and is expected to reach $4.12 billion by 2030, according to Verified Market Research. More than 41 million vinyl records were sold in the US last year – the highest number since 1988, according to the Recording Industry Association of America.
United Record Pressing has become a major player in the vinyl market, producing approximately 40,000 records per day at its Nashville, Tennessee facility. Founded in 1949 as Southern Plastics, the company has a rich history of producing vinyl records for iconic artists, including The Beatles, Stevie Wonder, Michael Jackson, Adele and Jack White.
But the company had an uncertain future 16 years ago when Michaels acquired it.
The second wind
The vinyl record industry had been in decline for several decades due to more convenient physical formats such as cassette tapes and CDs, a decrease in the quality of vinyl records due to lower quality materials and processes, and the rise of digital music. , such as MP3s and online streaming.
Sales of vinyl records fell in the 1980s and 1990s. And in the early 2000s, the industry was on the brink of extinction: In 2006, only 1 million vinyl records were sold in the US, according to the RIAA.
“I was questioning what I had done all the time,” Michaels said after acquiring the company. “I had many sleepless nights. [Even] my family asked what I had done.”
But in the years that followed, Michaels said, he noticed a promising trend: Indie artists showed a growing interest in vinyl.
Hoping to position United Record Pressing as a critical outlet for those artists and music producers who valued the tangible vinyl experience, Michaels purchased old record presses from closed plants to accommodate potential growth. .
“Before 2016, you had to be able to find an old record press and bring it back, and that was really difficult, difficult research,” Michaels said.
Demand for vinyl from both indie and mainstream artists led to reissues and color variations, marking a turning point, according to Michaels. That growth got more momentum when major retailers like Target and Walmart entered the vinyl market in the early 2010s.
The rise of mainstream
When Target and Walmart, two of the largest retailers in North America, decided to stock the entire supply chain with vinyl, according to Michaels.
Vinyl began to reach a wider market segment: consumers who may not have traditionally shopped in independent record stores but were eager to acquire mainstream vinyl titles.
“We realized with the old presses we got, and built the company around, that wasn’t adequate to be able to serve the needs of the market,” Michaels said. kind of 2016, a couple of companies started manufacturing new record presses.”
Shortly thereafter, United Record Pressing implemented a growth strategy, moving to a larger facility in 2017. The company established a creative marketing team that engaged artists and labels, the consider special vinyl ideas such as liquid-filled, colored and scented records.
The company also included a digital download coupon with each album and launched a record label, recording artists on tape and pressing directly to vinyl.
Michaels said the company also organized a local public relations campaign to celebrate its 60-year history as the leading vinyl pressing plant in North America.
United Record Pressing extension.
The new location, spanning 155,000 square feet in Nashville, not only met current requirements but also positioned the company for growth in the future – which would come just a few years later when the Covid pandemic gave the industry an extra boost as people reconnected with nostalgia. form.
Today, the medium reigns as the most popular physical music format in the US, representing 72% of all physical music sales, ahead of CDs and cassettes, according to mid-2023 data – the most available from the RIAA.
According to Billboard, the average price of a vinyl record increased from $26.12 in 2021 to $29.65 in 2022, reflecting higher production costs and the impact of inflation.
Additionally, the landscape of vinyl retailers has evolved over time. Indie record stores dominated the market in 2015 with 45.4% of sales, Billboard said, followed by Internet or mail-order retailers such as Amazon at 32.9%, and chain stores like Best Buy at 15%.
By 2018, Amazon had eaten into the dominance of indie stores, with the two categories representing 41% of the market share, while Best Buy’s share had decreased to just over 10%. And by 2019, major retailers such as Walmart and Target were registering on the scene.
Where big box retailers accounted for only 1% of the vinyl record market share in 2015, they accounted for 14.6% of sales in 2021, according to Billboard.
Directed by an artist
Michaels told CNBC that he is confident that the continued growth of the market will be driven by artists. That plus a general shift in interest, as younger audiences discover vinyl, suggests the medium is here to stay, he said.
Artists such as Taylor Swift offer collector’s versions of their albums, called “variants,” which are multi-colored vinyl records.
Artist Taylor Swift’s entire music catalog, including her album “Red,” was pressed at United Record Pressing.
“When Taylor puts out a new record, there’s probably eight, nine, 10, different variations of that same record – different colors, different mixes, maybe special tracks they weren’t included in the digital release, or on the CD, but you can get it on the vinyl,” explained Michaels. “There are a lot of fans who say, ‘There are eight different variations. I want one of each, please.’ They are very supportive.”
The CEO also attributes some of his company’s success to the city of Nashville, too, praising its deep connection to music and the creative industry, which has a skilled and dedicated workforce. to give
“You’ve got the whole music ecosystem here,” he said. “You’ve got artists, producers, studios — it all works together in a very symbolic way. It’s a great place, and we’re very lucky to be here.”
TUNE IN: Nashville’s “Cities of Success” special will air on CNBC on December 6th at 10pm ET/PT.