Retailers, Covid-era nostalgia revive the vinyl records industry

This story is part of CNBC’s new quarterly “Cities of Success” series, which examines cities that have been transformed into business hubs by an entrepreneurial spirit that attracts capital, businesses and workers.

Once considered a dying industry, the vinyl record business has enjoyed an impressive multibillion-dollar resurgence over the past decade. Popular artists such as Taylor Swift, the goal and walmartplus a growing wave of consumers rekindling their love for the nostalgic format during the Covid pandemic.

“Never in a million years did we think we would be where we are today, both as a market and as an industry,” said John, CEO and CEO of United Record Pressing, North America’s largest vinyl pressing plant. Chairman Mark Michaels told CNBC. Andrea Day will appear on the primetime special “Cities of Success,” airing December 6th at 10pm ET.

According to Verified Market Research, the global vinyl market was valued at $1.98 billion in 2022 and is projected to reach $4.12 billion by 2030. More than 41 million vinyl albums were sold in the United States 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 record market, producing approximately 40,000 records each day at its facility in Nashville, Tennessee. Founded in 1949 as Southern Plastics, the company has a rich history of producing records for iconic artists such as the Beatles, Stevie Wonder, Michael Jackson, Adele and Jack White.

But when Mr. Michaels bought it 16 years ago, the company faced an uncertain future.

The analog record industry had been in decline for several decades due to the advent of more convenient physical formats such as cassette tapes and CDs, the decline in the quality of analog records due to lower quality materials and processes, and the rise of digital music. , MP3 and online streaming.

During the 1980s and 1990s, record sales plummeted. And by the early 2000s, the industry was on the verge of extinction. According to the RIAA, only 1 million records were sold in the United States in 2006.

“I always wondered what I was doing,” Michaels said after the acquisition. “There were many sleepless nights. [Even] My family wondered what I had done. ”

But Michaels said he noticed an encouraging trend in the years since. The idea was that independent artists were becoming more interested in vinyl.

Wanting to position United Record Press as the go-to pressing plant for artists and music producers who value a tangible vinyl experience, Michaels is repurchasing old records from shuttered factories to accommodate potential growth. I bought a press.

“Before 2016, you had to be able to find old record pressings and restore them, and that was a really hard, hard search,” Michaels said.

According to Michaels, demand for the record from both independent and mainstream artists quickly led to reissues and color variations, marking a tipping point. Its growth gained further momentum in the early 2010s when major retailers such as Target and Walmart entered the vinyl market.

According to Michaels, when North America’s largest retailers, Target and Walmart, decided to stock records, the entire supply chain was significantly affected.

Records began to reach wider market segments, including consumers who may not have traditionally shopped at independent record stores, but were keen to obtain mainstream record titles.

“We built the company around all the old printing presses we acquired, but we realized that wasn’t enough to meet the needs of the market,” Michaels said. “Conveniently, around 2016, several companies started manufacturing new record printing machines.”

Soon after, United Record Press implemented a growth strategy and moved into a larger facility in 2017. The company established a creative marketing team to work with artists and labels to conceptualize unique record ideas such as liquid-filled, split-color and scented records.

The company also included a digital download coupon with each record and launched a record label that records artists to tape and presses them directly onto the records.

Michaels said the company also organized a grassroots public relations campaign to highlight its 60-year history as North America’s premier vinyl pressing plant.

The new 155,000 square foot space in Nashville not only met current requirements, but also positioned the company for future growth. It was just a few years later when the coronavirus pandemic gave the industry another boost as people re-engaged with nostalgia. format.

The medium currently reigns as the most popular physical music format in the United States, surpassing CDs and cassettes and accounting for 72% of all physical music sales, according to mid-2023 data (the latest information available from the RIAA). occupies .

according to signboardthe average price of a record rose from $26.12 in 2021 to $29.65 in 2022, reflecting higher production costs and the impact of inflation.

Additionally, the record retail landscape has evolved over time. Billboard reports that in 2015, independent record stores led the market with 45.4% of sales, followed by the internet and mail order. Amazon 32.9%, chain stores, etc. best buy At 15%.

By 2018, Amazon had eroded the dominance of indie stores, with both categories accounting for 41% of the market share, while Best Buy’s share had declined to just over 10%. And by 2019, major retailers such as Walmart and Target had signed up to the scene.

According to Billboard, major retailers accounted for just 1% of the record market share in 2015, but accounted for 14.6% of sales in 2021.

Michaels told CNBC he believes continued growth in the market will be artist-driven. Plus, a shift in public interest as younger listeners discover records suggests the medium is here to stay, he said.

Artists like Taylor Swift offer collectible album versions called “variants,” which are multicolored vinyl records.

“When Taylor releases a new record, there could be eight, nine, ten different variations of that same record. Different colors, different combinations, maybe some things that aren’t on the digital release or CD. There may be a unique track, but it’s on the record,” Michaels explained. “There are a lot of fans who say, “There are eight types, but I want one of each.” They are very supportive.”

The CEO credited the company’s success in part to the city of Nashville, praising its deep ties to the music and creative industries, which have provided a dedicated and skilled workforce.

“We have a whole ecosystem of music here,” he said. “You have the artists, you have the producers, you have the studios, and they all work together in a very symbiotic way. It’s the perfect place and we’re so lucky to be here.”

Tune in: The “Cities of Success” special featuring Nashville will air on CNBC on December 6th at 10pm ET/PT.