RIAA Reports Recorded Music Market Enjoyed Solid Growth In 1999

The news is good for CDs, great for DVD, worrisome for cassettes and music videos. On the whole, though, the Recording Industry Association of America (RIAA) found that the near $15 billion market for recorded music, measured by what manufacturers ship to retail and non-retail channels, continued its upward trend in 1999, enjoying moderate growth. According to the RIAA, manufacturers saw a 3.2 percent net unit increase in audio and video product shipped to domestic markets (from 1.12 billion units in 1998 to 1.16 billion units in 1999). The corresponding dollar value of those shipments at suggested list price increased 6.3 percent from $13.7 billion in 1998 to $14.6 billion last year. ""The nearly twenty-percent growth in list dollars that the industry experienced over the last two years is a clear indication that despite the ever-increasing competition for the consumer's entertainment dollar, music has an intrinsic value that touches Americans - they love their music and they want more,"" said Hilary Rosen, the RIAA's President and CEO. Total album product - full-length LP, CD and cassette shipments - grew 5.6 percent in 1999, closely resembling SoundScan's 5.9 percent increase in sales of album product. This similarity between RIAA and SoundScan numbers for the second year (growth in album shipments and album sales matched in 1998) indicates retailers are weathering consolidations, continuing to control inventory effectively and maintaining an efficient product pipeline between manufacturers and retailers. Despite the maturity of the format, in 1999 full-length CD shipments grew nearly 11 percent over the previous year. On the other hand, while shipments of CD singles remained flat at 56 million units, this was a significant improvement over 1998. Growth within the CD singles format is being driven by CD maxi singles, which increased from $35.7 million in 1998 to $65.3 million in 1999. Full-length CD unit shipments grew 10.8 percent from 847 million in 1998 to 939 million in 1999; full-length CD dollar value grew 12.3 percent from $11.4 billion in 1998 to $12.8 billion in 1999. Although DVD is included under music video totals, the RIAA is breaking out DVD music video shipments for the second year. This allows comparative data to be drawn for the first time, substantiating the enormous growth in this format. These numbers do not reflect total DVD shipment activity because not all reporting companies are able to provide DVD statistics at this time. DVD music video unit shipments grew 405 percent from 485,000 units in 1998 to 2.5 million in 1999. DVD music video dollar value grew 442 percent from $12.2 million in 1998 to $66.3 million in 1999.In 1999, shipments of cassette units continued to decline as they have over the past several years. Cassettes are losing the advantage of mobility as more and more cars are sold complete with CD units and sales of portable players of many different kinds continue to increase. Cassette unit shipments dropped 22 percent from 158.4 million in 1998 to 123.6 million in 1999; cassette dollar value dropped 25.2 percent from $1.4 billion in 1998 to $1.1 billion in 1999. Special markets, which accounts for 25 percent of the total domestic market and includes all mail order operations, record clubs and non-music retail outlets, showed continued growth in 1999, and sustained recovery from a 19 percent decline two years ago. Unit shipments of all formats to direct and special markets grew 6.1 percent from 274.3 million in 1998 to 291 million in 1999; dollar value of shipments to direct and special markets remained flat with a 1.4 percent decrease from $1.6 billion in 1998 to $1.5 billion in 1999. Music videos, which now include DVD activity, suffered a big drop last year. This format is hit-driven by key acts and there were only a few top-selling videos in 1999, which accounted for the majority of these shipments. Although this is a significant decline for this category, it constitutes less than two percent of the overall market. Music Video unit shipments dropped 28 percent from 274.3 million in 1998 to 19.8 million in 1999; music video dollar value decreased 27.6 percent from $520.2 million in 1998 to $376.7 million in 1999. The RIAA's year-end numbers, which are compiled quarterly by PricewaterhouseCoopers LLP, represent data from companies that distribute approximately 90 percent of the prerecorded music in the United States. To calculate unit shipments and dollar values for the remainder of the market, PricewaterhouseCoopers LLP utilizes retail sales data from SoundScan to estimate shipments by non-reporting companies. Dollar value is calculated at suggested list price.