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Onward,

Michael Beach

The Music Industry Is Still Trying to Party Like It’s 1999

The fire started, as these things often do, with a song that wasn’t really about fire.

On July 24, 1999, as Limp Bizkit tore through “Nookie” at Woodstock 1999, pieces of plywood began lifting off the ground. Someone lit one. Then another. By the time the set ended, the crowd had turned restless energy into something visible. Flames. Smoke. A symbol, if you wanted one, that something had gone wrong.

I had just finished my first freshman year at Ohio State and really wanted to go.  Tickets were $150 ($270 today), which was $149 more than I had in my bank account. I stayed home, which felt like missing the biggest cultural moment of the summer.

It wasn’t.

Because 52 days earlier, a different kind of fire had started. No smoke. No stage. Just a piece of software called Napster, quietly spreading from dorm room to dorm room, letting people trade songs for free.

The industry saw Woodstock and thought, 'This is the problem.'

It saw Napster and thought, "This is nothing."

One of those judgments was off by about 26 years.

Woodstock burned for a weekend.

Napster burned the business model.

Let's break it down into 4 big questions:
1) How big is the music business today?
2) What share of our daily media diet is audio?
3) How many people subscribe to a music service?
4) How do streaming music services make money?

How big is the music business today?

The U.S. music industry has bounced back to $18B (in today's dollars) after losing two-thirds of its value. But it's still 36% smaller than it was in 1999.

The industry calls this a recovery. It's really a smaller business built on a cheaper product. CDs cost $15. Streaming costs $11/month for every song ever recorded.

U.S. music industry retail revenue in 2025 dollars (RIAA):
1) 1975 - $14B
2) 1985 - $13B (↓ 8%)
3) 1995 - $26B (↑ 97%)
4) 2005 - $20B (↓ 22%)
5) 2015 - $9B (↓ 55%)
6) 2025 - $18B (↑ 99%)

U.S. music industry retail revenue in 2025 dollars:
1) 1999 - $28B
2) 2025 - $18B (↓ 36%)

At its peak in 1999, the industry was worth $28B in today's dollars. Today it's $18B. The comeback got it to 64 cents on the dollar.

The real story is live music. The top 100 concert tours made $9B in 2025. The entire U.S. recorded music business - every artist, label, platform, and format - made $12B. A hundred acts touring stadiums earned three-quarters of what the whole industry earned.

Streaming is the marketing. Touring is the business. Merch is the margin. Everything else is noise.

What share of our daily media diet is audio?

Quick answer: 21%.  Americans spend 2h 47m per day listening to audio.

People listen to music while doing other things - driving, working, cooking, exercising. They watch video as the main activity. This is the difference between background media and foreground media. That difference drives everything below.

How many people subscribe to a music service?

In a decade, the number of American households paying for streaming music went from 11M to 107M - a tenfold increase that, remarkably, made almost nobody rich.

Streaming music subscribers:
1) 2016 - 23M (↑ 110%)
2) 2017 - 35M (↑ 56%)
3) 2018 - 47M (↑ 33%)
4) 2019 - 60M (↑ 29%)
5) 2020 - 76M (↑ 25%)
6) 2021 - 84M (↑ 11%)
7) 2022 - 92M (↑ 10%)
8) 2023 - 97M (↑ 5%)
9) 2024 - 100M (↑ 3%)
10) 2025 - 107M (↑ 7%)

Why it matters: One in three Americans now pays for music streaming. Growth went from triple digits to single digits. The easy sign-ups are done. From here, growth depends on price hikes and getting more out of each subscriber - a much harder game.

How do streaming music services make money?

Two ways - subscriptions and ads. Subscriptions do almost all the heavy lifting.

Music streaming revenue (Activate):
1) Subscription -  $12.3B (84%)
2) Advertising - $2.3B (16%)
3) Total -$14.6B

Botton line

Music is the canary in the streaming coal mine. It hit the subscription wall first. It found out that ad revenue couldn't fill the gap. And it learned that the real money was in the one thing technology can't copy - live, in-person experiences you have to be there for.

The industry is still trying to party like it's 1999. But 1999 was a $28B party. This one costs $18B, and the growth is slowing. Same industry. Smaller room. Fewer people are dancing.