Record Growth: Pressing Plants Invest In Vinyl

While streaming may be the dominant form of music consumption, it's no secret that vinyl is also seeing an impressive renaissance among music consumers, which is causing more pressing plant to make the smart investment and poney up for vinyl.

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Guest post by William Glanz of SoundExchange

[Editor’s note: We’re all about streaming at SoundExchange. But we have a special place in our hearts for vinyl. We all remember the first album we bought (but couldn’t find it now if we tried). Our affection for vinyl is even more profound because of one simple fact – vinyl almost died.]

Vinyl has made a record comeback, and Furnace Record Pressing can’t open its new vinyl pressing plant in suburban Washington, D.C., soon enough.

“After seeing years of consistent vinyl growth and new markets emerging around the globe, we knew it was time to make the significant investment into expanding our operations,” Furnace Record Pressing founder and CEO Eric Astor said.

In the digital age, vinyl sales still pale in comparison to revenue from streaming. While revenue from the sale of vinyl reached $182 million in the first half of 2017, according to data released in September by the Recording Industry Association of America (RIAA), revenue from streaming services reached $2.5 billion.

But vinyl has momentum, and its share of the market is growing, too. Revenue from the sale of vinyl albums comprised 29 percent of total physical shipments at retail value – its highest share since the mid-1980s.

Chain Reaction

Growing demand for vinyl has set off a chain reaction throughout the industry.

Demand for albums grew faster than the industry’s ability to press records. The lack of presses became a problem because it slowed production and distribution. Now, vinyl pressing plants are racing to catch up and accommodate demand from major and independent labels and from bands who self-release.

Furnace Record Pressing will open a 50,000-square foot production facility in Fairfax County, Virginia, in January 2018. The investment represents an expansion of its operations. Furnace Record Pressing does all vinyl pressing now at European facilities through agreements with overseas partners. It assembles the albums, sleeves and jackets in Virginia. When its new pressing plant opens, it will have the ability to do all the work domestically and produce up to 10 million 12-inch and 7-inch discs annually with its 16 presses.

“People have been trying to make sense of the vinyl revival for the last decade. Now that it’s clear that vinyl isn’t going anywhere, you’re seeing existing plants invest in expansion and new companies are starting up to help better feed a hungry industry,” Astor said.

Furnace Record Pressing isn’t the only company investing in vinyl production. Jack White’s Third Man Pressing opened its Detroit plant in February 2017 with eight German-made presses able to accommodate production of 12-inch and 7-inch discs. The vinyl plant is an extension of White’s Third Man Records, a label he started in 2001.

“It was the next logical step in regards to how we’ve grown here. But it was also the right situation and the right timing,” said Ben Blackwell, who oversees vinyl manufacturing and distribution at Third Man Pressing and is a co-founder of Third Man Records.

It also allowed Third Man Pressing to make its own albums, rather than relying on others.

“Our catalog had grown so quickly, and we keep everything in print – 500 titles and counting – so just managing that became extremely difficult with standard turnaround times,” Blackwell said.

And United Record Pressing, the nation’s largest vinyl pressing plant, last year announced it would expand operations to a new 142,000-square foot facility in South Nashville.

Today there are an estimated 23 pressing plants in the U.S., said Matt Earley, vice president at Gotta Groove Records, a pressing plant in Cleveland, Ohio. Within a year there could be five more vinyl pressing plants in the U.S., he said. That’s a 21 percent increase.

“I am surprised by the degree of growth in the market. Every time you think it has leveled out, it grows again, and I think there is still some room for expansion,” Earley said.

Data illustrates the increase in demand for albums that is driving the boom in capital investment.

Nielsen Music reported that sales of vinyl increased 3.1 percent through the first nine months of the year compared to 2016, with 9.35 million discs sold through September compared to 9.07 million during the first nine months last year.

But Michael Fremer, editor of analogplanet.com and senior contributing editor of the music and audiophile site Stereophile, says he thinks album sales far exceed what Nielsen reports and could reach 27 million units this year. In other words, he said, the industry is doing even better than people think.

“I never expected that vinyl would be embraced like it’s being embraced now,” Fremer said.

Demand for Supply

Identifying the reasons behind the growth is a bit harder.
“You’ll get a different answer depending on who you talk to,” Earley said.

Appetite for rock accounts for part of the increase in demand. Nielsen reported in its 2016 U.S. Music Year-End Report that rock accounted for 43 percent of U.S. album sales, far more than any other genre.

Major labels are distributing more albums and have a big role in driving sales because those albums are distributed so widely and their catalogs are enormous.

“The majors are important. They are sending albums to Urban Outfitters and Barnes & Noble, and those are gateways for consumers to get into vinyl,” Earley said.

Streaming may represent another gateway by serving as a means of music discovery for so many consumers who have embraced digital music.

“I think streaming can [drive vinyl sales]. I don’t know if it’s clear cut enough to say that it does,” Blackwell said. “In some regards, there are different fan bases. I would say most people who stream probably don’t buy vinyl. But I would say people who buy vinyl probably also stream, whether it’s a matter of convenience or as a way to explore music and fuel their vinyl purchases.”

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