It’s 2017, and Vinyl Records Are Selling Better Than Ever. Here’s Why

vinyl records

The music industry isn’t what it used to be. Gone are the days of artists selling tens of millions of albums and going multi-platinum. Now, musicians make most of their money through touring, licensing their songs to commercials, and pretty much anything but album sales.

Yet album sales aren’t going away any time soon. In fact, the U.S. music industry recently had its best year in a while, and album sales made around $3 billion in revenue. While people are still buying CDs and downloading mp3s from iTunes, 26% of American album sales come from an antiquated format: vinyl.

The vinyl record industry exploded in the last several years, with millions of people buying records of new and legacy recordings. In 2016, vinyl record sales in the U.S. came out to $430 million, the best they format did since 1985.

But how is such a dated format making a comeback? Let’s take a look.

Record stores don’t really exist anymore, but stores selling records do.

In 2014, Urban Outfitters ($URBN) claimed to be the biggest vinyl retailer in existence. While this could be disputed, the fashionable apparel retailer and Amazon ($AMZN) both sell a substantial amount of records (as do the remaining record stores). Placement in Urban Outfitters and other national retailers like Whole Foods ($WFM), Best Buy ($BBY) and Walmart ($WAL) helped the format spike in sales. Vinyl record sales represent a fraction of the revenue these stores bring in, but the rise in physical record sales gave each chain reasons to display them more prominently or keep them on display despite the dying album format.

Vinyl records in 2017 are different from vinyl records in 1985.

In 1985, you could buy an album on a cassette, CD, or record. In 2017, the cassette format is only available as a sales gimmick and the CD is on its last legs. Today, when a record label releases a new or archived album on vinyl, they do so to treat the record as a collector’s item. The artwork, liner notes, and even the color of the record itself is paid careful attention. Select artists, like Jack White (of Third Man Records), prefer the vinyl format and release albums or special editions exclusively on wax.

Some analysts even speculate that music fans rarely play their records, streaming the album instead and treating the oversized physical edition as a work of art. This is similar to early vinyl collectors, who sought after hard-to-find records, never played them, and kept them as a token of their hours spent digging through crates. Whether they’re playing them on turntables or keeping them in the package, vinyl enthusiasts are nonetheless reviving a once-dying industry, much to the delight of music executives.

Can you invest in vinyl records? Sort of. You can’t invest in any of the remaining record plants. They’re too small to become a publicly traded company, seeing as how the two dozen existing companies generate $430 million in revenue. If vinyl surges in popularity, expect revenues and the number of vinyl plants to increase over time, but there’s no rush for any pressing plant to go public.

You can invest in music labels that sell records, like Sony ($SNE) and Vivendi ($VIV, parent company of Universal Music Group). The former has performed particularly well as of recent, mostly due to their electronics and video game division. (Owning most of The Beatles’ songs helps, too.) Conversely, Vivendi performed poorly over the last several years on the market, and isn’t a particularly attractive buy.

You could also buy limited collector’s editions of vinyl records on their release and sell them on Discogs or eBay. Both sites take sizable portions of your transactions, but this would be the best way to make money on your records.