Sign in Subscribe
4 min read

Alt Asset Report #005 - Vinyl Records

Alt Asset Report #005 - Vinyl Records

Overview

  • Phonograph records (i.e. vinyl) started holding music recordings around the 1880s
  • Remained the primary form of music recording and listening until the 1980s when the compact disc (CD) took primary market share
  • Annual sales went from $14.2 million in 2005 to $1.2 billion in 2022
  • Sales fell 33% in 2024 after growing continuously for a decade
  • Shopping for a turntable, to listen to your albums, can be it’s own adventure
  • Vinyl grading system and the impact on value
    • Mint (M)
      • Perfect in every way, typically still sealed
      • Very rarely seen
    • Near Mint (NM)
      • No marks on the vinyl, just opened for the first time
      • Many retailers won’t go above this grade
    • Excellent (E)
      • Small marks on the vinyl, a few signs of use
    • Very Good Plus (VG+)
      • Sometimes combined with Excellent
      • A few faults are ok, small smudges and sound crackles
    • Very Good (VG)
      • Light pops and clicks in the audio, visible scratches
      • Sell for no more than 25% of a NM record
    • Good (G)
      • Getting into rough territory, sound and visuals are compromised
      • Sell for 10-15% of the Near Mint value
    • Poor (P) and Fair (F)
      • Wouldn’t mess with unless for the most desirable of collectables, un-listenable
      • Sell for for 0-5% of the Near Mint value

Investment Hypothesis

  • Growing market with significantly increased interest over the past 20 years
  • Physical asset one can enjoy listening to while building value over time
  • It can look cool as a decorative piece and a conversation starter
  • A collection of memories and value that can be passed down through generations – This is how I got started
  • The romantic idea that you could stumble onto a garage sale and find the $200 gem hidden amongst the pile of $1-$2 albums

Investment Factors

Genres

Time Period

Background

Notable Albums

Rock & Roll

Early-60s to late-80s

  • Highest demand genre

  • Spans multiple decades 

  • Includes multiple spin-off genres (metal, punk rock, prog rock, grunge, etc.)

  • ‘Sgt. Pepper’s Lonely Hearts Club Band’, The Beatles

  • ‘Sticky Fingers’, The Rolling Stones

  • ‘Appetite for Destruction’, Guns N’ Roses

  • ‘Pet Sounds’, The Beach Boys

Grunge

Late-80s to late-90s

  • Alternative rock scene that grew out of Seattle, Washington

  • Fuses elements of punk rock and heavy metal

  • ‘Nevermind’, Nirvana

  • ‘Temple of the Dog’, Temple of the Dog

  • ‘Badmotorfinger’, Soundgarden

Early 2000s Indie

Roughly 2000 to 2010

  • Led by garage rock and post-punk revival

  • More guitar-driven than indie rock that came before or after

  • ‘Is This It’, The Strokes

  • ‘Funeral’, Arcade Fire

  • ‘Yankee Hotel Foxtrot’, Wilco

Early Hip-Hop

1980 to mid-90s

  • Born from block parties in 1970s Bronx

  • Built on disco grooves, electronic drums, and rapping

  • ‘The Chronic’, Dr. Dre

  • ‘Straight Outta Compton’, N.W.A.

  • ‘Kurtis Blow’, Kurtis Blow

  • ‘The Low End Theory’, A Tribe Called Quest

Rolling Stone - 500 Greatest Albums

n/a

  • Frequently updated list from the music industry’s premier magazine

  • Covers all genres and timeframes

  • ‘What’s Going On’, Marvin Gaye

  • ‘Songs in the Key of Life’, Stevie Wonder

  • ‘Purple Rain’, Prince and the Revolution

  • ‘Blue’, Joni Mitchell

  • Annual sales went from $14.2 million in 2005 to $1.2 billion in 2022
  • Most popular genres for vinyl sales
    • Alternative Rock - 17.8%
    • Alternative/Indie - 15.6%
    • Pop - 11.1%
    • Rock - 8.9%
    • Hip Hop - 4.4%
    • Hard Rock - 4.4%
    • R&B - 4.4%
    • Pop Rock - 4.4%
  • Fragmented market could mean more small successes ($200-400 LPs), and fewer home runs ($500+ LPs)
  • Retired Baby Boomers with time and money to collect
  • Too much reliance on existing IP
    • More dollars going after the same-old hand-full of classic albums
  • Similar to comic books, 
  • The 33% sales drop in 2024 after growing continuously for a decade
  • Pressing vinyl records has a large carbon footprint
  • Younger generations preference for “experiences” may lead to buying concert tickets over vinyl records
  • Streaming gives everyone with an internet connection access to most of history’s recorded music – although this has been true during the rapid rise in vinyl sales

Marketplaces

Investment Types

  • Start with a specific niche to focus your efforts
    • Genre
      • A sound that captures a specific point-in-time
      • 80s punk, post punk, new wave, 2000s indie, grunge, delta blues, etc.
    • Label
      • A unique record label that had a unique sound or list of artists
      • Fat Possum, Stax Records, Matador, Sub Pop, Delmark Records
    • “Scene”
      • A group of people in a specific geography, at a specific time
      • Seattle grunge in the 1990s, New York indie in the early-2000s
    • Autobiographical
      • A group of records/artists that has personal meaning to your life
      • Your parent’s old collection, music from your childhood, albums with relationship significance

Investment Guides

Industry Sources

Published by:

Scott Moorhouse