The vinyl records industry was revived by major retailers and Covid-era nostalgia.

CNBC's new quarterly series, Cities of Success, examines cities that have evolved into thriving business centers with an entrepreneurial atmosphere, drawing in capital, corporations, and talent.

The vinyl record industry, once thought to be on the brink of extinction, has experienced a multibillion-dollar revival in the past decade. This resurgence has been driven by popular artists like Taylor Swift, major retailers such as Amazon and Best Buy, and a growing number of consumers rediscovering their fondness for the nostalgic format during the Covid pandemic.

Mark Michaels, CEO and chairman of United Record Pressing, the largest vinyl recording pressing plant in North America, stated in the upcoming primetime special "Cities of Success" on CNBC that he never imagined the market and industry would become what it is today.

The global vinyl record market is expected to grow from $1.98 billion in 2022 to $4.12 billion by 2030, while the U.S. sold over 41 million vinyl albums in 2021, the highest number since 1988, according to Verified Market Research and the Recording Industry Association of America.

Since its inception in 1949 as Southern Plastics, United Record Pressing has established itself as a significant player in the vinyl market, producing around 40,000 records per day at its Nashville, Tennessee, facility. The company's extensive history includes producing vinyl records for renowned artists such as The Beatles, Stevie Wonder, Michael Jackson, Adele, and Jack White.

16 years ago, the company was uncertain about its future when Michaels bought it.

Second wind

The decline of the vinyl record industry can be attributed to the emergence of more convenient physical formats, lower-quality materials and processes, and the rise of digital music.

In the 1980s and 1990s, vinyl record sales plummeted, and by the early 2000s, the industry was on the brink of extinction. By 2006, only 1 million vinyl records were sold in the U.S., according to RIAA.

After acquiring the company, Michaels admitted to frequently questioning his actions, resulting in many sleepless nights and even his family doubting his decisions.

In the years that followed, Michaels observed a rising trend among indie artists towards vinyl.

To become the preferred pressing plant for artists and music producers who prioritize the tangible vinyl experience, Michaels acquired used record presses from shuttered plants to accommodate potential expansion.

According to Michaels, finding and restoring an old record press before 2016 was a challenging task.

The entry of major retailers like Target and Walmart into the vinyl market in the early 2010s accelerated the growth of the vinyl market, which was already gaining momentum due to the demand for vinyl from both indie and mainstream artists, resulting in reissues and colored variants, according to Michaels.

Mainstream lift

According to Michaels, the decision by Target and Walmart to stock vinyl had a significant impact on the entire supply chain.

Independent record stores were no longer the only place to buy vinyl as it started gaining popularity among consumers who wanted mainstream titles.

Michaels stated that the company's inadequate old presses, which were acquired and built around, were no longer sufficient to meet the market's needs. Fortunately, in 2016, a couple of companies began manufacturing new record presses.

In 2017, United Record Pressing moved to a larger facility and formed a creative marketing team that came up with innovative vinyl ideas, including liquid-filled, split-colored, and scented records.

Additionally, the company provided a digital download coupon with each record and established a record label, recording artists on tape and pressing directly to vinyl.

The company, according to Michaels, also launched a grassroots public relations campaign to emphasize its 60-year history as the leading vinyl pressing plant in North America.

The new 155,000 square feet space in Nashville not only met current needs but also set the company up for future expansion, which would occur just a few years later when the Covid pandemic caused a surge in demand for the nostalgic format.

In the U.S., the medium is the most widely used physical music format, accounting for 72% of all physical music sales, surpassing CDs and cassettes, based on the most recent data from the RIAA, which was obtained in mid-2023.

The cost of vinyl records rose from $26.12 to $29.65 between 2021 and 2022, as reported by Billboard, due to increased production expenses and the effects of inflation.

The market for vinyl records has changed over the years. In 2015, indie record stores had the highest sales with 45.4%, while internet or mail-order sellers had 32.9%, and chain stores had 15%.

In 2019, major retailers such as Walmart and Target were gaining market share, while indie stores and Amazon continued to dominate with 41% each.

In 2015, big-box retailers had a 1% share of the vinyl record market, but by 2021, they had a 14.6% share of sales, as reported by Billboard.

Artist-driven

According to Michaels, the market's continued growth will be driven by artists, and the shift in interest among younger listeners towards vinyl indicates that the medium will endure.

Multicolored vinyl records known as "variants" are collectible versions of albums offered by artists such as Taylor Swift.

When Taylor releases a new record, there may be up to 10 different variants of that same record, including different colors, combinations, and unique tracks that were not included on the digital release or CD but are available on the vinyl. Many fans express their support by requesting all eight variants.

The CEO acknowledges Nashville's contribution to his company's success, commending its strong ties to music and the creative sector, which have given rise to a talented and committed workforce.

Here, we have the entire musical ecosystem, with artists, producers, and studios all working together in a highly symbiotic manner. It's the ideal location, and we're incredibly fortunate to be here.

CNBC will air the "Cities of Success" special featuring Nashville on Dec. 6 at 10 p.m. ET/PT.

The caption in this story has been updated to clarify that most of Taylor Swift's catalog has been pressed at United Record Pressing.