The chipped Formica of the counter felt cool under my fingertips as I flipped through the dwindling stacks of CDs at a local record store last week. It wasn’t a nostalgic impulse, exactly, though the scent of aged plastic certainly tugged at something. It was a genuine search – a friend swore a limited-edition pressing of a Japanese City Pop album was hiding amongst the bargain bins. And that search, in a world saturated with streaming, feels less and less absurd. Because while the music industry has long declared the physical format dead, a funny thing happened in 2025: vinyl and CDs didn’t just survive, they grew.
Alliance Entertainment, a Florida-based distributor, just released its Q4 2025 financials, and the numbers tell a story that flies in the face of conventional wisdom. Vinyl sales are up 3% year-over-year, even if that’s a slowdown from the explosive 12% growth seen last year. More surprisingly, CD sales jumped approximately 5%, fueled by a new exclusive distribution deal with Virgin Music Group through Alliance’s AMPED Distribution division. To put that in perspective, Jeff Walker, Alliance’s CEO, bluntly stated on an investor call, “Some people say CDs are dead, who buys CDs anymore? We still sold 13 million CDs last year.” Thirteen million. In an era where a Spotify subscription costs $10.99 a month, that’s a staggering figure.
Beyond the headlines of a “vinyl revival,” what’s happening here is a recalibration of value. Streaming democratized access to music, undeniably. But it also stripped away ownership, the tangible connection to art. The rise of physical media isn’t about superior sound quality for most listeners – it’s about having something. It’s about the ritual of placing a record on a turntable, poring over album art, or building a curated collection. This isn’t simply a demographic quirk of audiophiles; it’s a broader cultural response to the ephemerality of the digital world. Luminate’s Year-End Music Report confirms this, showing vinyl sales grew 8.6% to 47.9 million units in 2025, with over 40% of those sales happening at independent record stores – spaces that offer community and curation that algorithms can’t replicate.
Alliance is betting big on this shift, and it’s moving beyond simply distributing physical media. The company recently acquired technology firm Endstate and launched Endstate Authentic, a platform using NFC chips to authenticate and track collectible physical goods. Simultaneously, they’ve introduced Alliance Authentic, a premium vinyl platform offering certified, numbered, and sealed releases. This isn’t just about selling records; it’s about creating scarcity, provenance, and a secondary market for collectors. Walker frames it as “extending the value of physical products across their entire lifecycle,” a smart move considering the company’s overall revenues were down 6.3% due to declines in gaming and arcade sales. The 33% jump in net income, however, suggests the higher margins on these collectible formats are already making a difference.
Source material: musicbusinessworldwide.com.
The strategy is a calculated response to a changing landscape. While Alliance’s total revenue dipped to $369 million, gross profit climbed to $47.1 million, and the gross profit margin increased from 10.7% to 12.8%. This indicates a shift towards higher-value products, even as volume sales in other areas decline. It’s a lesson other entertainment companies are likely watching closely. The question now isn’t whether physical media will disappear – it’s how companies will adapt to the evolving demands of a consumer base that increasingly values ownership, authenticity, and the tangible experience of collecting. Will we see more companies invest in authentication technologies and exclusive releases? And, crucially, will this focus on the “collectible category” ultimately be enough to sustain a physical media ecosystem in a predominantly digital world?
