Music Industry in Japan - Characteristics

•  Japan comes second after the US as the most valuable music market in the world.

•  Largest market of recorded music, namely CDs. CD rental business is very popular.

•  Prices on CDs are fixed. Saihan Seido is a system established in 1953 that allows owners of copyrighted material (CDs, records, cassettes, etc) to set minimum retail price of newly released product, eliminating any possibility of discounting. Newly released CDs range between 2500 and 3000 yen on average, which is 20% higher than the US and at least double of that in most other countries in Asia.

•  ‘Enhanced CD purchasing experience’, i.e. fanatic collectors drive the market. By successfully marketing CDs into entry tickets for a meet-and-greet event with an artist or voting tickets at the annual idol elections, production companies have seen lots of success selling CDs for boy bands and idol groups. Tower Records for instance sell over a million copies of each AKB48 album. Some artists release multiple version of a single product – collectable albums with bonus features or varying album covers – targeted at dedicated fans who buy each version.

Monica Nagashima, Keio University

Sources: http://www.billboard.com/biz/articles/news/global/1568815/why-japans-music-industry-is-booming-for-now http://3.bp.blogspot.com/-Q4OVYLv46es/UDxg4t6afZI/AAAAAAAAATo/-uHOj5gg5aM/s1600/AKB-Ayaka-Umeda-Moeno-Nito-at-hand-shake-session-web.jpg http://nippop.com/features/Saihan_Seido___Japan_s_Resale_Price_Maintenance_System/

Music Industry in Japan – Undeveloped Digital Market

•  Illegal downloading has not been overly popular. Platforms for illegal downloading such as Napster or Bit Torrent never became as popular in Japan as in other parts of the world. Possible explanation is the predominant use of ガラケー (flip-top cellphones) for net-surfing which does not allow for much file sharing.

•  Smartphone-based downloads are increasing. There is hope that built-in features such as iTunes will encourage users to purchase content legally. However, the Japanese music industry opposes the digital trend and a service with a complete digital catalogue has yet to be created.

•  iTunes launched in Japan in 2005, but could not get licenses from Sony Music Japan until 2012, meaning it did not have a big chunk of Japanese music for seven years.

•  Similarly, domestic subscription services have not seen much success because of lack of collaboration. Sony Music Unlimited has a service but does not have content from Avex, which has a similar service but without Sony’s content.

Share of digital music of the total market

Japan

Digital Music Other

Globally

13% 35%

Sources: http://www.billboard.com/biz/articles/news/global/1568815/why-japans-music-industry-is-booming-for-now http://www.japantimes.co.jp/culture/2013/12/03/music/spotify-rdio-and-what-didnt-happen-in-2013/#.U5u4rbFkhGY

Copyright Law and the Music Industry in Japan

JAPANESE COPYRIGHT LAW REVISED

•  In October 2012, amendments to the Copyright law criminalized illegal downloading, uploading and circumventing copyrighted music with a fine of 2 million yen and a jail sentence of up to two years. Streaming is still allowed.

•  No one has been arrested or persecuted.

A YEAR LATER (2013)

Report by Recording Industry Association of Japan (RIAJ)

•  70% of public is aware of this new law.

•  Illegal downloads decreased by 20%.

•  Sales of digital music went down by 23% and physical music by 13%, although smartphone purchases of singles and albums increased by 32% and 50% respectfully

•  Overall Japan’s music market shrank by 17% to 312.1 billion yen

Sources: http://www.jasrac.or.jp/ejhp/copyright/about.html http://blogs.wsj.com/japanrealtime/2013/06/24/as-cds-spin-on-in-japan-tower-records-rocks-on/ http://online.wsj.com/news/articles/SB10001424052702303287804579447222439275740

The copyright law applies to any work “in which thoughts or sentiments are expressed in a creative way and which

falls within the literary, scientific, artistic or musical domain" (Japan Copyright Law Article 2.  (1)(i)).

A work falls under copyright law automatically without the need for registration.

Entering the Global Music Industry

Last June, the Japanese Ministry of Economy, Trade and Industry allocated $500 million to

promote the Japanese image across Southeast Asia, Europe and America.

But at the moment, it is difficult to freely stream or download, let alone purchase Japanese content

abroad.

35% 13%

•  Some argue that the Japanese music market is large enough to sustain itself. This lack of necessity to expand internationally explains why major labels are reluctant to make the digital transition.

•  Globally, however, digital content is becoming predominant in the music industry, and streaming sites such as Pandora, Spotify and YouTube are replacing CDs and even downloads. Japan is missing out on the global market.

•  In 2012 the Bank of Korea recorded a surplus in cultural exports, and $300 million were allocated for promotion of the Korean brand in 2013. The K-pop wave swept across the world mostly through YouTube, and even gained big chunks of the Japanese market.

•  Unlike in Japan, it is difficult to make consumers abroad purchase content legally. Instead Japanese media companies could control the distributing platforms or collaborate with existing international companies like SoundCloud, placing the right laws to ensure that artists and content providers get proper royalties, paid for with advertisements or merchandise (Why not sell CD’s, T-shirts, etc. alongside music?).

•  Japan could even develop its own ‘YouTube,’ if only the strict IP laws were loosened to promote creativity and support the development of vibrant Internet communities.

•  More online content is the surefire way to promote Japanese culture worldwide, but the only way for an artist to succeed is to go through an agency at the moment.

Sources: http://www.billboard.com/biz/articles/news/global/1568815/why-japans-music-industry-is-booming-for-now http://beyondhallyu.com/k-pop/culture-wars-can-cool-japan-compete-korean-wave/