Monday, June 24, 2013

Japan's winning focus on the physical

This spells big yen for Japanese music (from Flickr)

Japan's #2, but not for long

Continuing the theme how music makers earn money, I'd like to turn to some big news this week. For a while, Japan and the U.S. have been the top two music markets in the world. Combined, these two markets make half of the world's music revenue. What's new is that for the first time, Japan is close to becoming the world's largest music market, trailing the US by just 1.3%. And gaining. With the U.S. market shrinking and Japan's growing, it seems inevitable that Japan will take over as #1 in the near future.

So, I'm sure you're wondering, how can a country that has only 130 million people be as profitable as a country with over 310 million? Well, it's a complicated question. In case you were wondering, the people in Japan do not have as much disposable income as those in the US. According to the OECD Better Life Index, the average family in the United States has way more disposable income than in Japan ($38,001 in US vs. $24,147 in Japan). But the Japanese may be more willing to spend that money on themselves, says one Japanese record producer: "After the [economic] bubble burst…people were no longer interested in one another's welfare…people just spent money on themselves."

Perhaps it's the types and ways Japanese market their music, producing large numbers of boy- and girl- bands that rotate members and churn out popular hits, often using TV music videos to get their music out. See this fascinating 2005 Guardian article about these J-Pop bands and their loyal "otaku" fans (quoted above). It's hard to argue against brand loyalty. But music in Japan is not limited to these types of groups, either.

Is music just better in Japan?

Let's get physical

I'm not sure, but the consensus of the articles I've seen is that the Japanese music market is still growing because music publishers are focusing on physical purchases: CDs and DVDs. These companies there decided to re-invest and make the packaging an added value and really push those sales. CD sales doubled in the first quarter of 2013. Actually, 80% of the Japanese music market revenue comes from physical CD sales. I can tell you the U.S. market is nowhere near that.

And this Japanese strategy makes sense. After all, the golden age of US music industry sales happened right before the digital revolution hit. CDs make more money than digital for everybody: the artists, the producers, the retail stores.* Couldn't musicians just boycott digital release of their music? It's not quite that simple, unfortunately. It's hard to trade the price of cheap, global distribution.

Personally, I still buy most of my music in CD form. First of all, it's better quality than a download—though many times I just download straight onto my iPod for listening. But I can still loan a CD out, which I couldn't do with a download (Libraries can lend them out, too.) And I don't have to worry so much about the cloud or my hard drive breaking down.

What do you think? Should the US stop focusing on digital downloads and go back to pushing CDs? Or is Japan's CD renaissance just a bright burst before a fall?

Vocab: J-pop
(click here for my recently-posted example of this genre)

1 comment:

  1. This is fascinating to me. Tim and I recently discovered that having physical CDs results in more people actually listening to the music. One of the great challenges of making music right now is the digital market is FLOODED and you can't get people to listen--not on facebook, not on twitter. Even friends and family just won't click the link and listen or get a free download. But if you give them a physical CD, they listen. So we're shifting away from digital.