Current Trends in the Japanese Music Market

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Current Trends in the Japanese Music Market

Many foreign bands are interested in the Japanese market and some of them do succeed in making their break in Japan. The Finnish export organization for music, Music Finland has been promoting Finnish bands in Japan for years. One of the biggest events they organize is Hokuo Music Fest in Tokyo. In 2016 the event was held on 16-19 November.

Hokuo Music Festival is a platform that allows music professionals to meet each other and create new contacts – and of course – to showcase Nordic music in Japan. It´s a joint Nordic collaboration organized by Nomex (Nordic Music Export Programme) in collaboration with the local Embassies of the Nordic countries, Creativeman and Sony Music Publishing Japan. All Nordic music export organizations (Music Finland, Export Music Sweden, Music Norway, Music Export Denmark and Iceland Music Export) participate in the effort to raise awareness for Nordic music. Hokuo Music Fest is a great event to meet and mingle with both the local Japanese and the Nordic music business professionals.

The event was organised in Shibuya, Tokyo. Shibuya is also home to the biggest record store in the world.

The event was organised in Shibuya, Tokyo. Shibuya is also home to the biggest record store in the world

This year, the festival consisted of a trade day for Nordic and Japanese music companies, a seminar on the future of music business in Japan, and two showcase concerts for Nordic bands. In addition, the Danish Embassy hosted a welcome celebration to kick-of the festival.

Riku Salomaa from Music Finland and Lillian Yiu from Ward Records.

Riku Salomaa, Music Finland and Lillian Yiu, Ward Records

Seminar on the Future of the Music Business in Japan

The majority of music worldwide is consumed digitally and for most of us the days of browsing through CD’s or vinyl’s at a record store are in the past. Globally, less than 40% of music is sold in physical form and digital streaming services are booming. This, however, is not the case in Japan. Japan is the second biggest music market in the world, and there – CD is still the King.

In Japan over 80% of all music is sold in physical format. There are more record stores and music rental stores in Japan than in any other country in the world. According to an estimate from the Recording Industry Association of Japan (RIAJ), Japan has more than 6000 music stores, where the US has less than 2000 and Germany, the 3rd biggest music market, has just a little over 700.

The popularity of CDs in Japan does not mean that they are cheap, on the contrary, CDs typically cost around 2500y – 3000y – which is more than twice the average price in most countries. This is because the retail prices for CDs are fixed. The owners of copyrighted material are allowed to set a mandatory minimum retail price for their newly released products. For CDs, the minimum price is typically 2500y. This is what the CD will sell for in any music store. Discounts are not allowed for a certain period after the release of a new album.

Another interesting characteristic of the Japanese music market is rental records. While nearly extinct in most countries, rental services are still quite popular in Japan. For the music industry, they are problematic. They eat up the sales profits and feed piracy. Rental CDs can easily be copied onto blank discs and sold on the black market. The stores do however provide the music industry with a good platform for advertising up and coming bands. Renting CDs also teaches the consumers to want physical copies.

CD is still big in Japan

CD is still big in Japan

Japan’s love for the physical format is linked to a strong fan culture. Buying CDs is not only about buying music, but also about supporting the artist and owning band merchandise. It is not uncommon for a CD or a DVD to be released in many different versions, featuring different covers, B-sides and bonus tracks. The record companies have also tapped in to the fan market by bundling CD’s with other products such as concert tickets, merchandise or meet and greet packages.

Another reason that might account for the popularity of traditional formats is the age structure of Japanese society. With aging population, the spending power and consumer demand are concentrated on older population – not teenagers, who are generally more comfortable with digital downloads and streaming services. This trend is visible not only in the music market, but on other walks of life as well. Where in the rest of the world department stores and shopping centers are losing customers to online shopping, in Japan they are still booming. Japan also has a strong preference for cash over credit cards.

The changing habits of Japanese music consumers

Consumer behavior is changing, however. In 2015 online retailers made sales worth nearly $90 billion, compared to $33 billion in 2009. Changing consumer behavior means huge potential for digital sales and music streaming services.

Streaming is rather new in Japan and subscription rates are still low. Digital downloads and streaming add up to only 8% of the country’s total music revenue. The biggest stream music providers are Apple Music and Line Music. Spotify was finally launched in November 2016 after a 5 yearlong planning process. The introduction of Spotify is expected to boost the popularity of music streaming, since it is the only service offering unlimited streaming.

One of the biggest concerns for the music industry worldwide are user-upload platforms such as Youtube. “Many people think that everything on Youtube is legal. This is not the case. A lot of education is still needed for people to understand that music is not free”, says digital music journalist Jay Kogami. Youtube and other user-upload platforms are very popular in Japan and have also contributed to the slow growth of music streaming services.

So why isn’t digital music selling in Japan as well as it could be? According to Jay Kogami, the biggest problem is that artists, managers and record companies are not familiar enough with the digital music market and its potential. Staying up to speed with the latest trends is crucial for success. New online trends, mobile applications and music related platforms can really help an artist to make their break in Japan, if used correctly. Interactive social media campaigns can make all the difference, but It is important to know how to reach the audience and how to tailor the campaigns specifically for the Japanese audience.

This is especially important for international bands and record labels looking to enter the Japanese market. The music market in Japan is highly concentrated around domestic production: almost 90% of all music sold is Japanese. In order to enter this highly competitive market, it is crucial to understand how the music market in Japan works and what the Japanese consumers want.

Strategies for entering the Japanese Music Market

Ward Records has a lot of experience of introducing new international bands to Japan. According to the Lillian Yiu from Ward Records the key to success is hard work and efficient brand management. Since the domestic market is so strong, international artists need to work extra hard. Traditional marketing methods such as radio and print commercials are not sufficient for selling international music in Japan. Entering the market requires a lot of effort, efficient marketing through multiple channels and most of all – Japan specific marketing strategies.

Music streaming could potentially become an important channel for international labels looking to enter the Japanese market in the future. At the moment the Japanese streming services offer mostly Japanese music, but Jay Kogami sees real potential international labels in digital music. Another way of getting your music out there is through Japanese television. TV-stations are always on the look for new music for commercials and TV-shows. For example Japanese reality show Terrace House is known for using a lot of international music – also from up and coming artists.

“In general niche genres such as heavy metal, reggae or drum and base are easier to sell than pop or rock music. Bands that represent niche genres also tend to attract more attention in social media”, Yiu says. Another good selling point are interesting stage performances. “Music in itself is not always enough. Japanese consumers are looking for an experience. Bands with visually impressive stage shows are more likely to stand out from the competition.”

The Swedish band Lancer just had their album released in Japan by Ward Records.

The Swedish band Lancer had their album released in Japan by Ward Records

Hokuo Music Festival Showcases

At the end of the week Music Finland organized two evenings showcasing Nordic music:

The Ja Ja Ja showcase event on Friday, November 18 presented indie music from Denmark, Finland, Iceland and Sweden. Yung (Denmark), Satellite Stories (Finland), Mr Silla (Iceland), and Hey Elbow (Sweden) performed at the event. The concert was sold out and the audience seemed very enthusiastic. Finnish Satellite Stories was received by a roaring crowd and a dancing audience.

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On Saturday, November 19, Nordic metal music was showcased at the traditional Loud & Metal Mania event. Four Nordic bands, Mokoma (Finland), Santa Cruz (Finland), The Interbeing (Denmark) and Lancer (Sweden) performed at the event. The venue was packed with metalfans and the atmosphere was through the roof. During Mokoma’s concert even a large moshpit was formed.

Finnish Santa Cruz performing at Loud & Metal Mania

Finnish Santa Cruz performing at Loud & Metal Mania

All in all, the week was full of interesting encounters, facts and tips on how to enter the Japanese music market, and two nights of splendid performances by many of the most interesting bands currently coming from the Nordic region. We look forward to an interesting week of events and seminars during the year of the centennial celebrations of Finland in 2017!

Text: Sanna-Maria Kettunen
Photos: Sanna-Maria Kettunen and Flickr.com