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2010: The Decline of Optimism in the Japanese Music Industry

Up until this year, Japan’s still-massive music industry looked like it would continue to avoid the fate of its overseas counterparts, which have almost all been shaken to the core by declining record sales. Even though the Japanese industry has mostly failed to export its products abroad at rates commensurate with anime and video games or generate any new and innovative models of pop stardom, its bottom line has not taken a haircut on par with the ones taken by its American and European brethren.

Physical record sales have been declining for years, and growth within the digital market finally petered out earlier in 2010. In fact, sales of digital products are down 5% quarter-to-quarter from 2009. There are still viable mass-market stars of the girl-pop, “pretty boys,” and nerd-exploitation-pop varieties, but fewer and fewer of them can actually attain any meaningful level of popularity. And the markets for niche material — classical, jazz, blues, rap, metal, etc. — are steadily collapsing. To be sure, file-sharing — the great disruptor of music revenues worldwide — has played a part in the industry’s contraction. Yet the baseline assumption that music is something free which comes from a digital tap hasn’t taken a strong hold in Japan despite being so prevalent in the West and other parts of Asia.

So digital distribution has arrived through establishment channels, leading to digital products like the Chaku-Uta Full download. ¥350 gets you a single song, packed to the brim with Digital Rights Management (DRM) software. This prevents you from sharing it with your friends, but also prevents you from, say, taking a song you bought on your phone and playing it on your PC.

People continue to buy these Chaku-Uta Full by the truckload despite their inherent inflexibility. Their sales comprised about ¥12 billion of the ¥21 billion worth of digital music products sold in the third fiscal quarter of 2010. But the genius of the format is that the act of paying for a Chaku-Uta is completely abstracted. The charge for the song appears on your wireless bill, and it’s not even a single line-item. You’re sold the right to download the song for ¥200 and another ¥150 for the bandwidth required to transfer it to your phone. The upshot: There’s very little chance here for the final cash-register moment of reflection, the realization that you could probably buy your boyfriend a nice lunch or something for the price of an ultimately-not-so-great Koda Kumi CD. So songs become an impulse buy lumped into a mysterious phone bill, and the industry collects a massive margin (we estimate around ¥200 per track). It’s a heck of a cash cow, but the widespread consensus within the industry is that its age is at a close and there is no clear candidate to replace it.

The issue is the widespread adoption of smartphones. When your phone is a computer and your data plan is unlimited, you move from a closed consumption environment to an open one. And from the perspective of the Japanese music industry, the track record of monetizing music within such environments looks bone-chilling. In the US and Europe, the iOS and Android App Stores have set users’ expectations with regard to how they’ll pay for digital content, as well as opened up the market for a variety of new sellers, enriching Apple and other new players at the expense of major labels. The alternatives are even worse: Cloud-based applications like Rdio or MOG have so far provided payouts in the range of a tenth of a cent per track downloaded.

If that all sounds like a hopeless situation for content owners, observers should take care not to discount the reasons why they’ve been able to avoid catastrophe so far. Big firms remain willing to use powerful strong-arm tactics to protect their interests. For instance, Sony Music Entertainment alone has basically been able to keep iTunes from really reaching critical mass in Japan all by itself by flat-out refusing to allow its music onto the platform. The same sort of thing could keep the smartphone-distribution market from collapse (or rationalization, depending on one’s point of view). The industry could very well figure out a way to create some viable smartphone-enabled Chaku-Uta variant by sheer force of numbers.

But they would have to do it in unfamiliar territory. In Japan, when cell phone makers were writing music software for mobile devices, they worked together with the major labels through every step of the process. They were therefore able to create digital music products and payment schemes that suited their needs, not necessarily consumers’. This dynamic is reversed on more open smartphone OSes, which generally aim to provide functionality and freedom to end users and transact through credit cards (rather than, say, series of deliberately-obtuse line items on a wireless bill). Maintaining the security of DRM in a completely open OS environment like Android, for example, is a technical concern. But more important is the battle of ideas. The threshold of freedom Japanese consumers have over the use of their devices is moving. People are demanding — and getting — more for less.

It is fair to say that this is not a situation the establishment industry apparatus is prepared for. In all likelihood it will figure out a way to maintain its hold on music in Japan, but 2010 was the last year anybody could say so for sure.

McClure’s Asia Music News: (1, 2)

Connor Shepherd is co-founder of new Japanese music review site Goblin.mu.

Benny Rubin is co-founder of new Japanese music review site Goblin.mu.

19 Responses

  1. Avery Says:

    I think it deserves a mention that all of the top 10 CDs in 2010 were by either Arashi or AKB:


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  3. Dave Says:


    The link at the bottom doesn’t seem to work.
    Could you post the links or put a graph showing the actual decline?

  4. Connor SHEPHERD Says:

    Hi Dave,

    Sorry about that- link is fixed.

  5. Steve Says:

    Very interesting. I’ve been wondering for a while now just when the axe would begin to fall in Japan.
    I was sorry to see some of the Tower Records locations shut down in the last few years, but Japan is still the best place in the world to buy music on CD and vinyl.

  6. Connor SHEPHERD Says:

    I definitely agree, especially for deep-catalog stuff in reggae, blues, etc. If you want to buy music via a physical medium, Japan is still definitely the best place to do it.

    But reggae and blues are older niche markets, and a lot of the newer sort of locality-specific regional dance/pop musics aren’t driven by physical distribution. For instance Dubstep/Funky stuff from the UK doesn’t see physical release until everyone’s heard the digital versions, so cornering the market on deep-catalog Dubstep isn’t nearly as cool as deep-catalog reggae was 15 years ago.

  7. Dave Says:

    How about the Indie scene? Are there not a separate category by themselves?
    It be sad to see that even Ogre You Asshole were be unable to earn a living on their music.

  8. Mulboyne Says:

    Some data points from the rest of the world for comparison.

    In May 2010, the National Association of Recording Merchandisers (NARM) revealed:

    * 2 percent of releases made up 91 percent of sales from the 98000 releases of 2009.

    * Only 2.1% of releases managed to sell more than 5000 units.

    * In the USA last year, 75% of albums sold were on CD.

    * Susan Boyle’s ‘I Dreamed A Dream’ album sold 90.5% on CD.

    * Susan Boyle sold more records last year in the USA than Lady Gaga.

    * 2.8 million albums sold as vinyl releases last year and 75% of those sales came from independent retailers.

    * “fresh artists are staring at a near-zero chance of selling even modest amounts”.

    In April, Information is Beautiful produced this graphic looking at the economics of selling music from an artist’s perspective:


    Ian Hogarth of Songkick, which tracks the live performances of bands around the world, crunched some numbers from his database, estimating the revenue from playing certain types of venue. He believes no more than 25-30,000 artists are making a living from music.

  9. Connor SHEPHERD Says:

    Why, thank you for asking that question! I don’t know about Ogre You Asshole specifically (loved “Pinhole” though) but in general being an indie band in Japan is very hard. (I mean “indie” both in the denotative sense of not being signed to a major label and in the colloquial sense of making less obviously-commercial music.)

    Actually, one of the tougher things about being an indie musician in Japan is that there is no Pitchfork-like central information hub for the community. Benny and I are actually trying to fix that with our e-zine Goblin but that is a shameless plug. There are tons of other structural impediments between indie bands and financial sustainability, like:

    – You basically have to pay to play live, or rather the band takes on the risk for putting on a show. This system is called “Noruma” and it is basically the worst. It was invented during the “band boom” in the eighties and maybe at that time it made economic sense because there were too many bands, I guess? But now there are not enough bands at ALL and this acts as a severe disincentive to build buzz for your band by playing small gigs.

    – There’s a lack of stuff like college radio stations and WFMU and MTV2 which provide actual alternative music to the mass market. Most music promotion is done on the teevee and Japanese television is Serious Business. There was this weird time in the late 90s where they would let Momus go on Music Station to make challenging music with Kahimi Karie and generally spaz out, but that time is definitely over. If you would like to read really well-constructed eulogies for that rad and singular period in recent Japanese history there is no better resource than this site you are on right now.

  10. Dave Says:


    Noruma eh? First time I heard about this…
    But Tokyo Damage Report mention therise some sort of debt system for the hardcore and punk scene? Shouldn’t hardcore and punk have this Noruma system? I forgotten where is the article but you can skim his archives. Its very cool and subversive.

    If there is no outlet for alternative music, then how come Toe gets invited to Fuji Rock Festival? I mean, there must be some sort of word of mouth system for some of these non commercial bands to perform at these rock festivals… I consider Mass of Fermenting Dregs as non commercial music (post rock hybrid), but somehow they are now popping up everywhere………

    Nice site. http://www.goblin.mu/
    Strange to see Girl Talk, My Chemical Romance, Feist, sharing the same page Perfume, 2ne1 and AI(!!!). Is there a English version :D
    You should also review classic Japanese albums. i.e. Supercar and YMO and Boredoms.

    I have read Neomarxisme since 2006?
    His articles on the Japanese Entertainment Industry is very ILLUMINATING. Marxy might think he is posting random essay but truth to be told, he is an EXPERT on this scene. That’s show how secretive the whole thing is………….. scary shit.

    Momus was on Music Station!!?!??
    You mean the guy who was like 2 steps away from the Arama Johnny Jimusho fangirls?!
    The guy who used to take the position as the Weaabo on Neomarxisme?
    Damn, that was a surprise.

    I know the Shibuya Kei movement but, sorry, no fan of Cornelius, Flipper’s Guitar and Pizzacato 5. But I am amazed that they could even sell anything back then. It be impossible now.

    Sorry for typing so much but your response had a lot of stuff that i wanted to address.

    Someone should do a retrospective/essay on the Boredoms. A Japanese band that manage to be on Pitchfrok best albums of the 80’s is no mean feat.


  11. Paddy Says:

    Toe got invited to Fuji rock after building a big fan base by themselves over the years. Previous to their Fuji rock show they’d released a live DVD, sold out shows in medium/big venues around Asia. Oh, and here they are on a Pocari Sweat advert with Beat Takeshi:


    Inviting them to Fuji Rock just made sense. I wouldn’t say word of mouth is so important as getting picked up/approved by buyers in Tower/other influential record stores is. Although how much longer that will matter, who knows?

  12. Dave Says:

    Thanks for the info Paddy.
    It does seem like Toe got famous due a combination of word of mouth and being approved in record stores.

    That advertisement raises another question.
    How do Dentsu\CM companies decide what song is used in the background?

  13. Roy Berman Says:

    “- You basically have to pay to play live, or rather the band takes on the risk for putting on a show. This system is called “Noruma” and it is basically the worst. It was invented during the “band boom” in the eighties and maybe at that time it made economic sense because there were too many bands, I guess?”

    I’m pretty sure this is almost totally a Tokyo phenomena. In Kansai, which is obviously the second largest market, I think it only happens at a small portion of the clubs in Osaka, but not at the dozens of small venues in Osaka and Kyoto (and I guess Kobe but I have no idea.) Musicians I’ve known in Kyoto were always puzzled/amused/horrified by the whole pay to play concept, and it seems to be a real disincentive to moving to Tokyo.

    Of course, even if the local music scene is vibrant in other regions, you probably aren’t going to have a chance to make it pro without moving to Tokyo.

  14. Connor SHEPHERD Says:

    I had read about the noruma system in Osaka, so I guessed it was employed nationwide. Shows what happens when you assume…

    Of course, even if the local music scene is vibrant in other regions, you probably aren’t going to have a chance to make it pro without moving to Tokyo.

    Most of my favorite Japanese bands are not from Tokyo, but as of right now the path to professional musicianship definitely runs through the capital. I would like to believe that the decentralizing potential of the internet could make some sort of solution in this case, but as of now I just don’t see it.

    Thanks for correcting me though- I definitely have a tendency to be too Tokyo-centric in my thinking.

  15. Paddy Says:

    Noruma definitely exists outside of Tokyo – I’ve seen it ‘in action’ in Osaka and Nagoya.

    It’s more about the promoters I thought – generally if a live house puts on the show themselves a band can pretty much forget about any money. If a separate promoter, hiring the live house independently puts on a show, there is pretty much always a fee paid to the artists.

    “I would like to believe that the decentralizing potential of the internet could make some sort of solution in this case, but as of now I just don’t see it.”

    – I agree completely. Bands/labels are still afraid to stream more than 30 seconds of a song online, nevermind give away one sample track ala ‘forkcast’ etc etc. Goblin looks great by the way, good luck!

  16. Mulboyne Says:

    The year’s best-selling singles:


  17. W. David MARX Says:

    Two artists in the single top ten!!!

    I have recently being do some research and I think that’s completely unprecedented.

  18. Ron Smith Says:

    First time commenter, long time reader – especially since you referenced my old boy Santos years back in regards to Saaya Irie. Speaking of her, can you believe she’s about to turn 18 next year? Is the an over/under on how long it’ll be before she does JAV amongst Japanese commenters, or have they all but forgotten her?

    As far as the article goes, I’m personally not sure how I feel about AKB and Arashi dominating the top 10. I’ve been pretty apathetic about Japanese music for the last 4 years or so, but it sounds good for the industry itself and that it’s probably telling them that the hardcore fan is more worthwhile than taking a risk and trying to appeal to someone like me who might or might not spend money on their product even if it is in my face 24/7.

  19. Roy Berman Says:

    Personally, I had forgotten about her completely.