This is the third in a four-part series. See Part One and Part Two for more background.

As I have suggested over the first two parts of this series, artist management companies wield an enormous amount of power in the Japanese music industry — a power with which they dominate other institutions and influence overall decision-making. This should not necessarily be self-evident: The jimusho are not particularly large companies, nor highly-profitable companies (on paper, at least). So why is it that the jimusho have historically controlled the Japanese entertainment industry rather than record labels, TV stations, or publishers? The following will show that their power originates from three main sources: possession of master and publishing rights, mass media dependence upon star talent, and perceptions of “extralegality.”

(1) Possession of Master and Publishing Rights

Owning music-related rights can be an extremely powerful tool in the Japanese entertainment industry, especially when most “talent” release music in addition to acting and variety show appearances. And since management companies usually take responsibility for songwriting coordination and recording, they are rewarded with the master rights to the recording. This bestows them with control over the work’s eventual mechanical duplication and third-party use. (Toshio Azami’s 2004 book Who makes popular music? 『ポピュラー音楽は誰が作るのか』 outlines the complex politics behind these rights in much detail.)

In the American industry model, record companies pay for their artists’ recording fees and subsequently receive the master rights. But ever since the 1960s, the larger management companies in Japan have invested heavily in recording and coordination themselves, entitling them to all consequent privileges and decision-making authority. At the time this practice began, Japanese record labels were accustomed to making licensing deals with American record labels. So the practice of leasing master recordings from outside parties was easily extended to domestic companies.

Today, large jimusho often hold master rights exclusively or share the rights with other organizations like record companies and publishing companies. Smaller jimusho usually lack the resources for investment in this area, so the artist’s record company will often finance the master tape production. When management companies hold the master recording rights, record companies must license the master tapes to be able to mass produce the audio media. This is a significant source of revenue in itself and means artist management companies are directly entitled to high profits from record sales — something that is not true in most other music markets.

In addition to master recording rights, artist management companies that organize the songwriting process for their talent often lay claim to the publishing rights which control copyrights for individual songs. These rights allow the collection of mechanical royalties on the duplication of CDs, performance royalties for public usage of the song, and variably-priced synchronization licenses for media usages. Publishing has the most potential for long-term revenue streams, because songs may be re-recorded by future artists or used in other media long after initial CD sales have dried up. As we saw in Part Two, larger jimusho often receive “tribute” from smaller jimusho by taking their artists’ publishing rights.

Holding both master rights and publishing rights gives management companies ultimate decision-making power about a song’s usage, and other parties looking to utilize the song in a new context must win approval from the jimusho. Featuring a song in a TV commercial, for example, requires permission of both the master rights holder and the publisher. With artist management companies normally holding one or both of these rights, they generally keep control over a large portion of musical content, and therefore make themselves a major player in the music market overall. The jimusho are the ones who get to say yes or no to most projects involving music, which over the last 30 years, has been a significant part of the wider geinoukai.

(2) Media Dependence Upon Star Talent

The second source of the jimusho’s industry power emanates from media companies’ profound dependence on management for access to star talent. Television networks and magazine publishers create content for the specific purpose of attracting audiences to sell to advertisers, and the simplest way to do this is to hire celebrities and well-known talent.

In Japan, decision-making authority about artist appearance and performance lays squarely with the artist management company, and therefore, media outlets must negotiate with the jimusho — not the record company nor artist — for access privileges. This may be generally true in other music markets as well, but in Japan, artists’ inability to exit these firms (as laid out in Part One) creates large-sized jimusho with a sizeable “stock” of in-demand talent — often not just in the field of music, but also in acting, sports, and modeling. The management firm’s total negotiating power is proportional to all its stars’ cachet, which means that jimusho benefit from a compounded star power.

Negotiations on the use of one star have implications for the use of other jimusho members. Often large jimusho require networks to take smaller or newer talent on the network’s other television shows as “barter” for use of well known celebrities — a form of tying. Of course, management companies rely on media exposure to sell their talent, but healthy competition between the five major networks and the firms’ ability to limit access to a wide number of talent means management firms have the upper hand: They can threaten to give better treatment to other stations if demands are not met.

Using pre-established celebrities as leverage, large firms are therefore able to get more of their new talent into the media, which in turn, creates more overall popularity for their artists. Celebrity stature thus directly shapes market power for artist management companies, and networks are beholden to the firms for access to creative inputs. Networks may be able to forgo the use of one specific artist, but the jimusho system raises the stakes of negotiation to all artists under a companies’ auspices. This can be a huge number in the case of Burning, who controls hundreds of talents organized into dozens and dozens of subsidiary companies.

Johnny’s Jimusho have been one of the companies to conspicuously leverage this power with the media. As a general principle, the company refuses to allow its boy bands to appear on any TV shows with other rival boy bands. In the 1990s, this meant popular groups like Da Pump or w-inds from the Burning-backed Rising Production had a very difficult time appearing on the Johnny’s-dominated music show “Music Station.” In recent years, hit Korean group Toho Shinki (TVXQ) had similar issues. So when Fuji TV music show “Hey! Hey! Hey! Music Champ” decided to throw its lot in with Da Pump and the rival Johnny’s groups in the late-1990s, Johnny’s Jimusho effectively would not let their talent appear on the show for over five years. When a new producer came in and stopped offering guest spots to non-Johnny’s boy bands, Johnny’s acts came back with full force. (More here.) This is a perfect example of jimusho power in action: Even when the TV station tried to challenge Johnny’s Jimusho, they eventually had to give up the strategy.

(3) Perceptions of “Extralegality”

A few of Japan’s largest jimusho bolster their market power through widespread perceptions within the industry that they are likely to carry out punitive actions outside of legal and commercial barriers. In other words, the more powerful jimusho are understood to be linked to organized crime. While the first two reasons for jimusho power focus on measurable economic advantages that can be used as leverage in industry negotiations, the final one may be primarily psychological.

So are the yakuza involved in the Japanese entertainment world? Unfortunately there are no clear answers to this question, as the mainstream media rarely handles the topic, not even to debunk it as “myth.” What we do have, however, is a lot of compelling circumstantial evidence.

Many writers and scholars of Japan have mentioned the general idea of links between the two worlds. In Islands of Eight Million Smiles idol scholar Hiroshi Aoyagi writes of friends warning that “some agencies might be acquainted with the underworld.” Kaplan and Dublo’s Yakuza: Japan’s Criminal Underworld makes note that the Yamaguchi-gumi syndicate was deeply involved in the entertainment business. Most famously, members of that family directly managed the career of enka singer Misora Hibari.

In Takarajima’s Complete True Record of Taboos of Heisei Japan 『実録!平成日本タブー大全』, author Suzuki Tomohiko writes that crime syndicates openly managed and coordinated artist performances in various creative fields for the first half of the 20th century. While police since 1964 have apparently fought to keep the yakuza from working in the entertainment industry, links dating from the prewar have not been fully eradicated. Ugaya Hiro, writing in What is J-Pop? 『Jポップとは何か』, notes that the “dark side” remains strong in the music industry despite its absence in contemporary film and video game production fields. Veteran entertainment writer Honda Kei meanwhile has named specific links between the industry and yakuza bosses, but for this he has been sued multiple times for libel.

Police action of recent years, however, has at least highlighted some of the more structural corruption of the market. Jimusho heads have been arrested and jailed for tax evasion, including Taira Tetsuo from the market leader Rising Production (now Vision Factory) and Yamada Eiji from AG Communication (a Burning subsidiary that produced Suzuki Ami). Tax evasion does not necessarily imply organized crime, but consider the case of Rising’s Taira: At his trial, he begged for leniency from the courts, citing the necessity of “underground” (urashakai) financial measures in the music business. In general, the tendency of artist management companies to keep financial information private, change official firm names on an extremely frequent basis, and splinter into informal groupings creates an industry environment in which improper financial transactions can go easily undetected by authorities. While this would likely be how organized crime would run the music business, this is not solid proof of their involvement.

The best concrete evidence we have of links between top jimusho and organized crime comes from the Tokyo Metropolitan Police Department — although not intentionally. In 2007, a not-so-net-savvy cop leaked many confidential police files to the Internet, including a spreadsheet outlining companies related to the Goto-gumi crime family. As reported in magazines like Cyzo and Jake Adelstein’s Tokyo Vice, the file lists top jimusho Burning Productions as a “client business” (クライアント企業). A footnote in Adelstein and David McNeill’s Japan Focus article “Yakuza Wars,” also mentions, “In December of 2007, the National Police Agency sent out a formal request to the Federation of Civilian Broadcasters asking them to sever ties with organized crime groups.” If there was no organized crime in entertainment, the National Police Agency would clearly not need to make such a request.

While the role of organized crime in the Japanese entertainment business is still shrouded in mystery, the most important thing to understand is that industry workers act under the assumption these rumors are true. All of the industry sources for my master’s thesis believed that many of the top jimusho have links to organized crime. Few are interested in talking about this on the record, of course, but the entire idea — even if an urban myth — still rules the psyche of people working within the entertainment market. Needless to say, jimusho that did have mob backing would grow stronger by being able to make credible threats of violence and being able to tap into a free flow of dirty money. Yet even if these links do not exist or are weaker than imagined, the widespread perception of extralegal punishments would guide actors to avoid unnecessary conflicts with firms alleged to be allied with the underworld.

These suggestions of criminal connections cannot explain artist management companies’ power, and it is good to remember that there are plenty of strong artist management companies like Sony Music Artists who operate above the board. But the possibility of connections to the underworld has the effect of making smaller firms’ deferential to the larger, possibly dangerous management companies. Organized crime presence creates significant market distortions since conflicts would be solved outside of market and legal spheres and decisions made for reasons other than rational market logic. A member of the production team for a network music television program commented to me that one of the larger jimusho received preferred treatment in casting because the firm was “scary.”

Final installment: Why jimusho “production logic” rules the Japanese content industry