Recochoku, a digital content aggregator owned by major Japanese labels, debuted a smartphone-based streaming service called RecoChoku Best on Tuesday. It’s due to become available on PCs this summer.
It’s one more sign the Japanese music business is abandoning its Galapagos-like isolation and is entering the music-streaming mainstream.
Industry insiders say major international streaming services Spotify and Rdio, which have been in talks with local rights-holders since last year, will likely launch in Japan sometime in the next few months.
But Japan’s conservative music companies may have trouble getting their heads around what for them is a new business model. Industry insiders say it’s possible some key players will hold back on making content available for streaming.
Streaming, for the uninitiated, refers to online music services that work like a digital jukebox. Instead of downloading songs, users select them from a catalog and play them through digital devices such as PCs and smartphones.
It’s a business model designed for an era where physical ownership of CDs is less important than the convenience of on-the-go access and sharing content through online communities.
Spotify debuted in Sweden in October 2008. It now has some 20 million users in 24 countries. Five million of them pay monthly subscription fees; the other 15 million use a stripped-down, ad revenue-driven version of Spotify. About 20 million songs are available for listening through the service.
Rdio is an ad-free subscription-based streaming service that went live just over two years ago. It’s now available in 16 countries. It won’t disclose the number of users it has, but it has a catalog of some 12 million tracks.
Another major streaming service is France-based Deezer. It’s now available in 182 territories worldwide (including several Asian markets) and offers more than 20 million tracks. Deezer claims some 26 million users, including 3 million paying subscribers.
Streaming has become an important money-maker for the global music industry. According to BBC News, market-research company Strategy Analytics last year said streaming services are the industry’s fastest-growing sector and estimated they would generate total revenues of just over ¥100 billion in 2012.
Streaming services have come under fire in some quarters for not giving artists an adequate slice of the royalties pie. Spotify says it pays out 70 percent of its revenues in royalties. The issue is whether labels pass along enough of those royalties to their artists.
While other major markets have quickly embraced the streaming/subscription model, Japan has so far made only baby steps toward what many see as the music industry’s new paradigm.
Last July, Sony launched a Japanese version of its Music Unlimited cloud-based service. It was the first attempt to launch a streaming service in Japan since Napster entered the market in 2006. Napster Japan shuttered in May 2010, mainly due to a lack of support from local labels.
Major telecoms NTT DoCoMo, KDDI and Softbank (the latter in conjunction with record label Avex) have also introduced music-streaming services in recent months. In late January, mobile-content developer Faith launched a streaming service called FaRao.
None of Japan’s homegrown streaming services has yet had a major impact on the country’s music market. So all eyes are on the big international players — Spotify, Rdio and Deezer— and whether their entry into Japan will make streaming the new normal in the industry.
Some in the Japanese music industry welcome the arrival of Spotify and Rdio on these shores.
“Rdio and Spotify will have a positive impact on the Japanese market because they’re a great form of communication in social media for consumers, especially teenagers,” says Takayuki Suzuki, general manager of digital strategy, sales marketing, at Universal Music Japan.
“We are happy to have such a new purchase method as long as it meets the (needs of the) market,” says Kazunari Aida, digital development group manager at EMI Music Japan.
But Spotify and Rdio are cagey when it comes to pinning down a date for their Japan launches (Deezer could not be reached for comment).
“As of now, we do not have a specific launch date set for Japan,” says an Rdio spokesperson. “However, we will be launching in new territories throughout Europe, Latin America and Asia this year.”
Akira Nomoto, Spotify Japan’s director of licensing and label relations, is similarly noncommittal. “Spotify’s long-term aim is to be available in every country,” he says. “We know just how passionate Japanese music fans are, but we don’t have any update at present.”
But don’t hold your breath waiting for idol acts like AKB48 and the Johnny’s stable of boy bands to jump on the streaming bandwagon. The business model of those acts is built on CD and merchandise sales — music by Japan’s major idol groups is generally unavailable for digital download, let alone streaming.
One industry insider says as long as that Galapagos model continues to work in Japan’s surprisingly buoyant physical-music market, there’s little incentive for the production companies that control idol acts to offer their music through streaming services. If he’s right, Japan may well choose not to go with the streaming flow.