In 2010, legal downloads of music in Japan increased marginally over 2009, but CD sales were down by 12 percent, and sales by foreign artists, both imports and nihonban (domestically manufactured discs), by 15 percent. It doesn’t sound like the best time to start a new record label featuring overseas indie artists.
“Promising is not the word,” admits Adam Graham, when asked about the market that this new label, Pachinko Records, is entering. Graham is the label’s manager and, for all intents and purposes, its only full-time dedicated employee.
The impetus behind the startup has more to do with corporate prerogatives than anything else. Pachinko distributes in Japan records released by Cooperative Music, an umbrella label for various U.K.-based indies. It is part of Universal Music Group, the biggest record company in the world. Until last December, Co-Op’s releases were distributed in Japan by the local independent label Hostess Entertainment, which has a distribution deal with one of Universal’s rivals, Sony Music.
Co-op’s general manager, Vincent Clery Melin, stresses that he wants all his label’s releases, even those not deemed “top sellers,” to be released in Japan. The partnership with Hostess was based on this shared philosophy, but it was time “to move on.”
“It seemed strange to have all this repertoire, which runs through Universal to the rest of the world, going through a Sony-distributed company in Japan,” says Graham. “So when Hostess’ contract ended it was mutually decided to end the agreement. Universal thought, ‘We’ve now got all this repertoire we’re not exploiting in Japan, so let’s make a new label.’ “
Andrew Lazonby, the founder and CEO of Hostess K.K., saw the matter differently. “The decision came down to a simple but strangely over-the-top demand from (Universal Music Group) International,” he says. “Move all our business to their distribution or stay with our preferred partner, Sony, and lose Co-Op. That would have meant (Hostess-represented) artists such as Radiohead, Arctic Monkeys, Adele and others being forced to accept what is, in my opinion, not the most suitable option for their distribution in Japan.”
For the time being, Pachinko’s physical releases will be imports, which means Graham brings in foreign product and slaps a Pachinko sticker on it. Like all Japan’s foreign-related record labels, Universal Music Japan has its own import division that handles Universal Music Group releases, and Graham will be working with Universal Music Japan’s digital team to sell his artists on download sites such as iTunes Japan and Mora, so the question is: What makes Pachinko distinctive?
“The import team simply makes their product available to record stores,” says Graham. “We’ve got a marketing budget. We can do campaigns.”
Marketing budgets are usually reserved for nihonban, which, because they have added value in the form of Japanese liner notes and bonus tracks, have a high retail price. The extra margin justifies the budget. The margin for imports is much less, and Pachinko will have to compete with companies that do parallel imports of the exact same records.
“My job is to go to Tower and HMV and ask them to bring these records in through us,” explains Graham. “We could offer extras, like stickers, or if they order X-hundred copies we can give them a deal. We have to offer something.”
The challenge is promoting music that is often uncategorizable. “Japan is full of idiosyncratic sensibilities,” says Universal Music Japan marketing director Kimitaka Kato. “We need to meet the demands of diverse music lovers in Japan by delivering cutting-edge music via any media available. Speed is an important factor.”
“Foreigners living in Japan might know these artists,” adds Graham, “but it’s my job to spread it to the Japanese people as well.”
Many Japanese, however, may find the label name odd because of its gambling associations. “We’re aware of how they react when they hear it,” Graham says, but feels it has an “element of fun to it.” It was thought up by Max Hole, Universal Music Group International’s chief operating officer. According to Graham, Hole “has a special affinity for Japan.”
By June, Pachinko will have released almost 30 records by indie rock acts such as Yuck, Architecture in Helsinki, LCMDF and Mercury Rev.
“One of our artists, Noah and the Whale, is coming to Fuji Rock,” says Graham. “The plan is to do a Pachinko Records campaign around festival time; maybe get a pachinko machine in the stores and base the display on that.”