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Spotify, Rdio and what didn’t happen in 2013

by Steve McClure

Special To The Japan Times

This was supposed to be the year that changed the Japanese music business.

Back in March I wrote that major international streaming services Spotify and Rdio would likely launch in Japan “sometime in the next few months.” That, I confidently predicted, would be a sign that “the Japanese music business is abandoning its Galapagos-like isolation and is entering the music-streaming mainstream.”

Well, I was wrong. Mea culpa. Maxima, already.

Maybe having the International Federation of the Phonographic Industry (I love the retro vibe of “Phonographic”) confirm earlier this year that Japan is now the world’s biggest recorded-music market boosted the local music business’ “if it ain’t broke, don’t fix it” attitude.

But resting on their laurels really isn’t an option for Japanese record companies. Shipments of audio and video “product” were down about 10 percent in both volume and value terms year on year in the first 10 months of 2013, according to the Recording Industry of Japan (RIAJ).

And Japan’s digital music sector is also shrinking, believe it or not. The RIAJ says digital sales fell 20 percent by volume and 24 percent in value terms (to ¥31.5 billion) in the first nine months of 2013. Physical sales were worth ¥196.8 billion in the same period.

Digital’s 13 percent slice of the music sales pie puts Japan well out of sync with other music markets. The IFPI says digital now comprises 35 percent of the global industry’s sales, with physical at 57 percent (and falling).

Digital clearly has a long way to go before it can become the driver of music sales in Japan. As I noted in a previous column, smartphone-based downloads are the one bright spot in this otherwise rather bleak picture. They were up 32 percent for singles and 50 percent for albums in value terms in the January-September period.

But change is coming, Akira Nomoto, Spotify Japan’s director of licensing and label relations, said optimistically at a recent British Embassy trade seminar for visiting U.K. music companies.

“Don’t ask me when we will launch,” he said. “All I can say is very soon. Japan is hard to change quickly.”

Rdio, meanwhile, appears to have given up on Japan, at least for the time being. Sebastian Mair, who has been representing Rdio in Japan, e-mailed colleagues on Nov. 29 to say that he is taking leave from the company because, “Rdio will be concentrating on their core markets outside of Asia.”

While the carrot of streaming services remains mainly out of reach for Japanese music fans, the stick of penalties for illegal downloading doesn’t seem to be having much effect on music sales. So far no one has been arrested or punished with the maximum two years in prison and/or fine of up to ¥2 million that the Copyright Law now allows for.

In fact, one music biz insider says piracy (to use the industry’s pet term for illegal downloading) has skyrocketed in Japan in the last six months among under-25s. He says his information comes from a company that tracks unauthorized distribution of content online, requesting anonymity because this information isn’t for public consumption.

Meanwhile, it’s business as usual for a music industry lulled into a false sense of complacency by the continuing (and to my mind, inexplicable) popularity of dreck like AKB48 and their ilk. People are still buying CDs, although less from traditional brick-and-mortar stores and more from online outlets such as Amazon and HMV.

So people in Japan are willing to pay for music — it’s just a question of making it easier for them to do that. Opportunity knocks for Spotify, Rdio, Deezer and the other streaming services that represent the recording industry’s best hope for future growth.

  • thedudeabidez

    “People in Japan are willing to pay for music” — which is one good reason why we DON’T need Spotify here. Yes, people pay Spotify something — that is, if they’re not on a free ad-supported account, which most US users are — but the income generated vs. the gluttonous volume of music being made available is not nearly enough to pay artists even starvation wages. Spotify’s CEO becomes one of the richest men in the music industry, the major labels get equity and one-time bulk payouts that make their stockholders happy in the short term, while the artists wind up getting $0.005 per stream. Do the math and see if that’s sustainable.

    The only way Spotify can encourage artists and labels to sign on is by saying it’s better than being pirated, but that’s debatable; at least with piracy, people can make the moral argument and still have copyright law to stand on in demanding stricter action against cyberlockers and torrent sites that actively profit from piracy. Spotify is more insidious in that it convinces fans they are doing the right thing by paying for music, while in reality offering artists a model that is entirely unsustainable.

    Take for example, cellist Zoe Keating who has gone public with her sales figures to make a point. According to The Guardian, “97% of Keating’s income came from sales of her music on iTunes, Amazon and her own Bandcamp website. During that six-month period, Keating earned just under $47k from iTunes, $25k from Bandcamp and nearly $11.2k from Amazon, but less than $300 from Spotify.” This was despite seeing streams in the hundreds of thousands on Spotify. The download model is convenient yet workable for artists; the streaming model, at present, is not. To the extent that Spotify looks to cannibalise other monetized streams of artist income –download and cd/vinyl sales — it is a self-destructive act for any artist with a fanbase to put their music up on that service.

    More and more artists overseas are speaking out against Spotify and pulling their music from the site. It’s thus more than a little ironic to see it being proposed as some sort of solution for Japan’s music industry.

  • Josh Jenkins

    I remember reading about this before and thinking that the penalty was so massive for infringement. Hopefully they won’t pick one unlucky bastard and use him to send a message to everyone else… It’s too bad that copyright laws get so complicated when crossing oceans, and that transferring a service to a new country takes so much effort. But it’ll get there it sounds like. Till then there’s always youtube (and anything that works off it like torch music), and within a couple years Japan will probably be just another streaming service saturated market!