Does the future of Japanese music depend on streaming services?

by

Special To The Japan Times

When music consultant Mikiro Enomoto asked a class of Kyoto Seika University students how they listened to new music last year, he reckons 80 percent of them mentioned YouTube or YouTube-linked sites. When he asked the same question to this year’s class, almost all of them said they don’t bother looking for new music anymore.

It wasn’t an exact study — many people are reluctant to admit to using YouTube or illegal downloading sites to hear the latest tunes. Their response, however, will do nothing to calm concerns that Japan’s youth have been turned off by the music industry’s heavy-handed pushback against digital content.

The New York Times reported last year that 85 percent of music sales in Japan came from CDs. What that statistic didn’t reveal, however, is that CD buyers tend to be in their 30s or older (“Best of” albums do well here). Or they’re part of intense fandoms: For example, idol-pop group AKB48 has excelled at sales thanks to a devoted fan base who buy multiple copies of CD singles for the chance to receive extras, including chances to meet its members.

CD sales in Japan are declining. They went from ¥310 billion in 2012 to ¥254 billion in 2014. The decrease has come even after the government imposed strict penalties in 2012 — jail time or a fine of up to ¥2 million — for downloading copyrighted material.

In 2015, however, the Japanese music industry started to fall in line with other markets worldwide and began to push paid music-streaming services. In early summer, two such services launched: Line Music and AWA. Line Music is jointly run by popular text-messaging service Line and Sony Music Entertainment Japan, the country’s biggest record label. AWA is led by second-largest label, Avex Group Holdings, and the IT company Cyber Agent.

Line is, first and foremost, a messaging service that has more than 200 million active users and is popular among teenagers throughout Asia. This gave Line Music a decent head start in the streaming race here, with its app reportedly downloaded 8 million times within eight weeks. AWA boasted 1 million downloads in its first week, but both Line Music and AWA stopped disclosing figures several months after launching.

“Most of the free-trial members of both these services didn’t move on to the premium paid service when the trials expired,” Enomoto explains, stressing that conversion rates from “free” to “paid” subscribers remain a problem.

Indeed, Line Music began with a free two-month trial that asked users to choose between two plans after the period ended. The basic plan costs ¥500 for 20 hours per month, while the premium plan costs ¥1,000 with no limitations. Users took to Twitter to vent their frustration over the move.

“What!? They want money from us?” tweeted one user. “I’d use it if it kept being free,” said another.

Part of the reason Line and AWA put out their streaming services when they did was in anticipation of Apple Music, which launched in July. Apple CEO Tim Cook announced in October that the service had 15 million members worldwide and that 6.5 million were paid subscribers.

According to Enomoto, Apple has the highest conversion rate from “free” to “premium” in Japan even when compared to other countries such as the United States and the United Kingdom. This could be because many Japanese users just forgot to cancel their accounts after three months of a free trial, or it could be due to the country’s iPhone obsession — there are more iPhone users than Android users here.

Whether it’s love or forgetfulness, Apple Music in Japan is still mainly snagging elder listeners, who are more likely to have credit cards and a taste for Western music. Many popular Japanese acts are still not available on any of the streaming services in Japan. Reaching future fans remains a challenge.

These struggles are providing an opportunity for Spotify, the world’s leading music-streaming service. The Swedish company has been waiting patiently to seize on an opening in the Japanese market, but has been blocked by an industry that hasn’t wanted to give up on CDs. A Spotify spokesperson, who asked to remain anonymous because he wasn’t cleared to speak to the press, says the company has once again started negotiating with record labels here to examine the possibility of launching its service in Japan.

Out of Spotify’s more than 75 million active users, more than 20 million are premium members. While artists such as Adele and Coldplay have made headlines by not allowing their albums on the service, major Japanese acts are cautiously looking at it as a way to introduce themselves to an overseas audience. The top 10 Japanese artists on Spotify look nothing like the domestic Oricon charts with Ryuichi Sakamoto, Joe Hisaishi, One OK Rock, Babymetal, Kyary Pamyu Pamyu, Mono, Nujabes, DJ Krush, Utada Hikaru and toe all grabbing followers abroad.

These overseas introductions are usually made via YouTube, where it’s difficult to police pirated content due to the sheer volume of material on the site. However, Japanese labels disappointed fans overseas this year by restricting access to their content in the anticipation of YouTube Red, a paid monthly subscription that is rumored to launch in early 2016. The strength of YouTube Red would be its customer base, users here are said to comprise the website’s second-largest audience in the world (after the United States). Sources at YouTube, who wished to remain anonymous, say the company has already surveyed its users in Japan and found they would be comfortable paying a monthly fee of around ¥300 for the service.

Additionally, faced with a consistent blockade of idol-pop and Johnny’s boy bands on the top of the Oricon charts, many newer artists think streaming is the only chance they have to make a dent in the music scene here.

Speaking to Switch magazine, Kom_I from the group Suiyoubi no Campanella said that the streaming services will be important in the future of Japanese music. She’s not alone, Ichiro Yamaguchi of the band Sakanaction and producer Tetsuya Komuro have spoken in favor of some form of streaming music.

2016 will be the year when Japan tests whether it can finally move from CDs to digital services, and it will be worth watching particularly closely how any domestic attempts fare against the foreign competition.

The streaming debate is set to continue into the new year. Not only will we see if listeners accept a new model that has them paying for digital music, but we should be able to tell if a Japanese firm can be at the forefront of this momentous change in the music industry. For his part, Enomoto still holds out hope for Line Music.

“If they improve their service soon so that it can be more personalized,” he says, “they still could win the race.”

  • GBR48

    People who buy Apple are generally people with plenty of spare cash – they are not concerned by price tags. If they were, they would buy tech that did just as much as their iThing, just as well, for a third of the price. Apple music sells like unused gym memberships, to the same sort of people.

    The 2012 copyright crackdown has done more harm than good, alienating listeners from approaching new music. I hear *all* new Jpop, Kpop and MandoPop first online on YouTube or other free streaming sites, before buying the CDs of the stuff I like. A full crackdown on these free streaming sites and my buying would tail off. I’d be a couple of grand a year richer, the music industry would be a couple of grand a year poorer. Scale that up globally.

    Future versions of me, outside Asia, may never hear any Jpop or Kpop, and never explore it, or start to buy it. Copyright crackdowns can be counterproductive like that, whatever the suits say. The internet has exported and globally advertised the popular culture of Japan and South Korea like never before and has been a major factor behind increases in tourism. Turn off the streaming tap and you kill the goose that laid the golden egg.

    Many people have no interest in switching from paying for CDs to paying for streaming. CDs can be ripped to a non-proprietary file format and transferred to whatever device paying customers want to listen to them on. If they lose the device or it breaks, no problem. they can just switch to another. If they want to buy someone some music, they can buy them a CD. Files cannot legally be traded, so they are not much of a gift. Most people of my generation inherited a music collection on vinyl and will pass on both vinyl and CDs. A log of streamed music isn’t much of a musical inheritance.

    I have no interest in paying for the music industry to advertise their products to me, though I am happy to pay for their products themselves. I certainly have no desire to hand over money to the tech industry for music. I’d rather pay the music industry directly, and so should you. The internet should be removing middlemen, not creating them. Paid-for streaming hits the music industry hard, as it gets a much smaller percentage from it, of a much smaller amount, than it would if it sold direct to the public.

    The streaming sector re-routes much of the profitability of music away from those who create it, as individuals or as producers, and directs it instead towards the tech sector. This is bad for music.

    There was nothing to stop the music industry from diving in and creating YouTube, before it was created as a start-up, as a free advertising medium for music. Like the bookselling industry, they were too slow and too stupid. Tech guys with no history in the music industry just walked in and took most of their market. The music industry then compounded their stupidity by reaching for the lawyers, flushing their credibility down the toilet, making enemies of their customers and taking kids to court for stupid amounts of money.

    What nobody seems to be willing to accept is the inevitable: Over time the inherent value of things declines. Sometimes slowly as we learn how to produce things more cheaply, sometimes in sharp dips.

    A computer no longer fills a room and costs a fortune, we don’t buy films on videocassette at £40 a pop, and music tracks are no longer worth what they were. Although the unit cost of a CD single may actually be higher than a 7″ single was, a smaller percentage of consumers are buying them, with more capturing streams (the modern equivalent of recording from the radio or other peoples’ vinyl).

    The days when customers (and artists) could be milked for a fortune by coke-addled, mansion-buying music producers, all whilst whining about the sales of blank cassettes threatening their industry, are gone.

    The music industry is alive and well, but isn’t quite the giant money trough it used to be. Instead, for a larger proportion of artists, it has moved back towards other creative arts, like writing or taking photos professionally. That said, those with business acumen, like AKS, can still make a tidy profit.

    Groups and singers today make a larger proportion of their income from performances, incidentals and from actually meeting their fans, even if only briefly (those handshake events). Competent producers and agents work social media, rather than avoiding it or regarding it as a chore. CDs come with extras, DVDs, goods, tickets, voting cards.

    In general, the market is changing, a little like the economies of developed nations, from high growth to lower growth. Sensible companies manage this and ride the wave.

    The YouTube Red Block has been and will be absolutely toxic to the music industry. Complete poison. It will block growth, restrict access and reduce new sales. It takes dumb to a whole new level, and hands over more control of the music industry to the tech sector.

    A recent example of this was the exclusive release of Taylor Swift’s concert material on Apple’s service. Swift was basically saying ‘screw you’ to anyone who didn’t subscribe to Apple. Do you think that won her more fans?

    The tech sector are slowly divvying up the entire commercial environment with the monopolistic goal of online exclusivity – things you can only see or hear on their service. This is good for their shareholders but bad for everyone else. How would you feel if you had to pay a subscription to go into a Lawson and another subscription to go into Family Mart, with KitKats being sold exclusively in one and Pocky being sold exclusively in another?

    As musicians, do you really want only people who pay money to Apple or Google every month to be allowed to listen to your music? Apparently Taylor Swift does, as do those whose music is blocked from free access courtesy of YouTube Red.

    YouTube Red may work well for YouTube vloggers and speciality gaming channels, where people watch other people play computer games (yes, that does actually happen), if they feel they can maintain an audience that way. It is a disaster for the music industry.

    Handing over control of the music industry to the tech sector will be fearsomely damaging. So kick the streaming services and exclusive contracts into touch and support the music industry by going to gigs and buying CDs. It is better to retain control of your industry than sell out to the tech sector. Don’t expect them to act in your interests after you do.

    • thedudeabidez

      You are describing a paradox above: you insist that music companies make entire albums available for streaming in full to allow the listener to decide whether or not he wants to buy them or not — which I agree is ideal — yet at the same time you admit that people are ripping streams and not buying the music. So what’s the answer? You can be a good indie musician putting your music up on your own personal page on Bandcamp, not some faceless corporation but an actual artist in direct contact with your fans, and people still rip it, and it winds up on a gazillion Russian torrent sites.

      I’m glad to hear that you are one of the people who actually buy CDs after listening on YouTube, but you are definitely in the minority.

      Music tracks are no longer worth what they once were, as you put it, simply because a pirate model exists as an alternative. But the value of music to people is no less than ever given the vast amounts of it that people are consuming. So the problem becomes one of creating a marketplace wheree musicians — not major labels and not big tech — can decide what is a fair price for their work. Piracy is not an impossible problem, big tech just wants us to believe that, because they are doing real well selling ads on all that pirated content. Shut down the Megauploads, hold ISPs responsible for dealing with repeat offenders, and by that I mean sites that Hoover up every new piece of music released and put it on their “free MP3 “website for profit, and things will change quickly.

      FYI, touring existed long before the Internet did, and it was one of several revenue streams that kept an artist afloat. It is a mistake to think you can eliminate all those other revenue streams and leave them with this one in its place, and somehow that will be sufficient for them to get by. If you’re thinking of the top 1%, sure, but if you like independent music at all, you should think again .

      Re. Taylor Swift, more power to her, she is speaking for a lot of artists, and I sincerely doubt that move cost her any fans.

    • thedudeabidez

      It’s funny to hear YouTube Red exclusive creators whinging about how their material is being posted over on Facebook which winds up drawing the views. Karma’s a b-tch.

  • thedudeabidez

    As an independent label owner in Tokyo, allow me to make a few comments:

    “CD sales in Japan are declining. ”

    Correct. Our last release, the amount Tower took to sell nationally was less than we used to sell in a single Tower shop (Shibuya) as recently as 5 years ago.

    Re. Sportify, there free to premium conversion rate has been flatlined for quite a while now. It is clear that the vast majority of of listeners choose to remain on the free model. The bigger issue, is that they paid model does not provide sufficient compensation for artist to sustain their careers. At 0.007 cents per stream or less, streaming has cannibalized sales of downloads in CDs while replacing it with only a fraction of a fraction of the revenue in return. This is not going to save the music business

    • Ademar Abiko Jr.

      Why not use youtube/spotify as a marketing tool with little (but not zero) profit, and move to the idol scheme, with goodies, and collectibles, and making ofs, so you can sell physical copies with more value (similar to what’s happening with the dvd / blu-ray market facing streaming services)?

      • http://sayonarababy.tumblr.com/ Ronald

        Most people aren’t going to pay for something they could easily get for free, especially when it’s right in front of them. And not every act wants to get into the idol scheme. Something like the AKS handshake events is absolutely unfeasible for the vast majority of acts.

      • http://soundofjapan.hu/ Case

        Actually what I see as the wise way is: promoting on youtube and selling stuff (both as physical and digital) on bandcamp… which has by far the most artist-friendly rates. It is not about ripping off artists like itunes and the like, it does not have ads plastered all over your content… so it could be a good alternative.

    • http://sayonarababy.tumblr.com/ Ronald

      I’m glad you brought up the tech thing. Why do people need 5TB external hard drives? Why do people need 50GB phones? What is that space being used for? Certainly not papers for school / work.

      It’s sad how streaming is cannibalizing the industry, but I guess some people think a pittance is better than nothing.

      It’s interesting hearing how much you ship to stores now. A lot of people just look at the upper end of things on Oricon and assume everything is fine, but it’s not. A lot of the sales are going to a very select set of acts.

  • thedudeabidez

    As an independent label owner in Tokyo, allow me to make a few comments:

    “CD sales in Japan are declining. ”

    Correct. Our last release, the amount Tower took to sell nationally was less than we used to sell in a single Tower shop (Shibuya) as recently as 5 years ago.

    Re. Sportify, there free to premium conversion rate has been flatlined for quite a while now. It is clear that the vast majority of of listeners choose to remain on the free model. The bigger issue, is that they paid model does not provide sufficient compensation for artist to sustain their careers. At 0.007 cents per stream or less, streaming has cannibalized sales of downloads in CDs while replacing it with only a fraction of a fraction of the revenue in return. This is not going to save the music business

  • http://w-p.biz Daren Afshar

    I still like buying CDs directly from the artists’ websites when possible and buying tracks individually online if I can’t buy direct.

    Apple Music, LINE Music or whatever is of zero interest to me. People should be rewarded properly for their efforts.