Music | MONEY AND MUSIC

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.