There are now just three major record labels left on the planet: Universal Music Group, Sony Music Entertainment and Warner Music Group.

These three companies control as much as 80 percent of the music that is commercially available in the world — and not just in terms of sales. They also, in most cases, control the worldwide rights to the music they sell, which means they also control how that music is managed and promoted.

In the past, when music was only sold via dedicated physical media — records, cassette tapes and compact discs — labels and artists in one part of the world would negotiate and sell rights to localized companies in other territories, thus allowing those companies to distribute, manage and promote that music in accordance with regional demands and tastes.

Japan has been the second biggest music market in the world after the United States for a number of years. The bulk of music that is sold in Japan has always been by domestic artists, but international acts have always been keen to make an impression on Japanese music fans, believing that they can count on a certain high level of continuing support once they break into the market.

However, this situation is changing due to the globalization of the music business. And it’s not just changing with regard to the aforementioned “big three.”

Taylor Swift has her picture taken with a fan upon her arrival at Narita International Airport near Tokyo in November 2012.
Taylor Swift has her picture taken with a fan upon her arrival at Narita International Airport near Tokyo in November 2012. | AP

In mid-November, Japan-based Hostess Entertainment, which handles, among other things, foreign independent record labels and artists in Japan and other Asian countries, announced that after Jan. 1 it was not renewing its agreement with U.K.-based Beggars Group, which represents the labels XL, Young Turks, 4AD, Rough Trade and Matador. Beggars’ releases in Japan will now be handled by a company that only distributes music.

Shortly after the announcement, the Japanese independent music news site Public Rhythm published an email interview with an unnamed person from Hostess. The label said that the break with Beggars happened because the latter had “revised its approach to the Japanese market.”

Speaking to The Japan Times, Hostess Entertainment President Andrew Lazonby is more specific.

“Our licensing partnership (with Beggars) has been successful,” Lazonby says, “but their mission is to bring Japan in line with their operations around the world, so no rights managed locally, only CD distribution for a commission. That means promotion strategy and budget control will be managed far away by people who don’t know this market.”

Consequently, Lazonby thinks the artists themselves will suffer.

“But the artists in situations like this don’t seem to be the priority,” he says.

Adele’s sales in Japan to date have been relatively low. | MATT SAYLES/INVISION/AP

Changing landscape

The term “big in Japan” was originally coined to describe Western pop acts who had scored hits in Japan but not necessarily in their native countries. The first and arguably most successful example is U.S. instrumental rock group The Ventures, who sold more records in Japan than the Beatles in the 1960s and regularly toured the archipelago. They still do, twice a year, even though the group’s last founding member retired several years ago.

However, the most famous example is probably Cheap Trick, the American hard rock band whose stardom in the United States was preceded by superstardom in Japan, the result of a chain of events, some fortuitous, others planned. In 1977, Cheap Trick opened for Queen on some dates of the British group’s American tour, which was covered by Japanese music journalists. The writers, however, were more intrigued by the opening act, which delivered poppy metal songs and a strange visual dynamic.

As Cheap Trick’s lead guitarist, Rick Nielsen, told The Japan Times in 2008, “There was a guy named Ryu from Music Life magazine, and he asked me to write an article about what it was like opening for Queen, so I did.” After that, the group was inundated with Japanese fan mail and when they arrived in Japan in 1978 to tour, “there were 5,000 people at the airport.”

Cheap Trick
Cheap Trick’s ‘Live at Budokan’ became the album that broke the group in the United States. | CHARLES SYKES/INVISION/AP

Sony, which owned the Japanese license for Epic Records, Cheap Trick’s label, used the publicity generated by the Queen-related print media to promote the band’s first two albums, pushing songs it believed would specifically appeal to Japanese music lovers. It worked, with the result being the 1978 album “Live at Budokan,” initially released exclusively in Japan as a kind of thank you to the fans, but which eventually became the album that broke the group in the United States.

At the time Japanese pop was monolithic. Everyone liked the same artists and listened to the same songs, because the media and the music industry were symbiotic. Even when “new music” — West Coast-influenced folk rock — became popular in the mid-’70s through singer-songwriters such as Yumi Arai, it was immediately absorbed into mainstream kayōkyoku (popular music).

For those who wanted something different, there was foreign music, which was easy to promote because it was the only alternative.

“TV pushed Japanese pop,” says Tadd Igarashi, a veteran music writer. “Whereas FM radio almost exclusively played foreign music.”

Until the late ’80s, Tokyo had only two FM radio stations, but they became the preferred media for more worldly music consumers.

Igarashi says that through the ’80s and early ’90s many FM stations encouraged on-air talent to be as free as possible.

“We would play everything,” he recalls. “Advertisers were not concerned with selling products. They were more interested in selling an image of being hip and cool, and that image was associated with foreign music.”

CD sales in Japan are continuing to decline.
CD sales in Japan are continuing to decline. | BLOOMBERG NEWS

For these music lovers, Japanese record companies made dedicated local products with high quality packaging and better sound compared to the original editions. They came with translated lyrics and special liner notes in Japanese. Because of the added value, these records were — and still are — more expensive than import editions of the same titles, which is why Japanese editions also have exclusive bonus tracks, thus making them instant collectors’ items for overseas fans.

“In the ’90s, when I worked for Sony, we had huge hits in Japan with (reggae singer) Diana King’s ‘Shy Guy’ and (Latin dance artist) Lisette Melendez’s ‘Goody Goody’,” says Archie Meguro, who now works for another international entertainment company. “We would scan an artist’s catalogue and say, ‘This could be a hit in the Japanese market.’ Diana King sold a million copies of her debut album in Japan.”

Up until the ’90s, the market for recorded music in Japan was roughly 75 percent domestic, 25 percent international. The gap has only widened over time.

“When I got into the business 25 years ago, the split was about 80-20,” says Jonny Thompson, a former employee of Warner Music Japan and currently general manager of the international division of Japanese music publisher Nichion. “Now, I think, it’s 90-10.”

Some in the industry argue that this shift is more about the changing face of domestic music, which has become more diverse and sophisticated, as well as the increasingly insular nature of Japanese youth, who seem uninterested in foreign things. However, Thompson also thinks the globalization of the music business, facilitated by large media company mergers, has made the “big three” less interested in localized promotion for international artists.

In any case, such promotion has become more problematic from a standpoint of overseas marketers. Masaya Inokuchi, managing director of Universal International, says he still relies on print media and radio to promote overseas acts, but it’s not as easy as it used to be.

“We don’t have segmented radio like they have in the States or Europe,” he says, adding that Japanese stations typically play all kinds of music.

Once the government relaxed regulations in the late ’80s, more FM radio stations appeared, and now they mostly play Japanese music.

Bruno Mars makes regular appearances on television in Japan.
Bruno Mars makes regular appearances on television in Japan. | CHRIS PIZZELLO/INVISION/AP

Moreover, the rise of the internet has made niche print media obsolete. Record companies have tended to buy ads in music magazines in exchange for exclusive interviews with artists, thus bolstering sales on both sides of the transaction. With fewer magazines, however, the strategy no longer justifies the expense for international releases — music lovers can get music information for free online.

More significantly, the personal connection between fan and artist that is vital to promoting international artists in Japan has been interrupted.

“Japanese artists are always around in Japan,” Inokuchi says. “They’ll take any promotion opportunity they’re offered. It’s not the same for international artists.”

In order for artists from abroad to be successful, Thompson says that they “have to show up whenever they release an album and tour and do things like TV, which is still important in Japan.”

Thompson says many artists only want to interact through their music, and, while the music itself is the eventual draw, “artists have to play by the local rules, and many don’t want to.”

A good example is Adele, one of the biggest selling recording artists worldwide in recent years. However, her sales in Japan to date have been relatively low.

“It would have taken an investment of time and resources to make Adele popular in Japan,” Meguro says. “It doesn’t matter if she sells a zillion albums overseas — Japanese people don’t care about that anymore.”

Pop appeal: Artists such as Carly Rae Jepsen are very popular in Japan because they work hard to interact with their fans.
Pop appeal: Artists such as Carly Rae Jepsen are very popular in Japan because they work hard to interact with their fans. | AP

In contrast, Lady Gaga, Taylor Swift, Ariana Grande, Bruno Mars and Carly Rae Jepsen are all very popular in Japan because they have made an effort. They have visited Japan and interacted with fans and the media through concerts and promotional activities.

The difference is that all four artists were designated as “priority” artists by their respective major labels, and while local marketing and A&R (artists and repertoire) staff handled the promotion here, the strategy was overseen by the global head office. These days, there’s little local promotion of international artists who aren’t prioritized by their record company’s headquarters.

Challenges ahead

Obviously, international artists are going to have a tougher time getting noticed in Japan unless they are invited to tour by a concert promoter, but even that option is becoming more difficult.

“It’s now so cost prohibitive for promoters to bring artists into Japan,” Thompson says.

Many musicians make most of their money now by touring rather than records, and with Japan’s notoriously expensive hotels and transportation, exacerbated by fluctuating exchange rates, ticket prices for international groups have skyrocketed in the past decade. Thompson says that Japanese promoters used to be successful at negotiating fees down because so many artists wanted to play Japan.

“But now the artists can go somewhere else and make three times as much money,” he says.

Some overseas acts can still gain footholds in Japan by making deals with Japanese indie labels, but there are not as many labels as there used to be.

Hayato Kasuga once took care of international artists for BMG Japan, which was absorbed by Sony in 2008. When Sony started downsizing its release schedule for international artists, he went out on his own as a freelance A&R agent. Later, he started his own label, Magniph Records, so that he could distribute in Japan some of the artists he knew.

“I run the company by myself,” Kasuga says. “I don’t have any staff. I don’t need big profits from CD sales, just enough to live off, and so far it’s been good.”

Kasuga was in charge of the Strokes when he was with Sony.

“The Strokes were a worldwide priority artist … but after three albums they didn’t want to do promotion anymore,” he says, adding that the group’s relationship with Sony eventually ended.

Kasuga now licenses and distributes the solo albums by Strokes members on Magniph, as well as the new EP by the band itself.

“They sold well,” he says. “They’re still popular in Japan.”

Koji Saito did something similar with his label 7 e.p., of which he is also the sole employee. Saito was once a music journalist and became friends with U.S. indie artists such as Isaac Brock of Modest Mouse and Phil Elverum of the Microphones.

In addition to albums by a few Japanese artists that he also manages, Saito releases records by musicians from the North America and brings them over to tour Japan. In exchange, they bring his Japanese bands to the United States.

“It’s a win-win situation,” Saito says. “In 2016, I only released six albums. I wasn’t super active, but I didn’t lose money, either.”

Although the audience for international music in Japan has shrunk in the past 20 years, Saito says audiences for the kind of music he sells have “remained stable, and that makes it easy to focus on them.”

Ariana Grande interacts with fans during a tour to Japan.
Ariana Grande interacts with fans during a tour to Japan. | AP

Indies such as Magniph, 7 e.p. and Hostess are, in their own different ways, maintaining the old A&R model, the idea that artists have to be cultivated over time so that their music lasts more than just a season. It has always been true in the pop music industry at large, but is especially true in Japan, where fans are notoriously loyal.

“What worries me is when people stop caring about the music,” says Keitaro Sumii, head of the international division at Warner Music Japan. “It’s not just about getting money. We shouldn’t think of just three months ahead, but five years, 10 years. That’s the biggest downside of streaming.”

Streaming services, which offer regular subscribers access to music libraries and playlists, remain a sticking point for the domestic music industry.

Spotify, the world’s biggest music streaming service, took forever to launch in Japan owing mainly to negotiations with Japanese record labels over domestic content. Now that it has officially been launched and is competing with other streaming services that were already up and running, no one seems to know what to make of it.

Sumii is especially doubtful. “The numbers (so far) are limited,” Sumii says. “Japanese people aren’t really comfortable with the concept of all-you-can-eat. They just want to pay for what they want.”

According to Nichion’s Thompson, however, international record companies are happy with Spotify, and not just because it cuts down on piracy. All an international label has to do these days is make a worldwide deal with Spotify — there’s no need to negotiate with individual territories.

“Because of the worldwide homogenization process, labels can collect income directly from streaming services,” Thompson says. “International artists are licensed globally now. That wasn’t the case before.”

Consequently, major labels have even less incentive to promote artists on a regional basis.

“We get good revenues from streaming for people like Justin Bieber, but it isn’t reflected on the charts,” says Universal’s Inokuchi. “It’s difficult to understand the nature of a song’s success. We’re making money, but we don’t really know how much each artist is earning.”

Much is made of how strong CDs remain in Japan, but CD sales nevertheless continue to decline. If they aren’t the future, what is?

Whichever format prevails, Meguro, who has also worked in the music business overseas, believes that international artists will still have to cater to Japanese tastes if they want to have a presence here.

“Japanese fandom is pure,” Meguro says. “Love for international artists and their music in this market is by far the best in the world, but it has become more difficult to reach those fans.”

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