Popular music streaming service Spotify is trying its luck in Japan, where consumer demand for packaged media such as CDs is traditionally strong and the market for streaming still has huge potential to grow.
Visiting Spotify founder and CEO Daniel Ek announced the company’s foray into Japan on Thursday at a news conference in Tokyo.
“I’m very excited to be here with all of you. This is the dream come true to me, to be here today, to be able to bring the 2 million artists around the world to Japan and of course to take the Japanese artists that we all love to the rest of the world,” Ek said.
However, Spotify Director of Product Dave Price said the music service will be offered on a trial basis at this point and only to people invited by Spotify.
With more than 100 million active users worldwide, Spotify is the world’s most popular music streaming service, available in 60 countries. It was launched in September 2008 by Swedish startup Spotify AB.
The Japanese version has 40 million songs on tap under two plans: Spotify Free and Spotify Premium.
Spotify Free costs nothing but occasionally plays advertisements between songs. Upgrading to premium removes them.
It is the first mainstream music streaming service in Japan to operate on the “freemium” model.
“It’s this model that made us the biggest music service of its kind,” said Hannes Graah, a director at Spotify Japan K.K.
Paid online streaming services were scarce in Japan before 2015, the year Apple Music, Google Play Music, Amazon Prime Music, Line Music and AWA appeared.
Many of them initially enticed users with free trial periods. The Line Music app scored 8 million downloads in its first eight weeks.
However, the companies are having difficulty getting users to upgrade from the free services to premium accounts requiring payments.
A survey in April by Mobile Marketing Data Labo found that 57.8 percent of the 703 streaming customers who responded were still using the free trials, according to Engadget website.
Spotify’s alternative approach could make it a success, says one industry commentator.
“It’s a huge deal that it’s basically free,” Mikiro Enomoto said in a Twitter post after Spotify’s launch. “You can share, just like through YouTube.”
But Enomoto has complained that Spotify, like other services, is short on Japanese songs, with less than half of the tunes on Japan’s Oricon Chart available to play. He said that is another reason why music streaming services have struggled to succeed in Japan.
Japan is the world’s second-largest music market, with nearly $3 billion sales per year, according to the TechCrunch website. However, customers prefer buying CDs to digital files.
Germany is similar, with 52.3 percent of sales generated by CDs.
Spotify says German music sales were on the decline from 1998 but rose for four consecutive years after Spotify launched there in 2012.
“Spotify is an international platform. We aim to connect Japanese musicians with the 100 million users that we have,” said Akira Nomoto, the official in charge of licensing and label relations at Spotify Japan. “We’d like to become a business that can contribute to the growth of the Japanese music industry.”