July 23, 2020

While it is the 2nd largest music market in the world – Japan remains dedicated to physical formats. But streaming is making its presence known as listeners and artists become more open to streaming platforms.

Japanese music is loved around the world, with Japanese artists performing at top global festivals while also topping the local charts. J-Pop, Japanese Pop music, is one of the most recognised genres of music in the world. In Asia, Japan accounts for over half of total music revenues at 57.4%. IFPI ranked Japan as the second-highest for music revenue in 2019 (IFPI, 2020). Similarly, CISAC collections placed Japan in the 3rd spot globally, with its €819million accounting for almost 10% of global revenues in 2018 (CISAC, 2019).

Despite these glowing global chart positions, Japan is undergoing a transformation period that has actually reduced its revenues in 2019. IFPI reported that of the top ten music markets, Japan was the only one who had not experienced growth in 2019. IFPI shared that the reduction of 0.9% in Japan’s total music revenues was caused by the 4.8% reduction in physical format sales, such as CDs (IFPI, 2020).

Physical music remains a huge market in Japan, however digital is growing its share. RIAJ reported that in 2018 71.9% of all recorded music revenues was from CDs, a number that dropped to 68.9% in 2019. Streaming is in the minority but is growing. In 2019 streaming accounted for 19.3% of revenues, up 4.7% on the year previous. This percentage translates into favourable revenues from streaming services. In 2019, ad-funded streaming service revenues generated 41.97 billion Yen ($385 million), up 33.8% on the 2018 revenue figure (RIAJ & MusicBusinessWorldwide, 2020).

One reason why streaming may not have reached its peak in Japan is that people are less likely to subscribe to a platform than other countries. In the Deloitte Global Mobile report which surveyed people within 20+ countries, the number of Japanese respondents who had subscribed to music platforms was far smaller than other nations. Just 17% of Japanese respondents had a music streaming subscription, in comparison to other countries such as the UK (39%), Germany (37%) and South Korea (34%) (Deloitte, 2019). However, this is changing as streaming grows. ASCAP CEO Beth Matthews shared that Japan was a “Slow starter” but is catching up as global streaming platforms such as Spotify compete with local offerings like LINE Music (CISAC, 2019).

Discussing their own behaviours using smartphones and applications, respondents shared that listening to music on smartphones was the 12th most common thing they did. However, when broken down by age this changes. For the 18-24 year old age group this number is higher at 21% and ranks as the 3rd most common action they use their smartphones for. Of those with smart speakers, listening to music was the most popular use that Japanese people had (60%).

Of those who have subscriptions to platforms, Amazon Music and Spotify are neck and neck for the most popular. In recent data from Mobile Marketing Data Labo, both of these applications were used by 21.4% of those who stream music. Amazon Prime Video is also highly popular in Japan so it makes sense that the music offering being bundled together would be used by many Japanese people. In third place was Apple Music at 15.7%. Local music streaming platform LINE Music is the fourth most popular with 13.9% of the streaming market (Mobile Marketing Data Labo, 2020l). LINE Corporation also operates a popular communication application in Japan, which may influence its popularity.

Another reason why streaming has not yet gained the same market share it has in other large music markets may be due to artists’ own apprehension. Music by local artists and in the Japanese language is very popular on the local charts. But many of these songs are slow to be added to the streaming platforms. For example, Japanese artist Kenshi Yonezu’s record-breaking song Lemon was Billboard Japan’s song of the Year for two years running, however, Billboard reported that in 2019 the song was not available on streaming. However, since then, the song has been added to streaming platforms. It is interesting to note that the Billboard Hot 100 focuses on 5 key metrics – downloads, video views, look-ups, Twitter mentions, and karaoke (Billboard, 2019).

More and more artists are becoming open to adding their music to streaming platforms, however doing so in announcements. In June of 2019, a member of the Japanese band Wanima made the announcement that their band’s music will be added to streaming platforms. Speaking of why they waited until now to do so, Kenta Matsumoto discussed how artists make “significantly less money” from a stream of a song over that of a physical album sale. Japanese artists may now be seeing the benefits of streaming. Through streaming, they can gain global audiences and grow their brand (Japan Times, 2019).

The topic of fair royalty payments is clearly top of mind for Japanese artists as they slowly open up to music streaming. While Japan has private copying levy laws in place, the revenues from this are minute in comparison to the total market. The advent of copyright directives globally may influence Japan as its streaming market grows (CISAC, 2019). While physical formats may continue to be popular, streaming could continue to grow in Japan rapidly. This will rely on the openness to streaming platforms of both artists and music consumers. The Japanese music market is definitely one to watch.

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