Around the world, the music business has shifted toward
downloads and streaming. But in Japan, the compact disc is still king.
On a drizzly Sunday afternoon recently, Tower Records’
nine-level flagship store here was packed with customers.
Japan may be one of the world’s perennial early adopters of
new technologies, but its continuing attachment to the CD puts it sharply at
odds with the rest of the global music industry.
While CD sales are falling
worldwide, including in Japan, they still account for about 85 percent of sales
here, compared with as little as 20 percent in some countries, like Sweden,
where online streaming is dominant.
“Japan is utterly, totally unique,” said Lucian Grainge, the
chairman of the Universal Music Group, the world’s largest music conglomerate.
That uniqueness has the rest of the music business worried.
Despite its robust CD market, sales in Japan — the world’s second-largest music
market, after the United States — have been sliding for a decade, and last year
they dropped 17 percent, dragging worldwide results down 3.9 percent.
Digital sales — rising in every other top market — are
quickly eroding in Japan, going from almost $1 billion in 2009 to just $400
million last year, according to the Recording Industry Association of Japan.
Turning Japan around has become a priority for the global
music business, which has struggled to regain its footing after losing about
half its value since 2000, when digital technology began to disrupt the
album-based business model.
But accomplishing change has been difficult, according to
analysts and music executives in Japan and the West, in part because of a
protectionist business climate in Japan that still views the digital business
Streaming music services like Spotify, widely seen
as the industry’s best new hope for new revenue, have stalled in efforts to
Peculiarities of Japan’s business climate have shaped its
attachment to the CD, but cultural factors may also be at play, like Japanese
consumers’ love for collectible goods.
Tower Records closed its 89 American outlets in 2006, but
the Japanese branch of the chain — controlled by NTT DoCoMo, Japan’s largest
phone carrier — still has 85 outlets, doing $500 million in business a year.
In the United States, digital sales have long since
overtaken physical ones. But CDs still account for 41 percent of the $15
billion recorded music market worldwide, and, in addition to Japan, some big
markets like Germany remain reliant on CD sales. That attachment worries some
analysts, who contend that if those countries do not embrace online music, an
inevitable decline in CD sales will further damage the industry.