Is Streaming the Future of Japanese Music?

Streaming is the big thing in music worldwide for the past few years, with Japan being a noticeable exception. The Japan Times recently released an article investigating streaming’s place in the Japanese music industry.

There are concerns that Japanese youth have been turned off by the music industry’s pushback against digital content. Last year, music consultant Mikiro Enomoto asked a group of college students where they listened to new music. About 80% of the group replied that they used YouTube or something of that nature. This year when he asked the question to a group of college students, nearly all of them said that they don’t even bother looking for new music anymore. This isn’t an exact study, but it does give some insight into how the youth of Japan deals with music and the industry today. Is the youth not listening to new music, or are they using less than legal options like pirated downloads?

Last year, The New York Times reported that 85% of the Japanese music industry’s sales come from cds. What they didn’t note however is how cds are mostly bought by people in their 30s and up, and also by idol fans who buy multiple copies due to bonuses like handshake tickets.

The fact of the matter is though is that cd sales are still in decline. Sales went from ¥310 billion in 2012 to ¥254 billion in 2014. This decrease is despite government-imposed penalties introduced in 2012 for downloading copyrighted material. These penalties include jail time or a fine of up to ¥2 million.

Earlier this year, Japan began to fall in line with the rest of the world with the introduction of 2 new music streaming services, Line Music and AWA. Line Music is a collaboration between the Line instant messaging service and Sony Music Entertainment Japan. AWA is collaboration between Avex Group Holdings and Cyber Agent, an IT company.

Line Music had a head start due to the fact that Line has 200 million active users and is popular with teens throughout Asia. The Line Music app was downloaded 8 million times in its first 8 weeks. AWA was downloaded 1 million times in its first week.

However, both services have since stopped releasing figures for how much they’re downloaded. The big problem is that these services garnered attention via free trials, but then had a problem getting users to stay on and pay to stream. “Most of the free-trial members of both these services didn’t move on to the premium paid service when the trials expired,” Enomoto explained.

Line Music launched with a free two-month trial. After the trial ended, users were given a choice between 2 plans: a basic plan that costs ¥500 for 20 hours per month or a premium plan that costs ¥1,000 with no limitations. Upset Line Music users voiced their discontent with being asked to pay post-trial via Twitter. “What!? They want money from us?” tweeted one user. “I’d use it if it kept being free,” another tweeted.

Line Music and AWA launched ahead of the debut of Apple Music in an effort to make a place for themselves before Apple took control of the streaming market. In October, Apple CEO Tim Cook announced that Apple Music had 15 million users worldwide and that 6.5 million were paying subscribers.

Apple Music has the highest conversion rate from “free” to “premium” in Japan, according to Enomoto, even when compared to other countries such as the United States and the United Kingdom. This could be because many Japanese users forgot to cancel their accounts after 3 month free trial. Or it could be due to Japan’s iPhone obsession, a country where there are more iPhone users than Android users.

Regardless, Apple Music in Japan is still mainly a thing for older people, people who are more likely to have credit cards and who are more likely to be fans of Western music. Many popular Japanese acts are still not available on any streaming services in Japan. Getting more people to buy into streaming without these acts remains a challenge that must be solved.

Can Spotify over the challenge? The company has been trying to crack the Japanese market for years, but has met resistance due to the largely physical nature of the music market. An anonymous Spotify source confirmed to The Japan Times that the company has recently started the process of talking to record labels about launching in Japan.

More than 20 million of Spotify’s nearly 75 million users worldwide are paying users. Recently Taylor Swift, Adele, and Coldplay made waves by refusing to put their new albums on Spotify. However, some Japanese acts are cautiously using Spotify as a means to introduce themselves to an overseas audience. The top 10 Japanese artists on Spotify look nothing like the Oricon charts. Ryuichi Sakamoto, Joe Hisaishi, One OK Rock, Babymetal, Kyary Pamyu Pamyu, Mono, Nujabes, DJ Krush, Utada Hikaru and toe are all grabbing followers abroad via Spotify.

Overseas introductions to foreign acts are usually made via YouTube. However, some Japanese labels disappointed international fans this year by blocking content due to YouTube Red. The strength of YouTube Red would be its customer base. Users in Japan are said to comprise the YouTube’s second largest audience in the world, after the US. Sources at YouTube Japan, who wished to remain anonymous, say the company has already surveyed its users and found that they would be comfortable paying a monthly fee of around ¥300 for YouTube RED.

Many newer artists think streaming is the only chance they have to make a dent in a music scene where there is a constant blockade of idols topping the charts. Speaking to Switch magazine, Koumai of Suiyoubi no Campanella said that the streaming services will be important in the future of Japanese music. Ichiro Yamaguchi of Sakanaction and Tetsuya Komuro have also spoken in favor of some form of streaming music.

The coming year will be the year when Japan sees whether it can finally move from cds to digital services. It will also be worth watching particularly closely how Japanese streaming services fare against the foreign ones. 2016 will also see if listeners accept a new model that has them paying for streaming. For his part, Enomoto has his eyes on Line Music. “If they improve their service soon so that it can be more personalized,” he says, “they still could win the race.”