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Japan Music Market

Japan’s Short-Term Growth of Music Sales Belies Decades of Decline:
According to the International Federation of the Phonographic Industry (IFPI) Global Music Report 2023, the value of global recorded music revenues for 2022 was $26.2 billion, marking 2022 as the 8th consecutive year of global growth.  IFPI reported that Japan is the second largest music market in the world trailing only the United States*.  The most recent statistics published by the Recording Industry Association of Japan (RIAJ) revealed that Japan’s recorded music production and digital music sales value in 2022 reached 307 billion yen (US$2.4 billion**) marking a 9% increase from the previous year and exceeding 300 billion yen for the first time in four years. This increase in sales resulted primarily from the sales growth in the digital music sector, which experienced a 17% increase compared to 2021 sales, marking 105 billion yen (US$808 million**).  In 2022, digital format music sales in Japan reached the highest level since digital format sales statistics were first tracked in 2005 and exceeded the 100-billion-yen threshold for the first time. Though Japan’s population is less than half that of the U.S., some experts calculate that per capita spending on music in Japan is about double that of Americans.  However, the short-term trend of increased sales over the few years belies a decades-long decline of music sales in Japan, as 2022 music sales were approximately 34% less compared to that of 2007.  If the overall declining trend continues, then Japan is predicted to soon fall to fifth place in the world with the United Kingdom, Germany and China (which edged into the top five for the first time ever in 2022) moving up in the rankings with their two-digit growth in the music market.   

Peculiarities of Japanese Music Market:
The sales structure of the Japanese music market differs greatly from that of the United States and many other countries.  According to the IFPI, the U.S. music industry’s transition towards streaming platforms continued in 2022, especially through monthly subscription-based services.  According to the Recording Industry Association of America (RIAA), in 2022, streaming accounted for 84% of recorded music revenues in the U.S market, making it the pillar of the music business; comparatively, physical media only accounted for 11%.  Conversely, Japan’s music sales go against the global trend as the industry still heavily relies on physical media like CDs and DVDs – sales of which accounted for about 66% of the market in 2022, whereas digital distribution accounted for only about 34%, according to the RIAJ.  Japan’s aging society is partly responsible for the continued consumer desire for physical media over digital formats.  Additionally, in Japan, physical media is desirable to younger generations who have strong fan engagement culture — they obsess over music idols and J-pop culture, and CDs (3,080 yen or US$24); DVDs come with the added value of collectable materials like booklets, bonus features, and experience passes, e.g., meet-and-greet opportunities with popstars.  Japanese superfans will buy hundreds of copies of CDs for the chance to win these experiences, which has helped physical media sales dominate the market, at least until the COVID-19 pandemic and related lockdowns.

COVID Impact and New Technology:
COVID-19 triggered a change in music experiences and purchases in Japan toward digital formats.  In particular, the pandemic spurred growth in demand for “online live” concerts that have been broadcast virtually or in a hybrid-format, as in-person events were cancelled or carried strict live-audience attendance quotas.  Although digital distribution services accounted for only 34% in Japan in 2022, and lag in international market rankings, COVID-19 has helped affect change of the Japanese digital music market into an upward trend.  Additionally, the recent introduction of Web3, which incorporates concepts such as decentralization, blockchain technologies, and Non-Fungible Tokens (NFTs), and is characterized in the entertainment industry as more immersive and experiential than traditional Web2 digital media – can provide Japanese superfans with the additional content and community they have historically sought through physical media. 

*According to the Recording Industry Association of America (RIAA)’s most recently published data, total recorded music revenues in the U.S. in 2022 continued to grow for the 7th consecutive year, marking a 6% increase to a record high total of $15.9 billion at estimated retail value.   

** USD$1 = 130 JPY

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