Chapter1:The Tremendous Perseverance of the Package Music Business becoming the World’s Largest Market

In 2011 the CD market had a size of 95% compared to the year before, namely 289,6 Billion Yen (about 3,6 Billion USD), the package music market including DVDs reached a size of 97% compared to the year before with 361,8 Billion Yen (4,5 Billion USD).  <table -1>

sales of packaged music in japan

sales of packaged music in japan

Considering the impact of the Great East Japan Earthquake with stores in some areas of the Tohoku Region closing down and postponed product launches, these few percent decrease indicate the miraculous sustainability of the market.

Since Japan got ahead of America in 2008 to become the worlds number one, it keeps the by far best share in the package market despite a small decrease while other foreign markets are continuously shrinking.

In the first place, in countries other than Japan national chain stores that specialize in selling CDs have almost disappeared. On the other hand, although the total number of stores has decreased, CD shops in Japan do not easily disappear. In 2010, convenience store giant Lawson has acquired the CD seller HMV Japan. In May 2012 the opening of a new type of store, an integrated CD/DVD shop-in-shop called “Lawson HMV Omotesandou” attracted public attention. In June 2012 Japan’s largest telecommunication company NTT Docomo increased the ratio of investment in Tower Records and changed it into a subsidiary company. NTT announced to strengthen its commerce business by operating the store sales and e-commerce together.

Tsutaya, the biggest CD seller that also runs rental CD businesses, owned by the Culture Convenience Club, performed a Management Buyout in February 2011 (management acquired company) and was delisted from the stock market. The reason for the non-listing was said to be a “need for significant transformation of the maturing business”. With the “Daikanyama Tsutaya Book Store” a new type of business aiming at the elder stratum was opened in December. Since then, a total area of 1000 Tsubo (about 3,306 sqm) was opened and has been attracting a great deal of attention.

The CD Rental business is a type of business that almost exclusively exists in Japan. It has started to spread in the era of analog recording, and is doing so even in the age of the CD. Through the “Right to Rent” it was recognized as a legal business by the industry. Despite a small decrease in 2011 compared to the previous year the CD rental market reached a size of¥544 Billion Yen (6,8 Billion USD) and showed a significant presence in the market and amongst users. has been established to users

Rental CD market proceeds decreased only slightly.  <table -2>

sales and number of rental CD biz.

sales and number of rental CD biz.

Although the Japanese package market is developing a “Galapagos Syndrom”[1] as a result of keeping itself away from competition by a “Fixed Price Law ” resale system (resale price maintenance system)[2] and the direct relationship between the labels and shops,[3] it is a rarely seen case in the world that various chain stores specialized in CDs preserve their existences and influential power.

With regard to the reformation of the music industry’s business scheme, the nationwide existing specialized sales-network has a big significance as a point of contact with the user.

O2O (Online to Offline)[4] is becoming a keyword in Internet marketing. Shouldn’t we also positively shift the attention to the new potentials of the package business now without being fixed upon traditional models?

In this connection, the CD standard was created in 1982, and celebrates its 30th anniversary this year. Even though various evolutionary steps were accomplished and different standards such as VHS, Laser Disk, DVD, Blu-ray, 3D etc. were developed, video product standards still do not reach the scale of spread comparable to that of the CD.

A new user-appealing package should seriously be proposed.

〜from “WHITE PAPER of DIGITAL CONTENTS in JAPAN” (supervised by METI)
 (translation:Benjamin Tag)
■terms

[1] Galápagos syndrome (ガラパゴス化 Garapagosu-ka) is a term that describes the phenomenon of a product or a   society evolving in isolation from globalization.

[2] RPM – is a system were manufacturer and distributor agree on a certain price at a certain price level, currently Novels, Magazines, Newspapers, Music CDs, Music Cassette Tapes, and Vynil Records.

[3] Distributor System – by contract, manufacturers and particular wholesalers establish a nationwide system where stable sales channels are decided and fixed.

[4] E-Commerce, online services are used for promotion and marketing in order to attract and stimulate offline sales (e.g. Coupon Services).

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About yamabug

Music Producer consultant of contents business C.E.O. of BUG corporation director of Federation Music Producers Japan. in details ☞ https://yamabug.wordpress.com/2012/01/25/my-profile/ Twitter ☞ https://twitter.com/NorikazuYama
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