Wednesday, October 8, 2014

3 Reasons Why Japan Still Buys CDs

While most of the world is rapidly changing to music streaming there is still one market where where CDs reign supreme - Japan. Indeed the round plastic discs still account for 85% of sales in Japan, while in most of the world the figure hovers around 40%.

That figure, along with pricing restrictions that keep the price of CDs above $20 each, has resulted in Japan being second in total music sales just behind the much larger US. In fact, Tower Records, which closed its stores in the US in 2006, still has 85 outlets there and does nearly $500 million a year in revenue!

But why are CDs still so popular there? There are actually 3 reasons:

1. The Japanese consumer relishes collectibles, which a CD can be classified as. Greatest Hits releases do especially well there because of this fact.

2. Digital music services, especially streaming services, haven't been able to obtain music licenses because Japan's labyrinth of copyrights makes it more difficult than other countries. There's also a reluctance on behalf of the record labels and licensing bodies to grant licenses.

3. The existing digital services don't have the latest hits. Even iTunes doesn't have many of the hits from its competitor Sony.

All that being said, Japan's total music sales were still down by more than 17% last year, and this year doesn't look to be much better, which does not bode well for the music industry in general. While the rest of the world is evolving, Japan still wallows in the past.

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