Japanese Music Sales Dragging, But It Could Be Good News

While the US is well established as the largest music market in the world, number two, Japan, is perhaps less well known. Recently, the island nation's music sales have seen a bit of slowdown, however. Still, this may not be a bad thing for the music industry overall.

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Guest post by Bobby Owsinski of Music 3.0

Everyone knows that the United States is still the largest music market in the world, but which one do you think is #2? The UK? Germany? Nope, it’s Japan, and the country has been second largest in music sales for quite a while. That’s why the music business as a whole takes notice whenever anything changes in Japanese music economics. In this case, the growth in revenue that the country’s music scene has experienced has slowed in the first half of the year. The thing is, that may actually indicate better days are ahead.

The drop in revenue is only .25%, but the decline comes from the physical product side of the business.

This is a big deal in that CDs are still big in Japan, but not necessarily for the reason why the rest of the world buys them. The typical Japanese fan buys a CD to show support for his or her favorite artist, not so much as an audio delivery device. It’s more of a memento or collectible. That side of the business is finally slowing like in the rest of the world.

What is growing is streaming music subscriptions, up by almost 24% from last year, with streaming in-general up almost 28%, according to new data published by the Recording Industry Association of Japan. In other words, Japan is now catching up with the rest of the world when it comes to digital music delivery.

The country has a ways to go before streaming revenues take over from physical product (it’s still a billion dollar business in the United States despite streaming’s popularity), but that numbers indicate it’s now moving in that direction.

There are many industry pundits that still question whether streaming can ever replace all the revenue that comes from physical product, and that’s especially true of Japan. Goldman Sachs seems to think so though, predicting over $40 billion in global revenues by 2030.

That being said, how Japan music sales go, so does the industry. It’s still the second largest music market on the planet.