A new music streaming service in Japan is aiming to make a dent in the world’s second-largest music market, but it could face a tough challenge from the undisputed king of the sector — the good old compact disc.
While digital music now eclipses CD sales in the US, Japanese music lovers tend to be big on showing off their disc collections — e-books have also struggled — and the industry is heavily geared toward sales of physical media.
Last week, mobile messaging giant Line Corp said it was going where others including Sony Corp and games giant DeNA Co had failed, to launch a streaming service that offers unlimited access to a collection of more than 1.5 million songs for ￥1,000 (US$8.1) per month.
The announcement came weeks before tech giant Apple Inc is expected to enter the Japanese market with its own streaming business — part of a wider digital download strategy that is expected to offer up a heavyweight rival to online services such as Spotify Ltd, Pandora Media Inc and Jay Z’s fledgling Tidal.
Line Music said it would run a two-month free campaign before rolling out the fee-based business, which is to offer budget-conscious consumers 20 hours of listening time for ￥500.
It said it plans to boost its collection to 30 million songs by next year.
Last month, information technology firm CyberAgent Inc and music giant Avex Group rolled out their AWA streaming service.
Experts on Japan’s music business said the new offerings might supply a shot in the arm for a struggling industry, luring business from a young generation used to spending their cash on online games and messaging services, while cruising YouTube and other Web sites for free music.
“Young people are spending their time and money on mobile phones and games, so their spending on music has declined,” Recording Industry Association of Japan spokesperson Yuko Tanno said. “We are hoping that [streaming] is a growth market.”
Japanese digital music sales rose 5 percent last year, the first increase in five years.
“Flat-fee subscription services are driving the increase we saw last year,” Tanno said. “It is true that CDs take up significant market share and that will not disappear, but we think digital distribution will also expand as more people start using smartphones.”
Japan’s music market was estimated to be worth US$2.6 billion last year, trailing only the US$4.8 billion US market.
However, packaged sales, such as CDs, account for about 78 percent of the Japanese market, contrasting sharply with the US, where about 70 percent of the music industry’s sales now come from digital offerings.
“The challenge for Line will not only be dealing with competitors, but also overcoming the Japanese music market’s long-standing aversion to the Web, adding enough content into the service in a reasonable time and Japanese users’ unique penchant for buying and renting CDs like in no other country in the world,” Tokyo-based mobile industry consultant Serkan Toto said.
However, Toto said Line’s established hold in mobile messaging would give it a leg up.
Line’s successful messaging app, which is hugely popular in parts of Asia, lets users make free calls, send instant messages and post images or short videos. It combines attributes from Facebook Inc, Skype Ltd and WhatsApp.
Best known for letting users send each other cute cartoon “stickers,” Line is particularly favored by Japanese teenagers.
“It could well be that Line, with its massive reach in Japan, turns out to be an accepted distribution channel for music as well,” Toto said.
Still, Japanese consumers tend to favor physical collectibles, and some acts sell multiple covers of the same album to encourage die-hard fans to buy more copies.
In some cases, tickets to live shows come with CDs purchased at stores — or fans who bought discs get priority seating at concerts.
Japan’s most successful all-girl pop act, AKB48, links CD purchases to ballots that fans cast in an annual election to decide which group members get prominence in their rotating line-up — pushing fans to buy more discs to help their favorite stars rise in the ranks.
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