I just got back from 10 days in Japan to check out the independent music scene there. Here, I ‘ll write up what I found in case it’s of use to anyone else.
I’ve been curious about Japan, because CD Baby’s biggest customers are there. Though we have only about 5000 customers in Japan today, they’ve spent over $1 million in CDs at CD Baby.
But we have very few musicians from Japan, probably because of language differences and the problem of mailing a box of CDs from Japan off to America. I had been wondering if it’d be wise to set up a local representative : a point-person there to be “CD Baby Japan” so that the musicians of Japan could talk to someone Japanese to ask questions, mail their box of CDs locally, have them shipped to fans directly, and also as a remote warehouse for our top-sellers in Japan.
I had been wondering so much about this that I decided to check out the price of visiting, and it was only $475 round trip airfare! Yes, the hotels and trains would be expensive, but all-in-all, worth a trip. So I booked it.
I emailed our top 20 customers (some of which had spent over $50,000). Most of them were resellers, running CD shops in Japan, so I thought they’d be perfect to ask for help getting to know the scene. (Soon you’ll see, though, that this might have been unwise, as it skewed the perspective.)
I’ll break down my interesting findings by subject. PLEASE NOTE that everything said here is NOT definitive fact, but just what I saw and heard from the dozen people I met with last week (April 2005). It wasn’t the most well-rounded perspective, so consider this to be just one point of view.
*** E-COMMERCE ***
There’s not much buying online. Though many people have credit cards (mostly ATM-style debit cards) they’re generally not trusted, and so the whole e-commerce scene in Japan now in 2005 feels like America in 1996. Early-adopters doing it, but the majority are suspicious or just not interested.
As recently as 15 years ago, the huge Tower Records in downtown Tokyo didn’t take credit cards. Now they do but it’s still only 10% of transactions. Cash is still 90%.
If people do buy something online or mail-order, it’s usually paid for C.O.D. (”collect on delivery”) - paying cash to the UPS-style delivery person. You can also pay this person by credit card, and some do : the ones that distrust entering their card number online, but don’t mind handing it to a trusted person to process.
Another popular payment form is the convenience store! Every local 7-Eleven (and all similar) convenience store has a full range of services including having your packages delivered there to be paid for and picked up in person.
Bank-transfers are also common, but it costs about $4 per transfer, so is mainly used for bigger transactions, not buying a CD.
PayPal has an unfortunate history here. Seems a competing bank bought the exclusive license, but then ran it to the ground so it wouldn’t compete with their own similar system. But since it only works with other customers of that same bank, it never took off. So the whole PayPal phenomenon seems dead in the water, here.
Cell phones are massively popular. Everyone has one. In fact, because of the sophistication of the phones (sending text-messages is very popular), and the disinterest in “web browser and a credit card” e-commerce of America, it seems the e-commerce style that will catch on in Japan will be direct-to-cellphone. I’m not talking about teens, by the way: I saw quite a few over-50 women and men spending their entire train ride typing on their cellphone : either sending messages or playing games. It is considered rude, though, to talk on your phone in indoor public places, and most people honor that. For as many people that have cellphones, I hardly ever saw someone talking on it in restaurants or trains.
It’s not so popular to have a home computer! Probably only half as many people have a computer as have a cellphone.
*** BUYING MUSIC ***
CDs cost $22 - $25 and are the main way to buy music in Japan.
There’s a regulated price-fixing for Japanese CDs: when a CD is created the price is actually named on the CD itself! The “2350 Yen” (or whatever) price is actually written right in that inner ring of data on every CD created in Japan. So if a CD is named as 2350 Yen, it is exactly 2350 Yen at Tower, 2350 Yen at HMV, and 2350 Yen at any little store on the corner. This price-fixing is seen as good for small shops, so they can fairly compete with the big giant shops.
Imported items, though, are free to be priced what at whatever they want. They usually sell for the same $22-$25 range, though.
People aren’t as price-sensitive, and there’s even a feeling that prices too low are just stupid & pointless, since they’re OK with paying more. Might even be a cultural bias so that if a CD is selling for $10-$15 it’s assumed there’s something wrong with it.
Apple iTunes hasn’t launched in Japan yet, though people say they’re planning to someday soon. The e-commerce differences make make it a tough sell, though.
There’s only one iTunes-style download music store, but it’s created by the majors and only puts its top hits for download. Some think they do it this way because though they know the digital-download future is inevitable, they’re trying to avoid it. Since people even spend $10 on a CD-single in Japan, so the idea of the $1 single is threatening.
Online streaming of music, even 30-second previews, are basically not allowed in Japan. Only label can license it, and labels don’t license it.
95% of the top-40 albums are Japanese : only a few like Mariah Carey, J-Lo, Avril Levigne make the top charts. Even U2 and Jack Johnson don’t.
The two biggest threats to the music industry are free downloading (like Kazaa), and CD-renting(!). You can *rent* a CD, take it home, copy it, and return it. CD-rental shops are very common (and legal).
By far, the most popular music to import from America are black artists. Old classic R&B Soul, gospel, modern rap, as long as it’s black. There’s a real fascination with black Americans. Because of this, the artist needs to be on the cover, or it won’t sell. (And as you’ll see below, it has to be a real professionally manufactured CD, not a CD-R.)
*** MUSICIAN SCENE ***
This was a harder one to figure out, since most of my meetings and introductions were with top CD Baby customers, they are importers more than exporters. They know a lot about bringing in American music to Japan, but not as much about Japanese musicians. (Often none at all!) I did meet with a few people on the music-making side, though. (Producer, promoter, musician.)
A strange thing came up many times, when I was asking about independent musicians in Japan: this feeling that anyone not on a record label is a bad amateur. Some said that the labels are so actively looking for anyone good, and signing them to small development deals, that it’s felt that as a musician in Japan, if you’re not on any record label you must not be any good.
There are quite a few distributors that will carry “almost any” album that anyone puts out. But most just list it in their catalog, and don’t actually put it in stores. Some stores (even one big chain: DiskUnion) will carry independent albums, even working directly with musicians, on consignment.
One person told me that this is how record deals work in Japan:
- label likes a band and signs them
- label assigns them a management company
- label pays a *salary* (!!) to the band, and to the management company
- management company gets a much larger percentage than the artist
- artists get almost nothing for music sold or shows
… therefore : a record deal is actually a very good deal for a band that does NOT sell, because you can end up with a few years salary, even without selling anything. But if you sell a lot, it’s a pretty bad deal, since your success is not rewarded as directly.
I didn’t hear any of the venomous hate of record labels, though, like we do in America.
A couple bands, recently, sold 100,000 CDs in Japan as an indie. This has excited and encouraged people (like Ani DiFranco in America).
When I asked about where the musicians gather, (popular musician magazines, websites, email lists, directories), they were stumped. Though there’s one annual directory (a la Indie Bible or Yellow Pages of Rock) - nothing else came up. I really kept pressing for this, and still got nothing. Maybe there aren’t any, or I might have just asked the wrong people.
The only thing that did come up when I was asking about the “musician scene” was one small neighborhood in Tokyo where all the little “indie rock” record stores are. They say all the musicians hang out there, too. Might just be a rocker-thing, though. (Like Sunset Strip was in the 80’s.)
*** CDs ***
The topic of CD-Rs kept coming up in all my conversations. Apparently it’s a real issue, in Japan.
CD-Rs are seen as *dangerous* - that they might BREAK your CD player!! I thought this must be total misunderstanding or myth, but found that there’s some truth to it: that the oldest, earliest CD players, when trying to play CD-Rs, would malfunction, and sometimes never work again. Very strange.
Because of this, though, CD players are now marketed with “CD-R compatible” and people are actually aware of this.
This came up a lot, because when talking to the importers/resellers, they were SO upset whenever they buy something from CD Baby and discover it’s a CD-R. It means they can’t sell it.
All this being said, someone said he suspected the whole CD-R fear was a conspiracy manufacured by the labels who felt that a CD-R revolution would damage their $25-per-CD business.
CD-Rs are given away by musicians for free at their shows. Only printed and manufactured audio CDs are seen as “real”.
It’s just as cheap to manufacture 500 CDs as 1000 CDs. Most do even less, without penalty. In fact once you do press up 500-1000 CDs with a manufacturer, you’re free to order re-runs as small as even 100 copies, for the exact same price-per-disc as you paid for the initial 1000-CD run.
*** - ***
In America, the music scene is all a-buzz about Apple iTunes, Rhapsody/Napster subscriptions, and the digital future of music. Because it’s so covered in the press, I know many people think there’s NO scene for CDs anymore, that it’s ALL digital.
It really surprised me that Japan, who most people consider to be the most technological-advanced nation, has a music scene that is almost entirely based around paying $25 per CD in cash to physical stores. That the idea of buying music online has been decidedly shunned.
Does the music scene in Japan need breaking and replacing? Even to ask feels arrogant.
Perhaps this music revolution that everyone is talking about only applies to America?
Maybe Japan will skip this whole transition stage we’re in and leapfrog into something much more advanced?
I didn’t go there to make any decisions. Just to listen, look, and learn. So I won’t end this with any conclusion.