major trend in Japanese music market


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About Japanese Music bussiness trend,
especially, Mobile Music Download trend.

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major trend in Japanese music market

  1. 1. Music Trend in Japan - What can we learn from the past? - Mar, 2009 COZY MIZOGUCHI [email_address] +81-08-1205-8448 COZY MIZOGUCHI , All rights reserved
  2. 2. Continuous Sluggish Trend in Music Industry in Japan <ul><li>Too cling to old fashioned business model?, </li></ul><ul><li>even while new services entered into music fields?? </li></ul><ul><li>< Grand trends in Japanese music markets > *numbers from RIAJ, etc </li></ul><ul><li>- Entire size of record market in 1983 before CD was born; 281.663billion </li></ul><ul><li>Market share by products in 1984; Record=53.5%, Cassette Tape=41.3% CD=5.2% </li></ul><ul><li>*Entire market size of Music: 274.111billion </li></ul><ul><li>Market share by products in 1998 = 15 years later after CD appeared: </li></ul><ul><li>Record=16/0%, Cassette tape=3.0%, CD=81.0% </li></ul><ul><li>*Entire market size of Music; 607.494billion / 214.7% increased from 1983 </li></ul><ul><li>Entire market size of CD in 2008: 361.775biilion </li></ul><ul><li>*CD covered close to 100% in music </li></ul><ul><li>*Music digital download: 162.700billion / 86.3% compared the peak year = 1998 </li></ul><ul><li>  </li></ul>What sort of “CHANGES” happened in Record industry? COZY MIZOGUCHI , All rights reserved
  3. 3. Major topics / events in Japanese music industry <ul><li>- New useful tools encouraged users behavior to shift drastically; from Record to CD. </li></ul><ul><li>Record companies established “new equation” for selling CD by lots of “tie-up” with </li></ul><ul><li>popular TV drama theme songs, TV commercial featured songs in accordance with </li></ul><ul><li>“ Karaoke” movement since 1980’s in Japan. </li></ul><ul><li>*We had various “Million” sold CD albums in late 80’s to late 90’s. </li></ul><ul><li>1999 – 2000 in US, we had new services = Napster, Gnutella, etc where we could </li></ul><ul><li>more easily exchange music file via digital devices without fees, boundary… </li></ul><ul><li>We had another music related service = “Ringtunes” in 2001, accelerating # of users </li></ul><ul><li>in Japan because of those usability provided by Mobile operators; DoCoMo, KDDI. </li></ul><ul><li>- The iTunes Japan was born in Aug, 2005 in Japan finally… </li></ul><ul><li>Music Fans are less likely to watch TV after YouTube has as new useful media, </li></ul><ul><li>especially among youngsters, provoking the drastic change for “The equation”, due </li></ul><ul><li>to the facts that record companies can no longer expect “mega” hits in TV tie-ups. </li></ul><ul><li>Some top ranked artists, bands tend to leave major record companies, re-starting </li></ul><ul><li>their music activities as Independent, effectively using web media; such Madonna, </li></ul><ul><li>Radiohead, Eikichi Yazawa in Japan, etc. </li></ul>COZY MIZOGUCHI , All rights reserved Why Record companies face with difficulty ?
  4. 4. Wrap-up <ul><li>- Maybe, they were likely to cling to old fashioned business model, </li></ul><ul><li>in addition to their own business norms. </li></ul><ul><li>Because, they are (were) living “Rights” business, so that some record </li></ul><ul><li>companies tried to keep those too much, </li></ul><ul><li>but “Rights” finally can generate money after using those. </li></ul><ul><li>Surely those are up to “striking the balance”! </li></ul><ul><li>On the flip side, Apple, Amazon, Google, etc, they have enjoyed to </li></ul><ul><li>earn profits by MUSIC. </li></ul><ul><li>AVEX = Japanese independent, Sony Music are trying (close) to build </li></ul><ul><li>up new revenue model = sort of “360” business, not only relying on </li></ul><ul><li>music, but leveraging all relevant artists contents, via appealing + </li></ul><ul><li>selling their web media, etc. </li></ul>COZY MIZOGUCHI , All rights reserved What can we learn from history?
  5. 5. New trend *based on my personal assumption <ul><li>Record industry to be integrated into 3 majors like Japanese Bank industry was </li></ul><ul><li>finally integrated into 3 majors: </li></ul><ul><li>  1 Japan: Sony Music Group, AVEX group, Universal Group </li></ul><ul><li>  2 US, EU: Sony Music group, Universal group, Warner/EMI group </li></ul><ul><li>Major / large scale artists/celebrity management companies tend to have more </li></ul><ul><li>power, enabling them to develop new artists, create new CD, as well as initiating </li></ul><ul><li>effective promotional scheme directly with useful media, distributors, etc. </li></ul><ul><li>They are also likely to get “master rights” as possible as they can. </li></ul><ul><li>3 majors, such as; Sony, AVEX, Universal to get all relevant rights belonging to </li></ul><ul><li>artists at the initial contract stage, plus enhancing their own artists management </li></ul><ul><li>functions.      </li></ul><ul><li>New types of companies to enter in “music world” as effective marketing opportunities, such as; </li></ul><ul><li>* 2 nd ranked mobile operator has established their own artists firm as JV with one of </li></ul><ul><li>major artists management company. </li></ul><ul><li>** One of growing game company has just bought Columbia Music. </li></ul>What will happen next? COZY MIZOGUCHI , All rights reserved
  6. 6. New trend *based on my personal assumption *There are some which we can already see. 1 BUT, still / more, ability + power to develop new artists + create new songs/genre are critical / siginificant. 2 In order to get potential new comers, “Scalability” as Majors is more important for appealing actual evidence in producing hit artists/songs to artists firms. *Probably, we will have 2 ways from now more on in either major, and/or small but having unique artists. 3 “FAN Club” to become as reliable revenue stream by web, especially Mobile / Smart-phone; Digital contents are profitable business, because we don’t have to consider stocks, distribution. 4 Live to be more prioritized as both; 1)effective communication opportunity with Fans, 2)selling CD, artists items directly, etc. 5 In Japan, CD, DVD packing to be survived at some level, due to; 1)Pricing remaining policy enacted by law 2)Premium DVD attached CD are really supported by Fans, among female. What will be required to Record company from now on? COZY MIZOGUCHI , All rights reserved
  7. 7. Japanese Mobile Download Trend Number of Mobile Download Entire Japanese mobile download market shows grim; Ring-tune = 70% size to compared with FY07, Full-track = showing sudden slowdown 0 10 20 30 40 50 60 70 0 50 100 150 200 250 300 ( million ) Last year comparison (%) Ring-tune Full track FY08 FY07 FY06 1Q 2Q 3Q 4Q FY05 1Q 2Q 3Q 4Q 1Q 2Q 4Q Resource from RIAJ, 08 COZY MIZOGUCHI , All rights reserved
  8. 8. Sluggish sales situation of Mobile Download in Japan <ul><li>1 Ended special procurement demands at Sep / FY07 *Details attached #1. </li></ul><ul><li>2 Increasing illegal download markets; </li></ul><ul><li>- assumed 70billion in illegal mobile download according to the result of survey by RIAJ, 08. </li></ul><ul><li>3 Mobile users to tend to buy only Full-track; </li></ul><ul><li>- only 17% of monthly users buy both Ring-tune + Full-track according to Label Mobile, 08. </li></ul><ul><li>4 Price Competitiveness towards PC download; </li></ul><ul><li>- Average price for Mobile Full-track = 400 vs. 200 in PC download </li></ul><ul><li>5 i-Pod shares in Japan is quite larger with more than 50%; </li></ul><ul><li>- Even mobile download users tend to have i-Pod, other MP3 players. *Details attached #2. </li></ul><ul><li>6 Previous mobile users tend to shift their download activity from mobile to PC in accordance with their growing up + reasonable price of PC download, having MP3, etc. *Details attached #3 + #4. </li></ul>Major reason / backgrounds for current sales performance COZY MIZOGUCHI , All rights reserved
  9. 9. Shares about Japanese MP3 Players Maker % by units % by Amounts APPLE SONY TOSHIBA PANASONIC KENWOOD COWON CREATIVE 58.7 23.3 1.1 0.7 0.2 0.3 0.1 54.0 26.7 1.8 0.8 0.5 0.3 0.2 Result of survey by BCN, 08 APPLE, SONY are 2 major dominant players in Japanese MP3 market. attached #2 COZY MIZOGUCHI , All rights reserved
  10. 10. Japanese Population of Distribution “ Past” Youngsters = “Previous” mobile main users grow up, shifting their behavior for music download from mobile to PC, presumably. Size of current younger bracket is relatively smaller than “Past” youngsters. attached #3 COZY MIZOGUCHI , All rights reserved
  11. 11. Growth of Japanese PC Download Simulation based on actual PC download performance / trends by RIAJ attached #4 - # of download in PC is up from 23,500k in Q1/FY07 to 25,000k in Q2/FY08. COZY MIZOGUCHI , All rights reserved 0 5,000k 10,000k 15,000k 20,000k 25,000k 30,000k 35,000k 40,000k 0% 5% 10% 15% 20% 25% 30% 35% Actual Simulation % of PC download # of Download FY07 FY08 FY09 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q Mobile Full-track PC Download