2013 may just be the year that Japan will overtake the United States to become the world’s biggest music market. What’s even more remarkable is that the growth in Japan’s market has been driven by physical sales, an “anomaly” in this supposedly digital age.
The year-end 2012 table from the International Federation of the Phonographic Industry (IFPI) showed that the U.S. and Japan combined accounts for more than half of the global recording industry, with the American market just 1.3% ahead. Japan is one of the very few markets that had a positive showing in 2012, gaining 4% from its 2011 showing. Japanese trade group Recording Industry Association of Japan (RIAJ) said that the digital sales during the first quarter of 2013 were 70% higher than in 2012. Single track sales and ring-tones were the biggest contributors to the digital sales for this year.
But the real story is the resurgence of physical sales in Japanese music. Someone had the brilliant idea to reinvest in the physical packaging of CDs and DVDs of popular J-pop and K-pop artists (and even other genres as well) and lo and behold, sales started booming in 2012. And lest you think it was just last year’s fad, figures from the RIAJ show that CD sales almost doubled in the first quarter this year and CD-based revenues rose 92%. In fact, 80% of the revenue of the Japanese market comes from physical CD sales. This is also partly because of the government’s law criminalizing illegal downloading, which led to a drop in digital revenues. This trend in the Japanese market should serve as a learning point for music industries that are looking at revitalizing sales of their physical CDs and DVDs.