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The number-two market in the world for recorded music, Japan operates outside of the norms that are shaping music markets in the rest of the developed world. With 73% of the market still made up by physical sales, and having more record shops than anywhere in the world — including the US — some say that the Japanese music industry is experiencing a ‘Galapagos Syndrome’ through which it is evolving separately from the rest of the world. As such, Japan may be able to maintain a healthy physical market while bene ting from growth in digital.

Yet the signs are already evident that this will not be the case. music:)ally believes that the Japanese music industry is in danger of suffering years of decline, unless attempts to understand and evolve in-line with global markets are made.

This is most evident in the growth of YouTube, which is already the most popular way for Japanese consumers to find and listen to music. And it is evident in the way that the established record industry in Japan is keeping back the growth of new streaming models by withholding artists from the platforms. The local market is already digital but the local industry’s approach is not.

Yet there are signs that parts of the industry are already looking forward and outward. In this special music:)ally Report we explore the various sides of the Japanese music market, covering recorded music, broadcast media, and live music, examining which areas of the market are evolving and which are not. In addition, we look at ways in which the Japanese industry is innovating in its own way and is finding new methods of engaging fans in a pre-streaming economy.

It is music:)ally’s belief that this gigantic yet digitally-dormant market has either the potential to shift its large, affluent, technologically-savvy and musically- passionate fanbase into the digital domain, or to face an inevitable decline in CD sales against a backdrop of an increasingly- digital consumer and industrial players that are trying to resist change.