Why the Japanese Don’t Illegally Download Music. Much.

Bodacious Space Pirates(Source)

For all their passion, home-grown fans are not paying enough for K-Pop.

The CD industry is stagnant, and digital music sites are seen as vastly underpriced, with some charging just a few cents a song.

Bernie Cho, head of music distribution label DFSB Kollective, says online music sellers have dropped their prices too low in a bid to compete with pirated music sites….

….With downward pressure on music prices at home, “Many top artists make more money from one week in Japan than they do in one year in Korea.”

(BBC, June 2011)

With many implications for the Korean music industry, and raising many questions about the curious preferential treatment given Korean fans over international ones, I’ve been quoting Bernie ever since. So too Sony Pictures chief Michael Lynton and Paramount Vice Chairman Rob Moore on movies, the latter of whom suggested that cultural differences are the main reason that Koreans illegally download so much more of them than the Japanese:

…governments around the world are subsidizing and promoting the ubiquity of high speed broadband to make their economies more efficient and competitive. With this increase in speed, content will travel that much more easily on the Internet. But without restraints, much of that content will be contraband.

I’ve already seen it happen in South Korea, which has one of the most highly developed broadband networks in the world. But piracy has also become so highly developed there that we and virtually every other studio has recently had to curtail or close down our home entertainment businesses. It’s hard to sell a legal DVD when it can be stolen without any repercussions.

(Michael Lynton, The Telegraph, May 2009; source, below)

Iron Man 2 Japanese Poster…Paramount is holding back the release of “Iron Man 2” in Japan for several weeks, having little fear about the country being swamped with bootleg copies of the film.

However, when it comes to Korea, it’s a different story. “For better or worse, there are certain countries — notably like Korea — where it’s culturally acceptable to download movies online pretty much right away,” said Moore. “By the third week of a movie’s release, you’re starting to see a large part of the audience who will start consuming the film online. It’s why Korea has almost no home video business anymore.”

(Rob Moore, Los Angeles Times, May 2010; via The Marmot’s Hole)

Given Lynton and Moore’s frustrations, readers — and myself — can be forgiven for accepting that culture must have something to do with it, and that this would necessarily apply to music too. However, I’ve just finished reading Ian Condry’s brilliant Hip-Hop Japan: Rap and the Paths of Cultural Globalization (2006), a must-read for all Japanese and — yes — Korean music fans (I’ll explain in a review later this month), who adds two crucial economic and technological reasons that few outsiders to Japan would be aware of:

Ian Condry Hip-Hop Japan(Source)

Two other aspects that distinguish Japan’s music market are rental CD shops and low rates of online piracy. These characteristics further demonstrate that abstract markets do not operate separately from their concrete settings. In Japan, recorded music sale rose steadily during the postwar period, peaked in 1998, and then began a sharp decline that continued through 2004. The start of the decline coincided with the emergence of Napster in 1999, but there are reason to think that online piracy offers only a partial explanation for the decline in sales. As I discuss elsewhere, online piracy is less prevalent in Japan than in the United States. In Japan, most young people access the Internet using cell phones, which as yet tend to have neither broadband connections not substantial hard drives. In addition, ubiquitous CD rental shops make it relatively easy and inexpensive to sample new music without relying on unauthorized downloads. CD prices are high in Japan, generally between ¥2,500 and ¥3000 (US $23-27), but renting a CD is very cheap, generally around ¥300 ($3). The widening availability of CD burners contributes to this “sneaker net” for passing around music and also limits the attractiveness of online file sharing. This suggests that the lack of online piracy arises less from a national respect for copyright than from the combination of a business setting in which rental shops make it easy for consumers to sample music cheaply and a technology environment dominated by Internet-ready cell phones that make downloading over peer-to-peer networks unfeasible.

(pages 190-191; my emphasis)

Written well before smartphones had made their debut, clearly that description is a little dated. Indeed, by 2012, the Recording Industry Association of Japan estimated that only 1 in 10 music downloads were legally purchased, prompting the Japanese government to introduce harsh fines and jail times* for — uniquely — the illegal downloading (rather than the more usual uploading) of content, which in turn provoked an attack on government websites by Anonymous.

However, the Japanese are notorious for stubbornly sticking to outdated technology. Common-sense dictates that looking only at digital downloads would give a very skewed impression of the Japanese music market, which is still the second biggest in the world.

Japan Smartphone(Source)

For just last week, Japan Realtime reported that CD sales are booming:

“The Japanese market is very different from the rest of the world,” said Mr. Minewaki [CEO of Tower Records Japan]…

….While global sales of physical CDs have been plunging under pressure from the digital download market, Japanese CD sales bucked this trend in 2012 with a 9% rise from a year earlier, according to the Recording Industry Association of Japan. Tower Records Japan is majority-owned by Japan’s largest wireless carrier NTT DoCoMo Inc.

Mr. Minewaki said CDs continue to do well in Japan because of legal constraints that curbs rapid discounting, a lag in consumers switching from feature phones to smartphones, and the popularity of rental CD shops where consumers can rent then copy music, a cheaper alternative than buying songs or albums online.

But the compact disc business isn’t completely immune to the marching popularity of digital downloads…

Meanwhile, here in Korea, I don’t think I’ve even touched a CD in the last year. Although I do have hundreds, being 37 years old and all…

How about yourself? Are CD rental stores also still around in Japan?

*Like most articles praising the rapid rise of the Korean digital music market and the supposed success of Korean anti-piracy efforts, this article completely fails to mention how absurdly cheap Korean digital tracks are, as noted by Bernie Cho in the opening quote.