Defying the Stream: Japan's Enduring Love for the Compact Disc (CD)

When Prince sang "Tonight, I'm gonna party like it's 1999" on his 1982 hit "1999", he was describing a party during a turn-of-the-millennium apocalypse. He could have been singing about the music industry.

In 1999, according to the International Federation of the Phonographic Industry (IFPI), global recorded-music revenues soared to $22 billion ($40 billion in 2023 prices). That revenue was largely driven by the compact disc (CD). Over the next 15 years, those revenues would fall as consumers turned to streaming. The IFPI recently reported that streaming accounts for 67% of revenues, while CDs account for just 10%.

But in Japan, it seems time has stood still. In 2023, 39% of recorded revenues came from CDs there, making Japan the second-biggest music market globally.?

On the face of it, this may be down to demographics - nearly 30% of the Japanese population is 65 or older. But older listeners have embraced streaming elsewhere: although 24% of Italian citizens are 65 or older, 65% of recorded-music revenues in Italy come from streaming.

Instead, two factors explain the Japanese market for CDs. The first is price controls. In 1953, Japan's government, concerned about its products being devalued, established the saihan seido, or "price retail maintenance system". This system gave copyright owners the ability to set the prices for certain classes of intellectual property, including physical products such as CDs.?

Because retailers and resellers could not compete on prices, they were inflated, and consumers had few alternatives. Music companies are able to leverage this monopoly power to maintain the status quo.?

Japanese talent agencies also stopped their artists from being on streaming platforms.

The second factor is that, in the decades after the establishment of saihan seido, these talent agencies began to market performers as "idols".?

Part of the way that this idol status is maintained is through events, which fans are typically only eligible for if they purchase a CD. Some buy several copies in order to increase their chances of an encounter with a pop star.?

The branch of Tower Records in Tokyo has several floors dedicated to idols. This type of fan culture has kept the CD alive in South Korea too, where 33% of recorded-music revenues came from CDs last year.

Part of the allure of Japanese CD pressings lies in the inclusion of obi strips – sash-like paper bands wrapped around the album case.?

Originating as a way to provide Japanese customers with translated album details without altering the original cover art, these obi strips have become a coveted collector's item. Their presence traditionally signifies a higher-quality, limited Japanese pressing, commanding premium prices from enthusiasts.

One key reason Japanese CD pressings are so sought after is the inclusion of exclusive bonus tracks not found on international versions.?

Sometimes they have songs that are exclusive to the Japanese version. This tactic was employed by record labels to incentivize Japanese fans to purchase the domestic releases rather than cheaper imports.

To keep the very lucrative Japanese market, labels started doing exclusive Japanese edition bonus tracks. Now the Japanese would keep buying local prints instead of going for the cheaper overseas editions.

Beyond bonus content, many collectors prize Japanese CDs for their perceived higher audio quality.

As one fan noted, "The retail price for CDs in Japan is higher than in some other markets...but the SHM-CD quality sometimes sounds better."?

Another commented, "Japanese CDs are considered to be among the finest in the world, the mastering and manufacturing quality are consistently excellent over decades."

However, this perspective is not universally held, with one collector stating, "According to some people, many of them sound better (most of my CDs are Japanese and for me is not different from other pressings)."

Rarity and collectibility are also driving factors behind the desirability of Japanese CD pressings. "They can be rare and expensive to export/import, giving them a collectable status, especially when the 帯 OBI and special inserts are included,".

One Reddit user on r/vinyl eloquently explained, "OBI strips typically mean Japanese pressing. There's been a lot of US/UK releases over the last ten years that have utilized this feature, but the vast majority of Japanese pressings from the last few decades have had the OBI."??

Finding vintage Japanese pressings with OBI just furthers the 'originality' of the release and therefore can demand higher prices.

Real Obi strips are functional elements of Japanese pressings. It's where they put promotional info and prices on their records. They have become collectable when buying Japanese pressings because they are part of the original package, and they look cool.

Despite this enduring affection for physical media, the CD does seem to be losing its grip over Japanese music fans.?

In 2019, CDs accounted for 49% of recorded-music revenues in Japan, while streaming only accounted for 18%.?

Last year, streaming surged to 36%.?

Soon, it seems, Japanese listening habits will mirror those in the rest of the rich world.

In a world where digital content is fleeting and impermanent, the CD represents a tangible connection to the art, a cherished possession that can be held, displayed, and shared with fellow enthusiasts.?

Japan's unwavering devotion to this physical format, complete with its iconic obi strip packaging and often exclusive bonus content, is a testament to the enduring power of fan culture, exclusivity, and the tactile experience of music ownership.

The Enduring Power of Physical Media

The success story of Tower Records in Japan exemplifies the enduring power of physical music. While the chain declared bankruptcy in the US in 2006, its independent Japanese business thrives with over 80 stores. Industry reports for 2024 haven't been released yet, but it's safe to say they likely show continued customer traffic, especially from superfans seeking out unique finds.

Masato Hasegawa, General Manager of the Retail Business Division at Tower Records Japan, highlights the additional value physical media holds for fans: "Consumers value CDs and vinyl for reasons other than music, particularly in Japan," he states [ MBW Reacts, October 23, 2023].

Indeed, record labels often bundle physical media with perks like priority concert tickets and meet-and-greet events, turning them into collector's items with exclusive access for superfans [ Reuters, 2020].

The Japanese music industry stands out for its focus on superfans and its dedication to physical media.?

This approach has proven highly successful, making Japan a unique market where fans are not just listeners, but active participants and enthusiastic collectors who keep the music industry playing a vibrant tune.

About me

I'm dedicated to empowering artists and labels in the music industry by developing innovative tools that enhance direct-to-fan relationships. My latest project, Rapid Connect , an AI-powered Electronic Press Kit, is a feature at MINY and designed to revolutionize how artists present themselves in the digital space.

?? For more information on how Rapid Connect can amplify your professional presence, visit learn more at MINY: subwaymusician.xyz/rapidconnect