Japan’s Record Rental Revolution ??

Despite much complaining from trade groups, Japan’s record-rental model made the country’s music industry much stronger in the long run—after some timely regulation.

You’ve most assuredly heard the phrase Big in Japan—and one of the things that can ensure something becomes big in Japan is making it legal.

Hence, the tale of the record rental store. A phenomenon unique to Japan, the country’s music industry essentially developed around the idea of paying a small amount of money to take a record for a couple of days, then return it when you’re done.

It was a clever model, though one that infuriated the record industry, which said it cost them millions in sales. The International Federation of Phonogram & Videogram Producers (IFPI) watched what was happening in Japan and took steps to aggressively fight the model in other parts of the world, successfully getting them banned in the U.S. and other countries. And the Recording Industry Association of Japan (RIAJ) was fighting against the trend legislatively.

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However, the record rental stores themselves started their own trade group that fought for their own rights—and on top of that, Japan was home to a number of major device manufacturers like Sony, ensuring the business dynamics would not automatically favor the record industry. So, when Japanese legislators decided to update the country’s copyright law in 1985, it led to restrictions on what records could be rented, and how royalties were paid.

It was meant to be a temporary stopgap to support a transition away from the rental model, but the added regulations ended up making the model a good fit for the record industry, which got paid every time records were rented out.

And ironically, this actually made Japan’s record industry much better-positioned when the internet undermined physical music sales. Services like Spotify, while dominant in the U.S.,?have taken much longer to succeed in Japan, in part because of the favorable model.

Of course, while Japanese citizens got to rent records, they weren’t able to rent video games—creating an inversion of sorts with the U.S. market.

? Wanna learn more??Check out our 2019 piece,?Rental Self-Own.