Spotify Launches in Japan After Years of Planning
The country presents a unique, and gigantic, opportunity for the market-leading streaming company.
Spotify has, finally, launched in Japan, the world's second-largest recorded music market. As Billboard reported less than two weeks ago, the launch was known to be coming shortly, after years of planning and negotiations that were still underway as of this month.
Giving Japanese fans, who have particular tastes -- look at the heartbreak around the retirement of legacy pop group SMAP, or the enduring popularity of the baroque metal band X Japan -- exactly what they want to hear will be key to breaking through in the country, and CEO Daniel Ek knows it.
In a post on the news from earlier today (Sep. 29), Ek writes that it is a "landmark day" for the company and that his team has "worked extremely hard to build a service we feel is unique, with a range of discovery and personalised features -- as well as Japanese playlists and mobile lyrics support developed exclusively for launch -- that will change the way you enjoy music forever."
And change is coming for music fans in the country, who have long preferred their music on physical media, CDs in particular. The most recent figures on that market, from the Recording Industry Association of Japan and covering the first half of this year, show that $991 million was spent on CDs in that time, while digital revenues stood at $255 million, according to the IFPI -- and that's the whole kit and caboodle, including streaming, album and track sales, ringtones, videos, etc.
Put another way, in the U.S. 66 percent of recording industry dollars came from digital -- sales, streaming, etc. -- last year. In Japan that number was 18 percent. Less than 5 percent of total recording revenue was from streaming.
This is, clearly, a huge opportunity for Spotify. Japan's internet penetration (the percentage of a country's total population that has stable access to the web) is extremely high, 91.1 percent to 88.5 percent in the U.S., according to Internet Live Stats. That's lot of potential converts for Ek and Co.
However, Spotify isn't the first on the ground in the country. Apple Music, Google Play and Line Music are all available. Line Music was first to launch and, being South Korea-based company, has an inherent leg up both chronologically and culturally; it reported having 215 million monthly active users on its popular messaging app.
Spotify's launch was delayed, sources told Billboard earlier this month, because of the unique way the country is treated by rights holders. When a major label negotiates with a service like Spotify, those deals are usually global, with countries turned on semi-a la carte style. However, those global deals more often than not would carve Japan out, requiring more detailed negotiations.
Spotify's jump into Japan is also something of a prerequisite for the initial public stock offering its expected to debut within the next year; Wall Street would no doubt raise an eyebrow at the world's most successful music streaming company having zero presence in the world's second-largest recorded music market.