International

Universal Music Japan President/CEO Naoshi Fujikura Talks Streaming, Learning From K-Pop & More

Naoshi Fujikura
Masanori Naruse/Billboard Japan

Naoshi Fujikura

Earlier this year, Universal Music Japan’s President/CEO Naoshi Fujikura was named one of the global industry leaders driving the success of music business outside the U.S. on Billboard’s International Power Players list. Fujikura was recognized for shifting his company’s focus toward streaming in a market known for its weight on physical music sales, while also expanding its “services offered to artists, such as merchandising, live events and fan clubs.”

Fujikura sat down with Billboard Japan to share his thoughts on Universal Music Japan’s measures to increase streaming revenue, its strategies for overseas markets -- including but not limited to Asia -- and the company’s vision going forward.

You were recognized in Billboard’s International Power Players list for increasing UMJ’s revenues in streaming and other sources of income. Could you tell us what your company did in 2020 to achieve such growth, especially in streaming?

Some of the long-term goals toward which we’d been strategically working for some years -- in terms of both streaming development as well as A&R, marketing, creative and innovation -- finally started to bear fruit during the last few years. Ever since becoming the president/CEO in 2014, I’ve focused on finding the best ways of uniquely delivering the music of each artist; how best to reach their individual audience in terms of consumption; and how to develop and create the best possible music and market it accordingly. We didn’t put all our energy into streaming only; we have been very carefully to operate as if we have two businesses that are seamlessly intertwined so that we can maximize our artists’ talents to meet the demands of both the physical and digital worlds.

Recently, I’ve been telling our staff in meetings to “lean into it, get out in front, be creative.” We’ve worked hard to gain deeper understanding of how the platform side sees some additional items that enhance our A&R capabilities.

In order to increase streaming revenue, gaining listeners outside of Japan is crucial. Looking at the Billboard charts in the U.S., numerous K-pop acts such as BTS have been hitting the charts, but J-pop hasn’t enjoyed the same level of success since Kyu Sakamoto [in 1963]. What do you think is needed for Japan’s artists to accomplish this kind of success in the States?

Having watched how [K-pop artists] work, one area where there’s room for J-pop artists to improve is social media. BTS built an overwhelming number of followers from around the world and can now utilize that fan loyalty as part of their strategy when releasing songs and music videos. This instant engagement can affect streaming results also immediately, helping new music reach a wider, global audience. Social media is a foundation that can help deliver works abroad, so we have to refine and learn and create best practices, in order for Japanese talent to benefit from it.

Also, K-pop music cleverly incorporates musical trends that appear on the global charts. The lyrics might be in Korean, but the finished product sounds very familiar to fans everywhere.

Another aspect of that success is that the Japanese music market is predominantly J-pop. When comparing sales for Japanese and Western music in Japan, domestic Japanese music is becoming the overwhelming majority on the charts. The pandemic shut down music festivals and events, and international artists haven’t been able to come to our country, which has exacerbated this disparity.

I do think it’s meaningful to have music that uniquely embodies Japanese culture like Kyu Sakamoto’s “Sukiyaki” and the vocaloid, Miku Hatsune, that have achieved global popularity. On the other hand, we are seeing that the infusion of various countries’ cultures and trends into original music makes it easier for that music to be widely accepted in different cultural zones, thanks to streaming and the accessibility of music discovery. We have seen music from Latin countries and South Korea accomplish this globally, so hopefully it will be possible for Japanese artists and music to achieve it, too in the future.

What are your thoughts on strategies in the Asian region?

The Asian market is crucial to our success with fans around the globe. Where, in the past, piracy and accessibility prevented music’s commercial success, today streaming is increasing in markets like China, South Asia, and the Middle East. People who live in countries that used to be flooded with pirated CDs , or where CD players weren’t widespread, have now moved past CDs and are starting to listen to music on smartphones. And unlike Japan – where the birthrate is declining and the population is aging – the average age in Southeast Asian countries is very young, so the market is bursting with possibilities for future generations in that sense, as well. The Asian market has also been integral to the global rise in popularity of short-form video content, thanks to both innovation and investment in technology and content platforms within the region, but also thanks to the popularity and virality of fan engagement and user-generated content. This has helped drive the increased global interest in Asian culture, K-pop, fashion, and discovery around the world.

The Asian region can be the next base for a new wave of global hits and artists to be born.

The Grammy Awards and the Billboard Music Awards draw a lot of attention from all over, don't they?

I’ve attended the Grammys a number of times and have been impressed how even the many artists who weren’t nominated for awards participate in the events -- applauding their fellow artists onstage who win awards or who are performing. I think it would be great if we could create that kind of environment in Asia too.

What future endeavors does your company have planned?

Ever since I became president/CEO, I’ve been telling our employees here in Japan that I want the world to be a place where “music by artists from around the globe, is listened to around the globe.” Of course, I’d love to see J-pop artists enjoy success in other countries and hit the top of the charts abroad, but I also hope that the same will happen to artists from other countries as well. Back in 2014 when I took up this position, that goal almost felt like a dream! But now we see the global success of acts like BTS and J Balvin, who show us that it is now very possible to attain that dream.

Another point we are focusing on, is the deep connection with fans which I mentioned earlier. An artist has the ability to do many things on their own today, without belonging to management or record company, something that would have been impossible a few years ago. This might sound very basic, but in order for us to be the kind of partner that artists choose to work with, we have to be able to provide a higher level of opportunities and occasions for those artists to connect with fans.

One example of this is our own Universal Music Store, our direct-to consumer platform, which has been growing at a fast rate. Not only does it enable us to deliver products directly, but it also gives us a better understanding of what the fans want from their artist of choice.

In many countries outside of Japan, streaming has expanded its reach and has been increasing revenue to make up for declining sales of CDs and other physical packages. But what’s incredible about the development of Japanese artists, is that they’re holding out on physical sales whilst also increasing streaming revenue at the same time. The pandemic forced many CD shops to close temporarily in 2020. Physical sales went down as a result, but it still held out at 86% of the year before. That also shows the fundamental strength of CD sales in the Japanese music market.

The market for CDs took a massive hit at one point in South Korea as well, but we have seen artists that have the ability to sell over a million CDs, are coming back. There is definitely more than one solution to the evolving global music market, and likewise, I hope that there will be numerous ways for Japan’s artists to step out onto the global stage in the future.

Previously, the common way for J-pop artists to gain global popularity was to aim for the American market, by way of Asia. But now, new ways of marketing music on a global scale could spring up from frameworks that we’d never considered before. I personally feel the need to always continue learning, experimenting, and innovating wherever possible, in order to tread new pathways towards achieving global success and new exciting opportunities for Japanese music, artists and culture.