Billboard revealed its 2022 International Power Players list in April, honoring industry leaders driving the success of the music business in countries outside the United States. Kazuhiro Shimada, Director & GM of Amazon Music Japan, was one of the names from Japan listed among the music industry executives selected from various countries.
Billboard Japan sat down with Shimada to mark his recognition on the honor roll and asked about the future of the music scene in Japan — where digitization is rapidly advancing — and his views on hit music rankings and more.
Billboard named your company as an International Power Player for creating a richer musical experience for Amazon Music Unlimited members through spatial audio.
Kazuhiro Shimada: The quality of video is evolving rapidly nowadays and we believe high-quality sound is a factor in creating a new scene for music as well. We pioneered high-quality sound when we launched our Amazon Music HD tier in 2019, and last year, we integrated our HD tier into our Amazon Music Unlimited subscription tier at no additional cost for subscribers, bringing high quality sound to more people. In that sense, I think it was a groundbreaking year.
What has the response been like from users?
Since we have just started the integration of the tiers, we would like to see how well our high-quality sound will be accepted by our customers. And we would like to continue to make progress toward expanding our music offerings.
Japan’s music streaming sales hit 58.9 billion yen in 2020, up 127% from the previous year, and 74.4 billion yen in 2021, up 126%, continuing to grow significantly for two consecutive years.
Digital services have grown remarkably over the past two years. But the penetration rate in the Japanese market is still about half that of Europe and the United States. So we believe there’s still room for growth and that the momentum of the past two years can be maintained. We’re now working on a growth strategy based on these indicators.
Meanwhile, the competition to gain more customers is about how we can get them to spend their leisure time on our services. In other words, are they listening to music, watching videos, reading digital books? The competitive environment in terms of vying for people’s limited time will expand even further in the future. The best way to encourage people to choose Amazon Music is to provide what they’re looking for — UI, UX, rich content, high-quality sound, etc. — so we’ll continue to differentiate ourselves from other services.
What do you plan on consolidating in the second half of the year?
While continuing to focus on the strategy we’ve been pursuing since I joined Amazon Music, delivering a wide range of content within the musical domain, such as spatial audio and livestreaming. (J-pop singer-songwriter) Aimyon has worked with us on a virtual concert, and Twitch and Amazon Music have been partnering to produce livestreaming shows since 2020.
Regarding podcasts, the overseas interest is growing considerably and revenues from advertising are increasing, for example through the exclusivity of popular podcasters. The Japanese podcast marketplace is still in its infancy, but we hope to drive growth by promoting content investment.
Since this is a Billboard Japan interview, we’d like to ask you about charts. Do you think music rankings are necessary?
Yes, I think they are absolutely necessary. The existence of charts that are objective and not based on arbitrarily manipulated data enhances the credibility of the music industry as a whole and its affinity with music fans. We’ve always placed importance on data in our business, and it’s very important to have third parties such as your company provide us with highly credible data.
You mentioned earlier that the penetration rate of streaming in Japan is half that of the U.S. and Europe. What issues should be addressed to further popularize streaming in Japan?
One factor is the difference in how fast new services penetrate the Japanese marketplace compared to other countries. The pace with which people adapt to new technology is distinctive in this country, as can be seen in the way people shifted from feature phones to smartphones. But once the marketplace is formed and the trend accelerates, it won’t stop, so the digitization of the Japanese music marketplace will surely keep progressing. I don’t know exactly when this will happen to be honest, but Japan will no doubt catch up with Europe and the United States at some point.
On the other hand, there’s a strong ownership culture in Japan, which is conversely being reevaluated abroad. It’s called “merchandising” here, and it’s about adding more value to the physical product (CD). The Japanese music marketplace has developed a distinctive way of adding value that is easily understood by consumers, such as liner notes, DVDs, merchandise, tickets and more. It’s a good case study of how sellers responded to the needs of the owners of packaged music.
While the concept of owning digital assets such as NFTs is now emerging, the desire to own physical objects won’t disappear. Although digital sales, especially streaming, continue to grow, I believe that physical will never disappear and that the decline will settle down at some equilibrium point. Amazon’s strength is that it does retail as well as digital. We’d like to boost the music business by respecting physical music as well and delivering both values to consumers.