How K-Pop & J-Pop Are Saving Physical Music Sales…

While this week’s IFPI report on the global revenue from recorded music saluted the growth of digital downloading and streaming, there were two countries in the top 20 markets where the trend was going the opposite way — Japan and South Korea.

The Japanese market, which now makes 80 percent of its revenue from physical, saw digital revenues drop by 25 percent in 2012.  This was attributed to a continued fall in the mobile market (which has dominated digital music consumption in the country) and an increase in piracy, causing the country to introduce laws that criminalise illegal downloading.  However, the country’s 11 percent growth in physical more than offset the decline, as Japan was the only country in IFPI’s market top 5 that saw overall growth – by a full 4 percent, making it the second biggest market in the world.

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Though the South Korean market has grown steadily since it introduced strict anti-piracy laws, it fell by 4.3 percent in 2012.  (In 2008 it grew by a whopping 25.6 percent, in 2009 by 10.4 percent, in 2010 by 12.3 percent and in 2011 by 6.4 percent).  South Korea’s digital revenues also dropped by a massive 25 percent, which is largely blamed on the collapse of one the country’s biggest digital services, the social networking platform Cyworld.

It appears that a large part of Korean music fans moved from digital to physical when this happened, as the physical market grew by 11 percent and is now representing 74 percent of all revenue.  But because digital had dominated the South Korean music market up until then (in 2010 it made up 53 percent of overall revenue, with physical only representing 22 percent), that rise couldn’t offset the digital drop.

So why is Japan and South Korea bucking the trend? The answer is: K-Pop and J-Pop.

European A&R executive of Universal Publishing Pelle Lidell has been a pioneer among western music executives by tapping into South Korea as a new songwriting frontier about six years ago. Explaining why CDs are so popular there, he points to the fact that K-Pop music companies, the biggest being SM Entertainment, don’t release them in ordinary CD cases; they’re all in glossy luxury packaging.  They’re also often released in multiple different packages – and K-Pop fans buy them all.

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Last year, Korean female groups KARA and Girls’ Generation released their CDs in multiple versions, featuring different covers with each girl in the band – and there are nine members in the group.

Sure, PSY’s “Gangnam Style” single (which, by the way, is not in the K-Pop genre) became Korea’s biggest selling single of last year, thanks to its international success.  But it didn’t make a dent when it came to albums.  In that chart, K-Pop ruled supreme. Matter of fact, all top 10 albums were in that genre, with Super Junior at the top, followed by BigBang and TVXQ.

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Japan’s equivalent, J-Pop, has also played a major factor in the rise of CD sales.  In 2012, the number of CDs sold (166.4m) surpassed the number of single digital tracks sold in the country (150.1m) for the first time since 2008.  This may be attributed to Japanese companies selling CD singles bundled with promotional content, such as photos and tickets for handshake events.  You don’t get that with a digital download.  “CDs are becoming the new merchandise in Asia,” said Sandy Monteiro, president of southeast Asia, Universal Music Group.

Sometimes when Lidell gets a cut with a K-Pop song, he’ll make three different adaptations: Korean, Japanese and Chinese.  This is because the Korean entertainment companies often replicate an act’s success in those countries, sometimes with a local slant. TVXQ call themselves Toshinki in Japan, and though SME’s boyband Super Junior is Korean, the company has also put together a Super Junior in China.

As the love of K-Pop has spread across southeast Asia, Korea recently joined a select group of countries that export more music than they import – the other three being the US, the UK, and Sweden.

So what can music labels in the rest of the world learn from these two countries?  That they should invest in K-Pop?  Not necessarily. K-Pop lyrics are usually in Korean with a few English lines thrown in here and there (in particular the hooks), and so far no K-Pop acts have managed to replicate their incredible success outside southeast Asia – not even the ones who have used all-English lyrics.  It’s doubtful that K-Pop artists can replicate PSY’s success, as Gangnam Style’s success wasn’t K-Pop – not even the video was made in a K-Pop style.

Can they learn that they need to provide a large choice of legal digital music services in order to do well? There are conflicting messages here: in Korea, the loss of one of the biggest digital music services resulted in a drop in overall revenue.  In Japan, the decline in digital boosted overall revenue.  But maybe that’s because Korea already relied on digital much more than Japan did.

What is clear, however, is that being creative in the way you package CDs and what you bundle them with could turn around the steep decline in sales – and that, in turn, could stem the decline in overall revenue.  Maybe the music industry shouldn’t be so obsessed with turning all music fans into digital consumers.

13 Responses

  1. Zoe A Hill
    Zoe A Hill

    This is something I have also recognised. Such a simple solution is right infront of us for a concern on international scale for the music industry.

    In the case of Trent Reznor who also released multiple editions of the same album, in packaging fancier than a plastic case, was one of the many cases that proved that this concept could also work in the werstern music market.
    No matter what age a music fan is, they will happily spend a few extra pounds just to have a well thought out graphic and constructural album case. It allows them to be invited to an experience of having closer interaction and connection with their favorite artist’s music.
    We’ve already seen that the US and UK have takena page out of South Korea’s music industry book, by recognising how k-pop groups are generating a new generation of ‘fandoms’ which are strongly supporting the artist. We see this through the recent pretty boy successes of Justin Beiber and One Direction.
    Maybe they’ll also follow k-pop and j-pop with their album designs at a later date?
    I’d like to know if the western music market is keeping tabs on the Japanese and South Korean music market because they could learn a few things from them.
    @Zoe_A_Hill

    Reply
  2. Total Box Music
    Total Box Music

    Driving the scaricity into the packaging rather than the music creates the demand, but it still needs to be special and priced correctly. Data helps you determine the size of your market and price point thresholds but you still need a product that meets expectations or you lose trust with your audience. Often times labels and artists miss the mark on their “offerings” by simply putting together a discounted bundle of existing product, but it’s proven that dedication and focus on the packaging product as well as the elements that go in it is what drives success
    http://www.totalboxmusic.com

    Reply
  3. Faza (TCM)
    Faza (TCM)

    I think there are several interesting take-aways here, the most striking of all may be that digital just might be a dead end. At least the way we do it here in the West.
    Notice how the general tendency over the past decade was to make all music as cheap (and disposable) as possible? In the name of what? Scale? I seriously don’t think there’s a large enough segment of the population that cares enough about music to spend any serious money on it. Most folks are perfectly content to tune in to the radio (or run the free version of Pandora).
    On the other hand, the people who do care enough to spend, don’t mind saving a few dollars if they can get the same experience for less – that’s life.
    If the music industry and artists treat music like a commodity (y’know, with price and quantity being the only thing that matters), it’s hardly surprising that so will everyone else. This is great for commodity exchanges (I’m looking at you, Spotify and Apple), but not that great for producers – especially since music doesn’t work very well as a commodity from a production angle.
    Two other things come to mind:
    1. The A(sian)-Pop genres work because they make things awesome (at least as far as their target audience is concerned). This requires both work and money – to say nothing of a few good ideas to start with – but it creates something the fans can identify with (remember Kiss, back in the day?)
    2. You need the machine. My impression is that the A-Pop genres are heavily manufactured by our standards – as is most Asian show-business. The key thing, however, is that a lot of work goes into “making” the artist. It should be obvious that regardless of an individual’s talent – no matter how great – you need a team to make him or her into a star. It seems to me that the Asian talent agencies understand this a lot better than their Western counterparts, who these days prefer their artists fully-formed and with ready-made fanbases. The problem is, of course, that an artist who is already got a good team behind them and a large enough audience might not be particularly interested in letting someone else in on a slice of the pie – not without some harsh terms (for the label, say) in any case.
    That said, I don’t expect much to change in the near future. Korea and Japan are comfortably far away for us to keep cozily discussing how great the digital future will be in a couple of years, never reflecting that we’ve been having this conversation a couple of years ago and a couple before that.

    Reply
  4. Yves Villeneuve
    Yves Villeneuve

    Personally, I don’t agree with different packaging of the same product. It’s taking advantage of a vulnarable fan. The primary feature should always be the music.

    Reply
    • Blastjacket
      Blastjacket

      How is it taking advantage of anybody if the end consumer is happy? Why is the experience always have to be about the music? Isn’t the presentation (live, packaging, etc.) an important part of the experience?

      Reply
      • Yves Villeneuve
        Yves Villeneuve

        In my opinion, superfans are at the mercy of their favourite artist. If you can’t understand this then we differ on what is moral or ethical.
        Presentation is important for many but music should always be primary. Anything else will turn casual fans into cynics aimed at music industry exploitation. This is possibly the biggest reason in the past why regular Joe and Jane felt guiltless engaging in widespread piracy/theft activities.

        Reply
        • Blastjacket
          Blastjacket

          How is any fan, super or not, at the mercy of the artist? Isn’t the opposite true? If an artist doesn’t serve to the mercy of their fans then the fans will cease being their fans, proven over and over again. Charge to mich for tickets, release bad misic, give poor performances, poor packaging, gouging, etc., etc. This is neither a moral or ethical issue but rather a practical one.

          Reply
          • Yves Villeneuve
            Yves Villeneuve

            You forgot one, too many packaging options.
            I disagree that artists are at the mercy of superfans. Casual fans are much more practical in their purchasing decisions therefore it is casual fans who are more apt to be turned off with unbridled commercializing of music-related merchandise, including too many packaging options for profit intentions only.
            Superfans will buy everything and anything if they have the money and least likely to cease being a fan if received a bad product. Casual fans far from it.
            So, it is superfans who are vulnerable, not the casual fan.

    • PopmusicViewer
      PopmusicViewer

      Music? Whoever is interested in music doesnt care for pop music. Pop music is always about styles and images, not about the music itself. The musical aspects are pretty generic in pop.

      Reply
  5. Visitor
    Visitor

    It’s worthy to note that among the 20 best selling CD in Japan in 2012, 18 are from girls band or boys band. This is were sales are rising. It does absolutely nothing for real music. Now if you want to feed more Justin Bieber or One Direction, it’s fine. But real artists aren’t getting anything more. In fact, they have been pushed out the charts top and major TV shows and got far less exposure than they used to have until a few years back. And this translate by few CD sales.

    Reply

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