Features | 2005.05.07 Retail Channels and Media Formats Increase Amidst Declining Sales A recent study by the Recording Industry Association of Japan (RIAJ) indicates that Japanese are aggressively exploring various channels and formats for music purchases amidst declining overall music sales. On April 27, the Recording Industry Association of Japan released the results of its yearly survey of Japanese music media consumers. According to the RIAJ, the survey is conducted to help better understand consumers who purchase music CDs, music DVDs, downloadable chaku-mero and chaku-uta songs, and other music media formats, as well as to pinpoint related hardware trends, internet usage patterns, and other indicators. Below are some highlights. - Since 2003, respondents in their 30s and 40s have been the largest group of music consumers (41.5%), followed by respondents in their teens and 20s (38.2%) and those in their 50s and 60s (20.2%). Music purchases among respondents in their teens and 20s have been steadily declining since 1998, when the share for this group was a whopping 57.5%. Conversely, the share held by those in their 30s and 40s has risen almost 20% for the same period to 41.5%, marking a radical shift in music consumption demographics. Share for music consumers in their 50s and 60s has remained virtually the same since 1998. - The number of respondents who chose to purchase music at traditional brick and mortar music retailers held steady from 2003 at 46.1%, while those purchasing online grew over 50% in one year from 3.9% to 6.0%. The only other channel besides record stores to score over 15% was video rental giant Tsutaya, which claimed a very respectable 32%. - When respondents were asked the main factor in deciding where to make music purchases, selection was the number one answer, indicated by 56.6%. This was followed by proximity to home (50.4%), ease of finding products (42.9%) and low price (40.4%). Other popular responses were pleasant store environment (29.0%), friendly staff (27.2%), loyalty program (26.6%), availability of wide range of new releases (23.5%), open late in the evening (22.3%), and location on an oft-traveled street (21.0%). - Television dominated the list of channels influencing music purchases. 51.5% of respondents claimed televised music programs as a major influence on purchases, with 39.4% citing inclusion of a song in a television drama, 35.8% citing music used in commercials, and 33.8% noting televised commercials for music products. The next three most popular channels were recommendations from friends (28.9%), FM radio (27.4%), and seeing the actual product in record stores (22.5%). - 54% of respondents had purchased a new music CD (album, single, etc.) in the last six months. The same question in 2003 and 2002 generated responses of 57.6% and 58.0% respectively, indicating a steady decrease in overall music purchases, and a drop of 4% in two years. The used CD market has remained at roughly the same level over the last three years. - Chaku-mero penetration remains strong, with 69.4% of respondents purchasing and using. While this percentage is extremely high, it is interesting to note that numbers are slightly down from the last two years, in which usage was 75.2% (2003) and 71.7% (2002). Chaku-uta also dipped slightly from 2003 (18.9%) to 2004 (17.1%), but was still up from 2003 (11.5%). It is worthwhile to note that while 78.4% of chaku-uta users purchase chaku-uta songs to use as ringtones, 48.4% also purchase them to listen to as they would a music CD or file downloaded from the internet, which makes this format a competitor of both CDs and digital music available on the internet. - 56.9% of respondents were aware of paid music download services on the internet (excluding chaku-uta and chaku-mero). However, broken down further, the number of respondents who clearly understood the services available was still only 29.3%, with 27.6% indicating that they were somewhat aware of such services. 42.5% were completely unaware of internet based music download services. - 8.2% of respondents had used paid music download services, up from 5.0% in 2003, indicating a 60% increase in one year. - Music CDs remained the most popular source of music played on digital audio music players, at 62.9% Music recorded from rental CDs was second, with 49.7% of respondents citing this source. Third most popular were files obtained through free download or file swapping services, with 9.7% using them. Only 5.4% of respondents listened to files downloaded from paid music download services on their digital audio players. While the results show traditional retail channels and media formats continuing to dominate, newer channels like the internet and mobile devices and their corresponding formats are making serious inroads, and in highly wired Japan, this trend is sure to continue. Traditional music retailers are already feeling the sting of online CD retailers, which in addition to providing infinitely wider selection have the added advantage of being able to market directly to customers in their homes. This, along with the convenience of purchasing from anywhere at anytime, and the fact that only 22.5% of consumers now rely on record store visits to influence their buying decisions poses a big challenge to brick and mortar retailers in the future. Additionally, both physical and internet stores are sure to come up against a serious challenge from digital music distributed through the internet and over mobile networks, and while this market is small today, the potential for growth in this area is astounding. Just ask Apple. In related news, the RIAJ released March 2005 production figures on April 19. Total production for non-video music media for the month was 25,052,000 units, down 22% from the same period last year. In yen, the number was 30.8 billion for the period, down 26% from 2004. Broken down into categories, singles dropped 46% for the period, while 12cm albums dropped 14%, analog records plummeted 93%, and cassette tapes dropped 16%. Products categorized as "other" (SACD, DVD audio, DVD music, and mini disks) jumped 13%. While not released in conjunction with the above survey, these are significant numbers, demonstrating not only that alternative media formats are starting to have an impact on CD sales, but that the market as a whole continues to shrink. Is it time to get rid of the saihan system in order to spur more competitive pricing by retailers? Will record companies start more aggressively supporting alternative channels and formats? It's tough to say at this point, but it's probably safe to assume that these next few years will prove quite interesting for the industry and consumers alike. * The above survey was conducted within a 30 mile radius of Tokyo from October 10 through October 20 2004, with a sample size of 1,200 males and females between the ages of 12 and 69 years. by Bill Haw
|
