Ritsuhiko Tajima has about 100 CDs by his favorite artist, Japanese girl group AKB48, many of them copies of the same disc. The attraction? The CDs often include tickets to events where he can briefly meet his idols. “I don’t think I’ll ever get tired of them,” the 28-year-old nursing assistant says as he waits at the group’s Tokyo theater for a monthly sale of limited-edition photos of its members. “They’re pop stars that I can come visit.”
Fans such as Tajima helped increase music sales to consumers in Japan by 3 percent last year, to $4.3 billion, surpassing the U.S. to become the world’s biggest market, according to the Recording Industry Association of Japan. Japanese consumer music revenue rose in 2012 for the first time in five years, led by tunes delivered on CDs and other physical media, bucking a trend in the U.S. and other Western markets as cheaper downloads gain ground.
Physical media—preferred by some music companies because they’re less subject to pirating than digital downloads—made up 80 percent of Japanese music sales last year, vs. 34 percent in the U.S., according to the International Federation of the Phonographic Industry. Japan’s record companies boost sales with add-ons, and revenue gets a further lift from artist-related tchotchkes such as posters, key chains, and tote bags. “Japanese people tend to want to possess goods,” says Shigeto Shoji, a director in the recording association’s planning department. “CD jackets and lyrics add value for domestic consumers.”
Much of Japan’s strength can be attributed to acts such as AKB48, whose miniskirted members perform in three groups of about 20 each at the 250-seat theater above a discount store in Tokyo’s Akihabara district. Formed in 2005, AKB48 is the nation’s top-selling girl group, spawning three sister acts in Japan and two abroad. Sony (SNE), which has the second-largest share of Japan’s music market, started a rival group called Nogizaka 46 last year to compete with AKB48, a Sony act before leaving in 2008 for King Record. “Sony Music is betting its future to grow this idol group,” Yasushi Akimoto, the lyricist and producer for Nogizaka 46, and producer of AKB48, says on the Nogizaka website.
Behind the success of Japan’s girl groups is “a drastic change in relationships with fans by involving them in the star-making process,” says Hideki Take, a music commentator and disc jockey in Tokyo. After being chosen in amateur auditions, prospective members perform in small theaters where fans vote on who will be featured, à la American Idol. “Unlike most stars selected by executives at recording companies, it’s a fan-centered system,” Take says. “The fans feel they are part of the success.”
One fan, Yuka Kimura, traveled more than an hour from Tokyo for an AKB48 handshake event in Chiba prefecture. She had 10 tickets from 10 identical CDs that she bought for 1,000 yen ($10) each, which let her line up multiple times to meet her favorite singers—though each encounter lasts less than five seconds, and no photos or autographs are allowed. “It’s worth paying the price,” Kimura says. “Even just for a few seconds, I get to meet my favorite member, and that’s fun.”
The girl group AKB48 has become a cultural phenomenon, with its own theater and plenty of swagPhotograph by The Yomiuri Shimbun/AP ImagesThe girl group AKB48 has become a cultural phenomenon, with its own theater and plenty of swag
AKB48’s singing and dancing teens are divided into three teams—A, K, and B—that rotate performances every evening. Several times a year they also do tours where thousands of followers gather at convention halls across Japan for a chance to briefly meet their girl-band idols.
Nogizaka 46 is following a similar script, part of an effort by Sony to shore up domestic sales that have fallen in spite of the industry’s strength. Sony says its Japan music revenue dropped to 167 billion yen ($1.7 billion) in the year ended March 31, from 174 billion yen a year earlier. The company had a 14.4 percent share of the country’s music market last year, 0.5 points behind Avex Group Holdings (7860), according to researcher Oricon (4800).
Analysts warn that the revival of Japan’s music market could be short-lived. Sales of music delivered on physical media dropped 6 percent in the first five months of 2013 from a year earlier, according to the Recording Industry Association. And the U.S. still accounts for more total music-related revenue when the data include subscription and streaming service fees and licensing for films and ads. “We may appear to be in better shape than other markets, but music companies here aren’t feeling optimistic,” says Yusuke Nakagawa, president of Asobisystem, a talent agency.
The challenge for Japanese music companies is creating fan loyalty elsewhere, says Damian Thong, an analyst at Macquarie Group (MQBKY) in Tokyo. AKB48’s backers have launched groups in Shanghai (SNH48) and Jakarta (JKT48) to extend the franchise. “AKB48’s innovation was not, in a sense, making new music but in creating a new kind of immediacy and new kind of connection to the fan base,” Thong says.
Nogizaka 46 still has a long way to go before catching AKB48. Sony’s group sold 303,474 CD singles of its biggest hit, Seifuku no Mannequin, or Mannequin in Uniform, in the first half of this year. That was dwarfed by AKB48’s Sayonara Crawl, the No. 1 release, which sold 1.9 million copies. (That’s almost double the total number of CD singles sold in the U.S. in all of 2012, according to data from the Recording Industry Association of America.)
Sony auditioned 38,934 girls to select 33 members for the Nogizaka group. The company is adding 13 new members this year after a second round of auditions in May. Among the stars fans can meet is 16-year-old Erika Ikuta, a front-line performer who says she enjoys shaking thousands of hands a day. “At these events, I learn my fans are paying so much more attention to me than I could ever imagine,” Ikuta says before the group’s dance practice at Sony Music’s Japan headquarters. “It gives me a supportive push.”
The bottom line: With girl-group fans buying multiple copies of CDs, music sales in Japan grew 3 percent last year, to $4.3 billion.