ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter

Spotify wading into Japan's tricky music streaming market

 (placeholder image)
  © Reuters

TOKYO -- Spotify is coming to Japan soon, but whether the streaming music service makes it here in the long run will depend on its ability to adapt to this country's more traditionalist landscape.

Spotify is one of the biggest providers of on-demand music, used by over 100 million people worldwide. The paid version alone has about 30 million subscribers.

The company, founded in 2006 in Sweden, has been preparing for its Japanese debut by forging a capital and operational tie-up with Dentsu, one of the country's top advertising agencies. Spotify will offer its free version and a premium option costing 980 yen ($9.57) per month.

A trial run will start this summer at the soonest, with the service slated to become available to the Japanese public this fall. The company apparently has struck deals with Avex Group Holdings, Universal Music Japan and other big Japanese record labels. But Spotify will respect the wishes of individual artists when it comes to streaming their music.

Spotify is known for its "freemium" business model, which offers the music library at no cost in exchange for the digital ads on the free platform. The advertising revenue is shared with record companies and the artists. Users are encouraged to switch to the ad-free paid service.

But Japan's music industry is hostile to the idea of distributing songs for free. Spotify seems to be trying to mollify those concerns by imposing restrictions unique to the Japanese market.

Sony Interactive Entertainment may begin a fee-based music streaming service in Japan in step with Spotify's arrival. The Sony unit has offered the service internationally since forming a partnership with Spotify in March 2015, but has held off on a Japanese debut.

Spotify will bump heads with several competitors. Avex and CyberAgent launched the AWA music distribution service in May, while Line, Apple and Google brought their platforms to Japan next. But none of these players are seen to be generating adequate earnings here, partly due to Japanese consumers' unfamiliarity with subscription streaming services.

Spotify's Japanese unit hired former insiders of local labels and has been negotiating behind the scenes. But some labels and others in the music business pushed back against its freemium streaming service. The company needed a bit of time to set up shop in Japan.

The music provider has expanded its customer base by recommending songs that match the listener's history and by letting users share music through social networking sites. To replicate that success in Japan, Spotify will likely need to harmonize its strategy with local tastes.


Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more