December 30, 2010

What the market will bear

Thinking some more about how Arashi and AKB48 came to dominate Japan's top-10 CD singles list for 2010.

A big clue is CD singles. One reason for this fluke is the cartel carved out by Japan's biggest music producers and talent agencies, whose iron-fisted discipline must turn the RIAA green with envy. They charge two to three times for CDs and DVDs as in the U.S. In Japan, a "CD single" means two or three tracks and the karaoke versions for around $15.

We're talking agency pricing with a vengeance. Laws originally formulated to protect (absurdly) small retailers now pretty much screw over the entire population.

Plus the policing of every other aspect of distribution, limiting album previews on Amazon, limiting digital downloads to DRM-controlled iTunes, and limiting access within iTunes. iTunes subscribers outside Japan do not have access to J-Pop tracks. You have to buy a yen gift card or create an account with a Japanese mailing address.

You don't have to jump through these hoops to buy physical CDs at Japanese online stores. Your U.S. credit card will work just fine at BK1 and Amazon-Japan. But EMI is the only major label that allows Amazon-Japan to sell downloadable MP3s.

If you don't read Japanese, then your best option are export sites like CD Japan and YesAsia. Buying an album like Arashi's Time through Amazon-US will cost you a staggering $50. Through CD-Japan it's still a whopping $30.

There's a weekly program on TV Japan called J-Melo, basically VH1 for the international J-Pop audience. Last year, the hostess ranked requests and fan mail from outside Japan, and cheerfully proclaimed that the show has the most fans in the Philippines.

The relationship between Japan and the Philippines is similar to that between the U.S. and Mexico. Most foreign nurses in Japan comes from the Philippines. How many J-Pop fans in the Philippines are willing to plop down $30-$50 on a music CD? Um, none?

Number three on the list is the U.S. A few more than none, but not many.

In other words, a show like J-Melo is entirely predicated, with a wink and a nod, on piracy and reimportation (if a licensed version is even available). The Hong Kong and Korean versions of Time (that "will not be shipped to Japan") are priced at a more reasonable $15.

(So if you're buying J-Pop more or less legitimately, first check YesAsia and look for the "Click to see other editions" links.)

This perversely makes sense. If the only available products outside Japan are de facto illegal, or illegal in Japan, then it's easy to simply ban all reimportation.

Licensed anime sold in the U.S. costs a third as much as in Japan, causing heartburn for Japanese licensors, who have moved to stifle reimportation (because it's cheaper for otaku just to buy region-free DVD players). Delusory attempts to sell dub-only rights in the U.S. or to set MSRPs the same as in Japan have failed.

If anything, bundled season editions have gotten cheaper in the U.S. (and that's the only reason I've bought several recently). Yes, Virginia, if you care about market share, there are limits to what the market will bear.

What's forcing anime producers to change tactics again is digital television and piracy--enterprising pirates who record broadcasts, and translate and subtitle them way ahead of the authorized distributors.

Hollywood, to give it credit, repackages U.S. television series (gobbled up in Japan) as fast as it can, and does much of the localizing up front. They're all realizing that if they don't provide the streams, somebody else will. Just as the RIAA eventually figured out that DRM was a dead end.

For all its faults, the RIAA does its best to monetize its IP however it can. In contrast, when it comes to exporting Japanese cultural content, huge multinational corporations like Sony still find themselves caught in the classic prisoner's dilemma, and so are distressingly content to instead remain big fish in a small pond.

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