There are certain parts of the world–notably South Korea and Japan–where physical music product is still a big and profitable business. But why. Mark Mulligan at Music Industry Blog explains:
We are in the era of the always-on fan, with artists making themselves ever more available to their fans. It is a transition that comes with no shortage of challenges, not least the extra workload it places on artists and the way it chips away at the magical aura that surrounds them. There is an inherent tension between increasing an artist’s appeal through increased accessibility and creating it by maintaining distance. Contrast this with YouTubers like Jenna Marbles, PewDiePie and Phil and Dan who share so much of their lives with their fans. Platforms like Kickstarter, Paetron and the ever excellent PledgeMusic have given artists the ability to balance artistic credibility with monetizing their super fans. But while such efforts are currently on the fringes there is a country where super fans are at the heart of recorded music revenue. Artistic credibility however is not exactly at the top of the menu.
Merchandise Disguised As Albums
In Japan 78% of music sales are still physical. On the surface, for such a technologically sophisticated country as Japan this looks like a resounding success story for the CD. But all is not as it may at first appear. The Japanese music business long ago mastered the skill of using the CD as a tool for driving ancillary revenue. J-Pop artists used to routinely simultaneously release multiple editions of albums. But while in Western markets special editions typically entail different tracks, artwork and packaging, J-Pop special editions often featured exactly the same tracks and artwork but a different free gift. In practice this was merchandise sales disguised as music sales. This strategy banked on the repeatedly proven theory that super fans would buy every single edition. The practice still continues but looks patently philanthropic compared to the successor strategy of Japanese idol artists.