Spotify has had an office in Tokyo for at last 18 months, but protracted negotiations with record labels and the music industry have seen competitors like Apple, Line and Rakuten sneak in first with rival services. Now Spotify has joined its ranks with its free service and the paid-for option which costs 980 yen ($9.60) a month.
Japan is a hugely lucrative market for music. Sales are estimated at nearly $3 billion per year which makes it the world’s second largest market behind only the U.S., but Japanese consumers prefer to buy their musical physically, in the form of CDs, than digitally right now. Streaming service providers are viewing that as an opportunity rather than a threat, and success in Japan could give Spotify some momentum headed into 2017 when it is expected that the firm will make efforts to go public.
Spotify recently passed 40 million paying customers, and it’ll be aiming to add a large chunk more to that number from Japan.
It its favor, it is the one mainstream streaming service in Japan that has a free-tier option for users. That goes some way to explaining why it has taken so long for the Swedish company to secure deals with record labels, but it could be a factor that helps its service gain some momentum in the country among users who are not used to paying for digital music consumption.
This launch represents Spotify’s second major expansion in Asia this year. Back in March, it entered Indonesia, the world’s fourth most populous country, ending a quiet spell in the continent. Spotify first entered Asia in 2013 with launches in Hong Kong, Singapore and Malaysia, but, prior to 2016, it had only expanded to one new market since then: the Philippines.
There are whispers from inside Spotify that India is its next market of focus for Asia, although we understand that the company is studying the market and doesn’t have concrete plans for a launch right now. It might do well to observe Google’s efforts after the search giant launched its Google Play Music service in the South Asian country this week.