Japanese Idols Will Transform The World Entertainment Business!
Japanese idol groups have created many innovations that have greatly changed the Japanese entertainment landscape. Their success could be a huge hint for the future of entertainment businesses around the world.
Who is your Idol? What’s a Japanese Idol?
Who do you think of when you hear the word “idol”? Justin Bieber? One Direction? It’s no doubt that they are incredible live performers, have fans all over the world, and are huge success stories. But in Japan, nearly all Japanese people think of AKB48 when they hear the word idol.
So what do people in other countries think when they first hear about AKB48?
“Why are there so many members? I can’t tell who’s who!”
“They all wear the same thing so I can’t tell them apart!”
“Even in their music videos, they look too young and can barely even sing or dance!”
Actually, when AKB48 made their debut, many Japanese people thought the same and nobody expected them to become successful. But now, in a business where even the most popular groups can only sell around 100,000 CDs, AKB48's CDs have constantly sold upward of 1 million units.
Also, in the 2013 yearly CD sales chart, AKB48 and their sister groups held on to 7 of the top 10 spots. Even if you only count AKB48's sales, they have sold over 79 million USD worth of CDs, 53 million USD worth of DVD and Blu-ray discs, and they have become so popular that they sell out the biggest live venues in Japan (capacity of about 70,000 people).
Since AKB48's success, Japanese female idol groups have rapidly increased to the point where there are almost 1,000 different groups now. Idol groups (both female and male) have grown to a nearly 800 million USD market with growth rate of about 10%. Basically, due to these idol groups, the Japanese entertainment industry has had no choice but to change with the trends.
The music and live entertainment business has been on a downward spiral around the world due to the economic slump and the new free business model. Only a very few select artists have been able to become successful, and the industry is having a difficult time trying to find new, talented artists to produce.
Japan was also in a similar situation, with a long-term economic slump and free-business impeding profits. However, because of the numerous idol groups, the Japanese entertainment industry has been able to avoid this slump.
People around the world must see this and wonder, “Just what is happening in Japan?”
In order to answer this question, I will focus on female idol groups, dissect their business model, and reveal how they have been able to change the Japanese entertainment industry. I think this will be a good hint for how other entertainment industries around the world can find success.
It’ll take a bit of time going into detail about how Japanese idols changed the entertainment industry. I’ve made a YouTube playlist featuring my recommended idol songs, which I explain in more detail at the bottom of this article.
For now, sit back, relax, and enjoy some Japanese idol music. This should help you gain a better understanding of this article.
How have idol groups changed the Japanese entertainment industry?
1. Creating added value to CDs sells more product and appeals to more consumers
While music industries around the world have been in decline, in 2010 Japan passed America as the most profitable CD package business (CD singles, albums, DVD and BD music video packages) with $4.1 billion USD in revenue, and in 2012 Japan passed America with overall music sales (including music downloads) with $4.3 billion USD in revenue.
So how did Japan, a country where GDP is only 37% of America, create such a stable industry? Many people tend to think this is due to laws protecting the selling price of CDs and the dwindling birthrate leading to a larger elderly population who are not technologically savvy, but the biggest reason is that 80% of total music sales come from music packages (in America, package sales only account for 34%). And in 2012, 52% of package sales came from CD singles, which is nearly 30 times more than America. 80% of CD single sales come from male and female idol groups.
In this way, idol groups are the primary income for the current music market in Japan. For westerners who are used to the primary source of music sales being downloads from iTunes and Amazon MP3, the fact that music package sales continue to thrive in Japan must be very perplexing. Actually, behind the sales presence and passionate idol music fans lies a meticulously planned business model.
1–1. Create a package that leads to a real service to encourage multiple purchases
Idol CD’s feature various extras, such as tickets to hand-shaking events, performances, autographs, and photo sessions. Fans buy multiple copies of the same CD so they can get their hands on these extras.
Especially with the AKB48 family, which includes nearly 400 members, there are some fans that buy thousands of the same CD so their favorite member will be featured more on TV and in performances after the Yearly popularity contest, because 1 voting ticket to this contest is added to a CD.
Idol music has been able to avoid the negative effects of the free business by combining these real life experiences with the CD package.
1–2. Reach high positions in CD sales charts and use TV music ranking programs as advertisements
In most situations, adding real services to CD packages leads to a reduction of potential revenue. But since music rankings on Japanese TV programs are based solely on the number of CD sales, by reaching the top of the charts, music videos are played more often for a larger audience, reducing the need to spend millions of dollars on advertisements for the products.
1–3. Fans who buy multiple copies of the same CD give extra copies to non-fans, increasing the idol group’s reach
There have been negative effects of buying the same CD multiple times, such as increasing unnecessary waste. But in most cases, extra CDs bought are passed out to other people for free, giving non-fans the chance to hear the music and possibly become fans of the group.
1–4. Talented creators see the steady CD sales as opportunities for collaborations
As idol CD sales continue to grow and other artists CD sales decrease, songwriters, music video directors, and other creators see idol music as a potential source of a steady royalty-based income, so many talented creators work with the groups to create music and music videos. Also, due to increasingly powerful computer music software and video editing programs, what used to be a market for professionals has now opened up so talented amateurs can also be a part of the music industry. Idols have tended to be the best place for creators to test their contents, which is one of the reasons why the Japanese music industry has changed so much.
2. Make the story of their growth a core value and recreate the business model
2–1. Monetize their growth period
One of the biggest differences between Japanese idols and idols from other countries is that Japan has successfully monetized the idols’ growth period instead of focusing on providing a high quality musical performance.
In the entertainment industry, business typically follows a flow that starts with discovery through auditions, raising the talent, releasing a product, and promoting that product. The most costly aspects of this come from raising the talent through training and promoting the finished product.
However, in Japan, idols are viewed similarly as singers and actresses in training, and their training period is monetized by providing low-cost live and stage performances as entertainment. During their training period, the idols that gain the most fans move up in the industry, filtering out the more talented and appealing idols, as they become singers and actresses.
When it comes time for an idol to debut as a singer or actress, not only is promotion unnecessary as they are already well known, but there is practically no financial risk as the idol already has a large, dedicated fan base. So, where the training period and product promotion pose the biggest risk in most cases, for idol groups this is a non-issue.
2–2. Make the story of their growth a core value
Monetize the growth period for these idols and create contents that document them on their way to realizing their dreams, as well as showing them improve as singers and actresses.
In addition, for idols that are still in middle school and high school, provide contents that document them as they grow into young adults. This type of entertainment gives the viewers a feeling similar to a parent watching their child grow.
Also, since there are so many idols, it’s possible to maintain a close connection with their fans. By communicating at places like hand-shaking events, fans are able to feel that they have made an impact on their favorite idol, giving them the satisfaction that they are also part of the idol’s story.
These aspects are what maintain the high level of passion among fans as they continue to consume content.
Some fans project themselves into the stories of the idols, some fans watch their favorite idols grow up as if they were their own children, and some fans grow romantic feelings for their favorite idols. The trends of these fans can be viewed as results from Japan’s current social situation, including the decrease of births and aging population, the decrease in the marriage rate, and the stagnant economic growth.
2–3. Turn weaknesses into strengths
By providing contents that follow the story of idols during their training period, their weakness becomes their strength, which is one of the reasons idol music has become a successful industry. But beyond this, there are other examples of how idols’ weaknesses have become strengths.
Let’s take a look at their dancing skills. From the view of a professional dancer, the way idols dance primarily using their upper body must seem very awkward and unrefined.
But like with the dance from AKB48's “Koi Suru Fortune Cookie”, fans can easily copy the simple movements. These fans then feel delight after successfully learning and dancing with their favorite idols.
If you take a look at the music video, you’ll see that it’s a very fun video that focuses on AKB48's simple dance and people from all around dancing with them. This music video became a nation-wide hit, and all kinds of people started posting videos of themselves dancing to YouTube, including employees of the Kanagawa prefecture offices and companies like IBM, which led to the single CD selling 1.82 million copies.
(Most Japanese are very serious and rarely ever dance in their everyday lives, so the idea that employees took time out of their working day to create a video of them dancing is an incredibly rare occurrence in Japan)
Many people may think they are just following a recent trend of social dancing, as seen with Carly Rae Jepsen’s “Call Me Maybe” and Psy’s “Gangnam Style”, but the dancing performed by Japanese idols has always been choreographed so they are easy for people with little to no dance experience to replicate. At live performances, especially idol concerts, it is part of Japanese culture for everyone to do the same movements together, and since 2009, it has become common for regular Japanese people to upload videos of themselves dancing to idol songs to Japanese video sharing sites. There have even been cases where popular videos have gained more than 1 million views, making these dance videos very popular among the younger generation.
3. Groups feature a large number of members so they can better relate to fans and constantly provide interesting topics to keep fans excited
Compared to idol groups from other countries, Japanese idol groups have a huge number of members. In the AKB48 family, there are nearly 400 total members, and many other idol groups are made up of more than 10 members. The reason for this is that it gives fans a better opportunity to connect with the idols at handshake events and online through USTREAM and other SNS services.
These large groups are put together not only to increase CD sales, as described previously, but are a perfect fit for today’s social media generation, where the personalities of each idol are easy to connect with, increasing the group’s appeal to people who have varied preferences, likes, and dislikes.
Also, members of the same idol group are always together, which creates various stories, friendships, and fights that appeal to their fans. These stories are consumed by fans through online blogs and other internet media.
4. Use the community and feedback to influence management
Since idols are a type of content that is enjoyed by seeing their progress, fans constantly voice their opinions to the management, who then use those opinions to improve the idol group.
Most idol events are attended by the same group of fans, who often line-up long before the event, meet up with other fans and create unique fan-based communities which continue online. These communities form strong connections, creating a dedicated fan base for the idol group, and fans often engage in discussions on how they think their favorite group can improve.
Because of budget constraints, management for most idol groups only consists of 1 or 2 people so decisions and changes can be made quickly. This is why idol management can quickly implement opinions and feedback from fan communities.
This type of business is similar to what can be seen in the web industry with start-ups that incorporate lean start-up business practices. Idol groups are able to quickly provide services that the fan base wants which leads to a steady increase in fans.
5. The innovation dilemma brought about by the current entertainment industry
As I previously discussed, Japanese idols…
- monetize the early training period by creating low cost entertainment
- provide stories that follow idols as they mature into professional entertainers
- gain large numbers of dedicated fans by creating real life business made possible by the high number of members in each group
- provide success stories of talented idols who debut as actresses and singers while maintaining their large fan base
This has become a very profitable business model based on high quality entertainment that existing actresses, bands, and singers are not able to replicate.
In turn, idols are one of the main reasons the Japanese entertainment industry has, by necessity, evolved. The success of these idol groups has made an incredible impact on the current entertainment industry, similar to the type of disruptive innovation Harvard professor Clayton Christensen discusses in his famous book The Innovator’s Dilemma.
(To be more specific, idols need numerous different skills so when it comes to the quality of entertainment, the majority of idols will never be able to surpass top singers and actresses, so that type of high revenue business can stay intact. However, it’s common for less-talented singers and actresses to lose their spot in entertaiment industry.)
AKB48's success: How did they create such a dedicated fan base?
AKB48 started in December of 2005 as a group made of 20 members who performed at a specific theater in Akihabara, Japan’s hub for sub-culture. As of April 2014, AKB48 features about 130 members, and the AKB48 family is made of nearly 400 members. The reason for this, as I stated before, is so they can create more opportunities for fans and idols to connect with each other. AKB48 created the concept of “idols you can meet in person”.
Regarding the size of their fan base, when they first started only 7 people came to see them, but 3 months after that the venue maxed out at 250 people, and 7 and half years later they held a concert in front of 70,000 people.
AKB48 continues to change the way they attract new fans, but here I’ll go into more detail about how the current AKB48 is continuing to grow.
< Friendly competition is necessary in a group with so many members >
The biggest thing you need to know in order to understand AKB48's success is the way they are grouped into teams.
The AKB48 group is put together like a pyramid, and new members who make it through auditions start out as temporary students. If they achieve some success, they’ll be put into one of 5 different teams, and if they become even more popular, they’ll move up and become one of the selected members who are most heavily featured in music videos and other mass media.
Normally, whenever AKB48 is featured in a TV program or other media, they appear in a group that is put together with up to 20 members. These members are chosen by how well the fit the program itself, their popularity, physical appearance, talking ability, dancing ability, etc. (For example, for talk shows, their ability to create entertaining stories and banter is very important)
Since only about 10% of the actual members of AKB48 are chosen, they are constantly competing with the other members and must work hard to improve their strengths.
< Consistently use fan input to create a profitable business model >
AKB48 created a quantitative method to visualize how popular members become for not only the management, but also the fans and the members themselves.
The most obvious example of this is something I briefly touched on earlier: the yearly popularity contest. Each CD comes with 1 voting ticket, which fans use to vote for their favorite members, which are then relayed to the Japanese mass media. This event shows just how many fans the members were able to get over the past year. By visualizing the popularity of each member, dedicated fans end up buying the same CD multiple times so that their favorite member can move up in the rankings, which in turn creates a lucrative business model.
< Unite the AKB48 group structure with the marketing strategy >
From AKB48 fans, the group resembles a bottom-up structure that encourages competition between members, but people who aren’t AKB48 fans see the group in a different way.
AKB48 is able to reach larger audiences because the selected members who appear on TV and other mass media are carefully chosen and filtered by the fans and staff based on their individual unique talents so that the group becomes extremely appealing to all different kinds of media consumers.
Consumers who become interested in the group will search for more information about the group and members, and eventually they will reach the bottom of the pyramid structure.
If they reach the bottom of the pyramid and still want to be involved, their focus will be on paid experiences like exclusive online videos and handshake events instead of the content that is available through free broadcasts. As you can see, AKB48 is constructed in a way that turns dedicated fans into valuable consumers, creating a highly profitable business scheme.
< Expand AKB48's successful business plan into other markets >
The AKB48 concept of “idols you can meet in person” has created a profitable business scheme by encouraging fans to connect directly with the idols. Close connections between idols and their fans is necessary for this concept, so it made sense for AKB48 to branch out into other areas and markets. AKB48 took this concept and successfully created 4 more domestic groups and 3 international groups by building strong connections with local fans, which also led to friendly rivalry between groups in the AKB48 family, creating even more profitable entertainment opportunities.
The never-ending stream of idol groups and their position in the industry
Ever since AKB48 achieved nationwide success, idol groups with similar concepts have continued to appear all over the industry.
However, AKB48 has been structured so that there will always be new members to raise and new talent to cultivate, creating an endless source of entertainment. In addition, this business model has been applied to four local areas across Japan. Since it is difficult for other groups to compete with AKB48 on the same level, the number of smaller idol groups with less than 10 members has grown, which has lead to a greater variety of concepts, music, and fashion.
< STARDUST Family >
Main Groups: Momoiro Clover Z, Shiritsu Ebisu Chugaku
Current Status: Momoiro Clover Z is the second most popular idol group after AKB48, bringing in as many as 60,000 fans when they perform. Shiritsu Ebisu Chugaku is a young group thought to be the next to hit it big. The largest audience they have performed for is 10,000 people.
Business Strategy: They are well versed in postmodern marketing, creating buzz by purposefully ignoring the expected images of current idol groups. They have incredibly talented at life-cycle management. So, in the beginning, they started with a typical idol strategy of performing for free and holding handshake events, but they timely changed their strategy to focus on mass marketing and performances at large venues.
< Hello! Project Family >
Main Groups: Morning Musume, Berryz Kobo, C-ute, etc.
Current Status: They have been creating and raising idols for over 17 years, far before AKB48 burst onto the scene. At the moment, they are experiencing a reemergence in popularity thanks to their high-quality performances and refined idols.
Business Strategy: Their strength lies in the longevity of their groups and their high-quality performances. Compared to other groups, many of their dedicated fans have been around for a long time and they also have a decent following overseas.
< avex Family >
Main Groups: SUPER☆GiRLS, Tokyo Girls Style, Cheeky Parade, etc.
Current Status: They are run by avex, the single biggest company in Japan’s entertainment industry. They are home to more than 10 idol groups, all with various concepts, and their idol portfolio is full of a variety of acts.
Business Strategy: Because they run the biggest dance school in Japan, they have access to a huge resource of potential idols. They specialize in mass media promotion using their deep pockets and influence.
< Position of idol groups in the industry >
Below, I have created a graph mapping the above families (including the AKB48 family) based on their core value, the focus on high quality performances versus the importance of providing the story of growth, and how they are viewed as idol groups, from traditional idols to chaotic idols.
The birth of idols connected to local economies: Local Idols
Among the more than 1,000 idol groups that exist today, 80% of those groups are called local idols that spend the majority of their time in local areas around Japan. Japan is made up of 47 prefectures, and you can find about 20 idol groups for every prefecture (prefectures roughly equate to an average populations of about 2.6 million). Below, I will list two of the main reasons why these groups have come to be.
1. The penetration of the “idols you can meet in person” concept and the restrictions of location
The AKB48 “idols you can meet in person” concept is about creating situations where fans can easily attend live performances, handshake events, etc., which means the fans must be somewhat local in order achieve this concept. Also, Japan is a long country where 70 percent of the land is mountainous. This makes transportation very expensive so it’s difficult for idol groups formed in more rural areas of Japan to travel, which has led lesser known idol groups finding other ways to become profitable in local economies.
2. The focus on idols as icons who promote local consumption
After World War II, the central Japanese government was so strong that it was able to hit local governments with budget and authority restraints. However, as Japanese society grew in complexity the amount of debt increased for both local and central governments, so it became necessary for the authority of local governments to be increased so they can achieve a certain level of financial independence.
Because of this, local idol groups gained popularity as ways to increase consumption of local goods and act as fashion leaders for the younger generation. Also, dedicated fans will travel from all over Japan to visit these local idols, increasing the local income that comes from hotels and restaurants in the area.
Ehime’s Local Idol “Hime kyun Fruits Can”
A good example of a local idol group that became famous is the group known as “Hime kyun Fruits Can”. This group formed in the Ehime prefecture (population of 1.44 million) in 2010, and is made up of 5 members who sing songs based in rock. Although they are popular all over Japan including Tokyo, surprisingly, their activity has led to an increase in local income.
Hime kyun Fruits Can is practically known by everyone living in Ehime, which is why an Ehime shopping area partnered with them to increase business. For example, since the group members are viewed as fashion icons, advertising a traditional kimono store led to increased sales for a market thought to be forgotten by the younger generation.
The AKB48 family also includes local groups found in the larger cities, with SKE48 (Aichi prefecture: 7.26 million people), NMB48 (Osaka prefecture: 8.86 million people), and HKT48 (Fukuoka prefecture: 5.04 million people).
Idol groups expanding overseas, by the policy of Japanese culture export
With the increase in overseas popularity for sushi, sake, anime, goth-lolita fashion, and other Japanese cultural exports, the Japanese government has made a big push to improve the way Japan is viewed overseas with a program called Cool Japan.
Before this program began, the Hello! Project family was popular in countries that had strong connections with Japan, including France, Brazil, and other countries in Asia, which influenced the Japanese government into viewing idol groups as an important cultural export. This is why many idol groups have been performing in foreign countries at Japan-focused events like Japan Expo as well as solo concerts and music festivals, particularly in Europe and Asia.
In addition, from 2014 Japanese idols strengthen marketing strategies for American music market. For example BABYMETAL will perform their lives as a support member of Lady Gaga ‘s summer tour, And Morning Musume from Hello!Project and Cheeky Parade from iDOL Street will perform their solo lives on Oct. 2014 in NY.
Major Japanese companies have also started to support idol groups directly. Dentsu, the largest single advertising company in the world, is one of the back-up companies for Cool Japan, has strong connections with management for AKB48 and other idol groups and is well known for their mass market promotions.
In addition, Japan’s 2nd largest advertising company, Hakuhodo, created an internal venture company called ALL BLUE, inc. and it implements an approach that differs from Dentsu’s top-down structure. They provide services aimed towards overseas fans, such as international idol news, merchandise sales platforms, fan letter translation, and crowd funding that focuses on creating opportunities for idol groups to perform overseas. Their idol news service, Tokyo Girls’ Update is particularly hot at the moment about 600,000 likes on Facebook.
However, for most idol groups, performing abroad is not viewed as an international business opportunity. Instead, performing in foreign countries is a status symbol that idol groups use to strengthen their presence in the very profitable domestic market of Japan. On the other hand, AKB48 have gained a lot of attention by using foreign markets in a completely different way.
AKB48 created a business template from their success and is currently exporting that template to foreign countries. As of now, they have created 3 international groups in lucrative emerging markets: JKT48 (Jakarta, Indonesia, population of 9.61 million), SNH48 (Shanghai, China, population of 14.35 million), and TPE48 (Taipei, Taiwan, population of 2.62 million). These international groups are made up of members primarily from their respective countries and have been successful in gaining popularity by blending the Japanese idol culture with each country’s local culture. This differs from Korea’s international approach with K-POP, where they create groups of multi-lingual Koreans to debut overseas.
Particularly, the success of JKT48 is nothing short of remarkable. JKT48 is based in Jakarta, the capital of Indonesia. What’s amazing is that the primary target for idol groups, people under the age of 30, counts for more than 50% of Jakarta’s population. This is 3.5 times larger than Japan and equal to America’s under-30 population. Regarding their economy, in the past 10 years, their national GDP has increased a 3.7 times the rate of the US dollar, making Jakarta one of the most potentially profitable markets in southeast Asia.
JKT48 formed in November 2011, and if you take a look at the Google Trend graph below, you can see that they share the same degree of interest with AKB48.
Also, JKT48 has been used in commercials for Japanese products and companies, creating new business opportunities for Japanese businesses abroad and foreign businesses in Japan.
I would like to express my gratitude to Miss Ruka Mizote from SUPER☆GiRLS.
Her songs and attractive singing voice always heals my heart and encourages me during difficult times when I’m struggling at my management consulting works and as I wrote this article.
I respect her positive attitude toward challenges and her bright future, be it with many tears or her dazzling smile.
I will always hope her dreams come true…
(Translation: Nelson Babin-Coy)
Originally published at ignition.co.