Key Differences Between the Japanese and U.S. Entertainment Business

1. Difference in the Music Market

According to data from the Recording Industry Association of America (RIAA), the United States is the world’s largest recorded music market, with retail revenues of 17.7 billion dollars (an estimated 10–12 billion dollars on a trade basis). Japan, while far behind the U.S., remains the second-largest market at 2.5 billion dollars, followed by the United Kingdom at 1.9 billion dollars. The U.S. accounts for roughly 40% of the global recorded music market, an overwhelmingly dominant position, but Japan’s continued hold on the No. 2 spot is largely due to the strength of physical products such as CDs and DVDs, which still represent around 40–50% of total revenues. Two major reasons why physical formats continue to account for such a large share in Japan are: (1) a strong fan‑engagement culture, and (2) the comparatively slow adoption of streaming services.

Fun Engagement Culture

In Japan, dedicated fan communities often form around idol groups and artists, and fan‑club activities are highly developed. CD purchases frequently come with incentives such as tickets to handshake events or fan meetings, limited photo cards, or storybooks and other exclusive merchandise. As a result, many fans purchase multiple copies of the same CD to obtain these benefits.

Slow adaption of Streaming

Because physical formats generally provide higher profit margins, there has been relatively little economic pressure on rights holders to fully embrace streaming. Even today, some record labels and management agencies that handle many idol groups continue to restrict or delay full‑length streaming releases. If one’s sole focus is maximizing revenues in the Japanese domestic market, prioritizing physical sales over streaming can still be a rational strategy. Consequently, the diffusion of streaming services in Japan has lagged behind that of North America and Europe.

There are also structural differences in how copyright is licensed and administered. In Japan, a small number of collective management organizations, primarily JASRAC and NexTone, centrally administer most music copyrights under a collective management model, handling royalties for broadcasting, digital distribution, and live performances in a largely unified manner. By contrast, in the United States, public performance rights are managed by multiple PROs (Performing Rights Organizations) such as ASCAP, BMI, and SESAC, which collect royalties for broadcasting, radio, live performances, in‑store BGM, and streaming and distribute them to composers, lyricists, and publishers. Synchronization rights for the use of music in films, games, and commercials are typically cleared through direct negotiations with publishers or sometimes the writers themselves. This leads to a more diverse and complex contractual landscape, but it also creates a wider range of business opportunities for those who understand the system.

In short, Japan’s dominant model is a group‑ or brand‑centric “box” business that combines physical products and in‑person events to monetize fandom, whereas in the U.S. the mainstream model is to build each artist’s individual brand and grow a global fanbase through social media,touring, and collaborations. The allocation of intellectual property rights—copyrights, image rights, trademarks, and so on—is typically structured in detail by contract. For creators and rights holders, this means that the strategic playbook must change drastically depending on whether they are building a career primarily out of Japan or out of the United States.

2. The difference of existence of Contract & Contract Articles

Japan – Talent Contract and Music Business

In Japan, it is still not uncommon for actors and TV talents to work effectively “off a script and schedule alone,” with no formal written performance contract in place. A large part of the industry continues to operate on long‑standing relationship dynamics between talent agencies and TV networks or production companies. It is therefore not entirely an exaggeration when a U.S. indie film producer tells me that a Japanese actor was genuinely grateful simply to be presented with a written contract. Even today, standard exclusive management agreements between agencies and talents/actors tend to grant extremely broad rights and impose long‑term restrictions. The agency effectively controls almost the entirety of the performer’s likeness, performances, and publicity rights, and attempts to terminate such contracts frequently lead to disputes under general doctrines such as the duty of good faith or public policy.

By contrast, the music side of the business in Japan professionalized relatively early under the pressure of foreign rights holders. In the 1930s, a German language teacher named Wilhelm Plage established the “Plage Institution” in Tokyo’s Kanda district and aggressively demanded music usage fees from Japanese broadcasters (including NHK’s predecessor), orchestras, concert organizers, and record companies for the use of foreign—primarily Western—compositions. This so‑called “Plage Whirlwind” made it clear that if Japan failed to respect the rights to foreign works, it risked international isolation. In response, Japan accelerated efforts to create its own collective management system for music copyrights, and from that period onward contracts and licensing practices began to develop more systematically. In a sense, this pattern of institutional reform triggered by external pressure is very characteristic of Japan.

The US- Defining Roles and Rights by Contract

In the United States, and particularly in California, the Talent Agencies Act legally separates the functions of agents (who negotiate and procure work) from managers (who provide career guidance and personal management), and prohibits the same person from performing both roles without proper licensing. The Act imposes a 10% commission cap on talent agents and also enforces the so‑called “seven‑year rule,” which invalidates personal service contracts that purport to bind an artist for more than seven years. These rules are designed to protect artists. Japanese artists seeking to enter the U.S. market via Hollywood or K‑pop routes sometimes run into trouble when a “manager” is found to have engaged in unlicensed agent activities, leading to challenges to the validity of their contracts.

In music, whether with major or independent labels, it is virtually unheard of to move forward with a commercial release and full‑scale promotion without a recording agreement and a management contract in place. Contracts are drafted on the assumption that details will be thoroughly specified—term, territory, exclusivity or non‑exclusivity, advances, royalty structures, and more. It is common to include conditions such as requiring a “technically and commercially satisfactory” recording, and to address in detail whether the company can recoup from touring income or merchandise (merchandising) revenues. In short, revenue structures and risk allocation are typically engineered with considerable precision at the contract stage.

3. Movie & Drama Production

Japan – Production Committee Model

In Japan, the dominant model for producing films (and many TV dramas and anime) is the “production committee” system, in which multiple companies—film studios, TV networks, satellite broadcasters, VOD platforms, and home‑video distributors—form a committee to jointly make key decisions and finance the project. This structure spreads the risk of a box‑office failure across the participating companies, but it also means that profits are diluted and contractual relationships can become highly complex. When it comes time to exploit the work overseas, it is often unclear who ultimately controls which rights, which can create significant friction for international distribution and licensing.

The US – Studio Production System

In the United States, by contrast, it is still common for a single studio to assume the bulk of the financial risk for a film or series. When a project performs well commercially, the upside can be substantial, but “net profit” definitions and participation calculations are notoriously complex, and litigation over financing and backend participation is a routine feature of the Hollywood landscape. In recent years, streamers such as Netflix and Amazon have acquired or built studios in Los Angeles and now regularly produce films and series in‑house for exclusive VOD distribution. This has fundamentally changed how films and series are developed and financed when they are intended from the outset as streaming exclusives, a point Matt Damon has been quite candid about in recent interviews and articles discussing the streaming era’s impact on the traditional studio model.

Because a single entity typically controls all production and primary exploitation rights in the U.S. model, it can unilaterally design and adjust the compensation structure, windowing, and global distribution strategy in ways that are difficult to replicate under Japan’s multi‑party committee system.

If you are currently: (1) negotiating a Japan–US co‑production, (2) reviewing a management or recording agreement, or (3) planning to license content across borders, feel free to contact us for a brief initial consultation.