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Japan’s physical music sales in 2009 posted steeper declines. According to the Recording Industry Association of Japan, physical shipments fell 13% in 2009 compared to 7% in 2008, while trade values declined 5 points from 11 to 16%. In addition, Soft Information Planning says physical sales plunged by 27% in 2009 after falling only 3.9% in 2008. Tatsuro Yagawa, GM of public relations at Tower Records Japan says the sales in Tower’s 80 Japanese outlets have also experienced a 5%-7% decline in sales in 2009. One leading music merchant, HMV Japan, has significantly cut down on its CD inventory. Furthermore, digital music sales actually declined, and do not seem to compensate for the decline in physical sales. The short-term outlook does not seem much better due to tough economic conditions and illegal file sharing activities. There were some bright spots. Sony Music had a surprise hit in 2009 with Milayah Kato’s album “Ring,” but Sony Music COO Kiyoshi Furusawa still believes Japan needs the boost that only a new domestic superstar can provide. Besides that, Amazon Japan recorded double-digit percentage gains in 2009 for CD sales. To boost the physical music sales, music labels are including freebies such as figurines of artists and T-shirts. Meanwhile, Universal Japan is developing new revenue streams in order to establish a direct-to-consumer business model. In the future, Japan will have to face fierce competition that likely will lead to market restructuring, says Kazuhiko Koike, CEO of Universal Japan, “with mergers and acquisitions” on the horizon.