Marketplace’s Econ Extra Credit series explores one documentary film a month with business and economic themes. Last month, we watched “All Things Must Pass: The Rise and Fall of Tower Records.” Remember Tower Records? Well, turns out, physical Tower Records shops are still big … in Japan.

Tower Records Japan is separate from the original U.S. company and is now owned by the telecommunications giant, NTT Docomo. But Tower Records Japan still follows the business principles set out by the company’s late founder Russ Solomon. In an interview with Marketplace, the head of public relations for Tower Records Japan, Tatsuro Yagawa, said via translator that the company is following Solomon’s business direction “very faithfully,” while keeping up with the latest trends.

Streaming music is gaining traction in Japan, but the CD remains a huge cornerstone in the industry. “Like now, CD sales [are] going down [a] little bit. So, you know, maybe we’re just slow. But [on the] other hand, you know, someone who has as a record label like me, [an] independent label could survive well because we still sell the CD too,” said Nori Shiota, a musician, producer and owner of Steelpan Records in Japan.

Tower Records is now seeing a revival, of sorts, in the U.S. After more than a decade, a new location is opening in the U.S. this month in Brooklyn. But that location is small potatoes compared to the 76 stores across Japan. And many locations are a “total music experience,” said Patrick St. Michel, a freelance writer based in Tokyo.

Marketplace’s David Brancaccio spoke with St. Michel about why physical music is still a big feature in the Japanese music industry. The following is an edited transcript of their conversation.

David Brancaccio: So you can still go into Tower in Japan?

Patrick St. Michel: Yeah, you can go into Tower Records’ physical stores all over the country, in major cities to malls like scattered in the more rural areas of Japan.

Brancaccio: Now, Tower Records which started in Sacramento, as the film shows us, Sacramento, California. You know, it didn’t make it in part because it was behind the ball on technology it seems, but also lots of debt, they expanded too quickly, the film argues. Now, in Japan tower is owned by a gargantuan corporation, NTT DoCoMo, that’s the big telecom company over there. But besides that, you have a theory as to how this chain was able to keep at it over there?

St. Michel: Yeah, besides having that backing by a massive telecom company, it helps that the Japanese entertainment industry, especially the music arm of it, has been quite slow to embrace technological and delivery changes in how people consume entertainment. With music in particular, a lot of big companies and labels have always been really hesitant to embrace the internet or streaming. Services like Spotify and Apple Music didn’t come to Japan until late in the 2010s. And as a result, physical media, especially CDs have been the dominant mode of how people listen to music in the country, all the way until recently. You know, while the rest of the world was shifting towards Spotify, most artists and companies here were still putting all of their focus on physical albums and singles that you had to get at stores like Tower Records.

Brancaccio: You and I are both careful about generalizing across an entire population. But there seems to be some Japanese people with a collector’s instinct, who liked the physical box in their hand, they probably like to put it up on the shelf and take a look at something that they bought. Is that your experience there?

St. Michel: Yeah, you definitely encounter very devoted fans, whether they are people who love a particular pop group, or people who are obsessed with a certain rock band, and that includes like Western acts, you can like meet people who own every Bon Jovi loosie that’s out there. And there is kind of, there’s this type of fandom in Japan, and you kind of do see it more globally nowadays, but it’s very comprehensive. People want to make sure they have everything associated with, to stick with music, their favorite artists, or even a specific niche genre of music. And obviously, physical is the best way to hold on to that because you have ownership, there’s no worries about it suddenly vanishing from the stream or a file being corrupted. As long as you like, keep the disk healthy, you’ll always be able to have it and the packaging and the like expanded art that comes with it.

Record stores as music venues

Brancaccio: And we need to understand that going into some of the Tower locations in Japan is not like stopping over at the hardware store, it’s still a venue really more than just a place to to sell CDs.

St. Michel: Definitely, if you walk into most of the Tower Records in the country, especially the bigger ones in Tokyo, for example, they are offering you a total music experience, not just a typical retail trip. So for example, if you go to the flagship store in Shibuya, there’s a live space in the basement, so you can see shows or talks, and they just put on all kinds of events there. And if you go up one of the nine stories present in that building, you know, there’s like a café that changes its theme regularly, usually to reflect a different artist or TV show or anime. And you’ll see like, it’s almost at times like a museum, where if an artist has put out a new album, for example, they’ll sometimes devote an entire floor to showcasing memorabilia or other interesting artifacts from their history, maybe like an outfit from a live show, and people will just go there and take photos. You know, snap a selfie with it. It really sort of presents music as this all encompassing experience, you know, and of course, they want you to leave with a CD or in recent years a record, but they also want to highlight so much more.

Brancaccio: And you know CDs, not cheap in Japan, right? You got to … I don’t know … what are they about 30 bucks?

St. Michel: Yeah, it’s about and this is before, like, inflation and the yen collapsing on itself. So yeah, it’s about $30 USD, but that’s kind of just for the most basic album. A lot of artists, owing to the industry’s reliance on CDs, actually also released multiple versions, including deluxe editions that can go as high as like $50 USD or like, I’ve seen like $100, sometimes for really, really special offerings. So it’s pretty pricey.

Brancaccio: I’ve never been to Shibuya in Tokyo—to explain, it’s it’s kind of like Piccadilly Circus in London or Times Square in New York, but maybe squared or to the third power, it’s a fine location to get people in.

St. Michel: Yeah, exactly. It is sort of the youth culture center of the city. And yeah, I think those comparisons are pretty spot on. It takes up a good piece of real estate, that lots of people pass, it’s a destination, too. And yeah, it attracts a wide demographic of customers, whether they want to like find the latest K-pop offering or sort of see what their … what a singer-songwriter from their childhood is up to now.

Brancaccio: We saw this term, the “Galápagos syndrome,” where not all parts of culture are globalized. That you can still have places in the world that’s got its own thing going, I suppose that makes you happy to be alive, that there’s this …still records and CDs being sold somewhere. It’s probably one of the reasons that makes your work covering culture there interesting.

St. Michel: Yeah, the thrill of like … I try to go to a Tower Records, at least it’s like every two weeks, because there is this really great … this almost sensory overload of walking in and seeing all the new cardboard advertisements set up on the main floor, showing you all the new music and then you have this whole corner devoted to music magazines. And if you just go even deeper, it’s just like, almost like a history of music that you can just flip through, physically. It’s a really … it is great to still experience and have that tactile relationship with music.