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Why Japan Is Still Buying Music CDs Digital sales are on the decline in the country, while CD sales are still going strong.

By Laura Entis

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

In many ways, Japan is high-tech's poster boy. The country is awash in cutting-edge technology, from sophisticated wearables to Internet-enabled toilets.

But in one respect, Japan is a vision of the past: People still buy CDs. Lots of CDs.

Eight-five percent of music in the country is purchased via CD, The New York Times reports, and digital music sales are actually on the decline, plummeting from $1 billion in 2009 to $400 million last year.

Why, as CD sales continue to slump throughout the rest of the world, are they still going strong in Japan?

According to the Times, this quirk can be attributed to a couple of things, most prominently the lack of a good streaming service in the country. Spotify and Rdio, which dominate here in the States, still don't have music licenses in Japan. Meanwhile, Sony's Music Unlimited service, the most used online service in the country, doesn't have the rights to some of the country's chart toppers.

Related: You'll Never Guess Where Blockbuster Is Thriving

There's also a cultural aspect -- the act of collecting, as a hobby, is big in Japan. CDs sold in the country are often elaborately packaged, and can include special offers, such as concert tickets, which encourages fans to buy multiple copies of the same album, the Times reports.

While the rest of the world has left the CD in the dust, these two factors have converged to create a very special environment, namely a place where Tower Records, the iconic music chain that went bankrupt in the U.S. back in 2006, can thrive. In Japan, it's still a major force, with 85 locations that take in $500 million in business a year.

Overall, however, the music industry's future in the country doesn't look so rosy: Music sales have continuously fallen over the last decade, dropping 17 percent last year alone.

Related: Does Your Company Need a Spotify Playlist?

Laura Entis is a reporter for Fortune.com's Venture section.

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