Uncovering Karaoke: Japan’s Billion-Dollar Industry

If you’ve walked the streets of Tokyo, you’ve probably passed one of these bright signs:

Karaoke-kan

Big Echo

Manekineko

For those not familiar, these are karaoke establishments. With over 112,000 karaoke rooms nationwide, millions of Japanese people frequent these private boxes to sing their hearts out with friends, coworkers, family, or even solo.

Karaoke is more than just a pastime—it’s a cultural phenomenon, a form of therapy, and a surprising pillar of Japan’s music industry. Beneath the surface of this fun-loving tradition lies an ecosystem worth nearly ¥1 trillion (~$7 billion USD) annually, but there’s a deeper story about who actually benefits from this billion-dollar machine–and who doesn’t.

A newspaper article on the Takarazuka Revue’s use of pre-recorded music in response to labor strike (November 1, 1956)

The word karaoke combines kara (empty) and oke (orchestra), a term born in 1956 when a labor strike left the orchestra pit empty at the Takarazuka Revue, a beloved all-female musical troupe. To save the show, management replaced the live musicians with pre-recorded backing tracks from Matsushita Electric (later Panasonic). It worked so well that the concept stuck—and the name karaoke was coined.

Daisuke Inoue, known as the inventor of the first karaoke machine

A few years later, bar owners in the Kobe prefecture began experimenting with 8-track karaoke machines (provided by inventor Daisuke Inoue), letting patrons sing along to popular songs. By the 1970s, the first commercial karaoke machines were born. But the real breakthrough came in the 1980s with the arrival of the karaoke box: private rooms (often converted shipping containers) where people could sing without fear of public embarrassment. Laserdisc technology for onscreen lyrics and ISDN networks soon followed, turning karaoke into a powerful cultural and commercial force.

THE BILLION-DOLLAR KARAOKE ECONOMY

The numbers speak for themselves:

• 37+ million annual karaoke users (2023, Statista)

• Over 112,000 karaoke rooms across Japan

• ¥1 trillion (~$7 billion USD) market size (pre-COVID, including hardware, software, and content licensing – Karaoke White Paper 2020)

In Japan, karaoke royalties are often considered an “alternative revenue stream.” Since 1996, karaoke operators have been legally required to license songs through JASRAC, the nation’s copyright society, who then collect fees from venues and distribute royalties to rightsholders.

Here is how the money flows from karaoke box to rightsholders:

1. Artists and rightsholders → register their works with JASRAC (or their home CMO like ASCAP, PRS)

2. Tech providers → (DAM by Daiichi Kosho, JOYSOUND by XING) license the songs and distribute karaoke machines to venues

3. Karaoke venues → (Big Echo, Manekineko, etc.) pay blanket license fees to JASRAC to legally host these performances and install DAM and/or JOYSOUND systems

4. Usage tracking → Every song played on DAM and JOYSOUND systems is logged by the tech providers and reported to JASRAC

5. Royalty payout → JASRAC collects fees from karaoke establishments, calculates royalties based on play data, and distributes them to Japanese and international rightsholders

Though JASRAC doesn’t publish exact figures, karaoke is often said to pay ~¥2 ($0.015) per play—several times higher than Spotify’s $0.003–0.005 per stream. But there’s a catch: volume.

A global Spotify hit can rack up hundreds of millions of streams, while even Japan’s most-sung karaoke tracks rarely exceed 2–5 million plays annually across DAM and JOYSOUND systems combined. Mid-tier or niche artists might see only hundreds or a few thousand plays per year—translating to royalties in the tens or hundreds of dollars.

Additionally, performing artists often don’t receive a cut at all unless they are also the songwriters or publishers. Royalties flow mainly to rights owners, leaving many singers—the voices behind these hits—uncompensated.

For most artists, karaoke royalties are less a goldmine and more a trickle. The system primarily sustains superstars and the publishers behind karaoke classics like Queen’s Bohemian Rhapsody or Aimer’s Zankyosanka.

BEYOND PASSIVITY: KARAOKE'S DYNAMIC VALUE

But apart from collecting royalties, karaoke also acts as a cultural barometer: real-time insights from play data can help labels and managers spot fan-favorite tracks even before they trend on streaming. Karaoke data can be used to identify sleeper hits, refine marketing and promo strategies, and even select setlists for in-market tours. Unlike streaming, karaoke reflects active participation—fans choose, sing, and share songs in social settings. 

Some of my favorite karaoke memories are of singing passionately alongside friends until we lost our voices—these moments turned certain songs into lifelong, nostalgia-filled treasures. I’ve also gone alone, belting out cathartic ballads without inhibition, like a character in a dramatic movie scene. The vulnerability, joy, and pure emotion of karaoke creates a deep, participatory connection to music that stays with you beyond the karaoke box.

So while karaoke royalties alone may not sustain careers, the ecosystem offers other strategic advantages:

• Cultural insights: Play data reveals which songs resonate locally, often before streaming trends catch up.

• Fan engagement: Karaoke’s participatory nature fosters fan engagement and emotional connection to songs, offering communal and even language-bridging experiences. Also, platforms like DAM often show official music videos behind lyrics, further reinforcing fan immersion.*

• Market signals: High karaoke demand can indicate viability for tours, special editions, or Japanese-language releases.

*While official music videos and random filler visuals (passionate couples, city scapes, pretty sunsets) are beloved in their own way, these screens also feel like an untapped canvas for creative fan engagement, marketing, and artist branding.

But to make it truly equitable, structural reform is needed. Current royalty splits heavily favor publishers and legacy rights holders. Artists who don’t own their masters or publishing often see little return. Some argue JASRAC should renegotiate per-play rates with karaoke operators, or develop new systems ensuring performers are fairly compensated.

In an age where music is often consumed passively, karaoke reminds us why we fell in love with songs in the first place—not as streaming data, but as shared experiences.