The Impact of Metaverse Technology on the Development of Music

Industry:

A Case Study of Music Industry Development in China and Japan

Zhichao Zhang

1,* a

, Chengxi Liao

and Tianxing Ma

School of Foreign Language, Chengdu Neusoft University, Chengdu, China

School of Media and Communication, RMIT University, Melbourne, Australia

School of Information Management Business Administration, Chengdu Neusoft University, Chengdu, China

Keywords: Music Industry, Metaverse, Digital Economy, China, Japan, Loyalty Loop.

Abstract: According to Bloomberg Intelligence, a U.S. market research and consulting firm, the global metaverse

technology market scale is expected to reach $783.3 billion by 2024. While metaverse technologies provide

alternative space for the consumption and enjoyment of spiritual culture under the new epidemic situation, it

also brings people an immersive and interactive emotional and psychological experience that is far beyond

what the real world can provide. In this context, it is essential to explore new ideas and paths for the

development of China's music industry. This study uses a regional comparative approach to analyze and

compare the utilisation of metaverse technologies within the music industries in China and Japan, and by

using questionnaire to collect metaverse music consumers’ attitude towards relevant technologies, it aims to

interpret some existing problems in the development of Chinese music industry in the context of globalization.

Finally, the paper explores new ideas and paths for the development of metaverse music industry from three

aspects: loyal consumer groups, full-spectrum music genres, and high-quality internet infrastructure and

services.

1 INTRODUCTION

Human society is now in the transition from web 2.0

to web 3.0, which is a shift from smartphones to

extended reality (XR), from "cloud" to AI

technology, and from the emphasis on interactivity to

decentralized and balanced distribution of value. All

of the tendencies will eventually integrate into

"Metaverse," an information space that combines all

of these elements. Wang, Zhou, Wan and Ning (2022)

point out that metaverse is a comprehensive and

integrated application of existing IT technologies, and

it is a new stage in the development of information

technology. The development and application of

technologies such as 3DCG, Internet of Things, and

blockchain are what realize and support metaverse,

which has inspiring prospect in the upgrading of

music industry. In the report “The Top Ten Trends in

http://orcid.org/0000-0002-8141-0612

https://orcid.org/0000-0002-7386-4251

https://orcid.org/0000-0001-5789-7857

the Development of China's Music Industry in 2020"

by the Music Industry Promotion Working

Committee of the China Audio and Digital

Association (2022), it also clearly states that

"artificial intelligence, virtual reality and other

technologies will be better integrated with the music

industry, bringing more immersive all-round multi-

latitude artistic enjoyment to music consumers".

This study uses the knowledge related to

metaverse to explore its intersection with music

industry. Also, it seeks to compare the respective

development status, characteristics and existing

problems of music industries in China and Japan by

collecting user feedback through questionnaire and

analyzing results with Loyalty Loop theory. Finally,

it aims to provide insights for the solution of existing

problems and the exploration of new development

paths of music industry under the metaverse

perspective.

632

Zhang, Z., Liao, C. and Ma, T.

The Impact of Metaverse Technology on the Development of Music Industry: A Case Study of Music Industry Development in China and Japan.

DOI: 10.5220/0011936300003613

In Proceedings of the 2nd International Conference on New Media Development and Modernized Education (NMDME 2022), pages 632-640

ISBN: 978-989-758-630-9

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

2 THE "NEW" MUSIC

INDUSTRY UNDER THE

BACKGROUND OF

METAVERSE

2.1 Metaverse: Definition and

Development

The term "metaverse" was first introduced as a

science fictional concept. The widely acknowledged

etymology of metaverse is the parallel world of

virtual reality depicted by science fiction author Neal

Stevenson in his novel Snow Crash in 1992

(Stephenson 1992). Nevertheless, when considering

the standard of “a parallel virtual world”, the embryo

of metaverse had emerged prior to the novel. The

1986 computer game Habitat was the pioneer of

introducing "avatars" (avatars) and was considered as

one of the earliest attempts to build a large

commercial virtual community (Robinett 1994). Both

Snow Crash and Habitat embody one of the most

central features of the metaverse - the construction of

virtual worlds. Therefore, van der Merwe (2021) uses

Foucault's term "heterotopia" to argue that the

metaverse is, as Foucault suggests, an imagined,

"utopian-like" place that links different spaces

(virtual and real) and provides a place for people to

live in and fulfill their expectations.

Metaverse evolve in line with the advancement of

computer technology. According to Park and Kim

(2022), there are three new features of today's

metaverse compared to when the concept was first

created. First, the rapid development of artificial

intelligence technologies, such as deep learning and

generative models, has created a more immersive and

natural experience environment and reduced the

processing time and complexity required to run a

metaverse; second, with the development of Internet

technology, metaverse has moved from limited

single-device control to decentralized multipoint

access, breaking the boundaries of time, space, and

devices; third, the metaverse system nowadays allows

users to interact with real life through virtual

currency, allowing users to closely connect with

reality and continue their lives in multiple social

aspects (fashion, games, education, office, and so on).

The commercial potential of metaverse is naturally

spilling out in the context of the growing maturity and

everydayness of relevant technologies. According to

Bloomberg Intelligence (2022), the overall metaverse

market, consisting of social media advertising,

gaming hardware/software, and virtual performances,

will grow at an annual rate of 13.1% from 2020 and

reach $783.3 billion by 2024 (see Fig.1).

Figure 1. Metaverse market size statistics. Source: Bloomberg Intelligence (2022). Adapted by the authors.

As Bloomberg Intelligence suggests, the

application of metaverse is no longer restricted to

video gaming but has expanded to a wider range of

scenarios. Ball (2022) identifies seven features of

metaverse: (1) persistency (it does not restart, pause,

or end); (2) simultaneity (self-completing activities

designed in advance occur simultaneously with real

life); (3) without restriction (anyone can participate in

specific events with their online avatar); (4)

containing economic value (individuals and

companies can create, hold, invest, and sell activities,

and they can get paid for their work by meeting other

users’ needs); (5) extensiveness (it is an experience

that balances the digital and real worlds, private and

public networks, and open and closed platforms); (6)

interoperability (even across platforms, individuals

can freely use their online avatars and items); and (7)

user contribution (produced and operated by a wide

range of contributors, including individual users,

corporate users, and intentional groups). These seven

The Impact of Metaverse Technology on the Development of Music Industry: A Case Study of Music Industry Development in China and

Japan

633

characteristics are important benchmarks of the

metaverse business model and are equally applicable

in music industry.

2.2 Metaverse and the Music Industry:

Technology and Implications

The development of music industry is driven by

consumption, and the premise of consumption is

production (creation). The traditional model of music

creation and consumption, or in other words,

"production and interpretation by creators -

consumption by consumers", will gradually grow into

a more diversified and integrated development model

under the background of the application of metaverse

technology. As mentioned above, metaverse

technology has seven characteristics - persistency,

simultaneity, being free from restrictions, containing

economic value, extensiveness, interoperability, and

user contribution. This means that these technologies

help to build a platform for music creators and

consumers to conduct uninterrupted, simultaneous,

and unrestricted activities. The act of information

transfer between music creators and consumers, and

between consumers, plays a key role in driving the

growth of music economy, and the long-term

profitability of music industry can be achieved by

strengthening the mutual contributions between them.

In addition, creators and consumers create network

avatars through technologies like immersive

interactions, 5G, and VR to meet the demand for

highly immersive music production and

consumption. Relying on the arithmetic technologies

of metaverse and session management, it is possible

to satisfy long-time, persistent interaction about

music between creators and consumers and within

consumer groups. Eventually, the use of metaverse

enriches the connotation of feedback, information

transfer, support, and re-creation behavior, realizing a

social network of "music for all" and allowing people

to enjoy digital music experiences anytime and

anywhere.

Metaverse technologies make it possible to build

self-generating complete music ecosystems. One

example is VibeShare (Yamazaki & Shirai 2021), an

interactive live performance system developed by

Japanese VR developer Gree VR Studio Laboratory.

This system uses a common web server as a hub that

organically connects performers with the audience.

As shown in Fig. 2, by tapping on a mobile

application, audiences can easily respond to the scene

with actions like clapping, sending emojis, cheering,

and so on, and performers can then receive the

audience's reactions first. Performers can also wear a

special haptic device, so whenever audiences send a

specific expression, performers can feel it in real

time, greatly enhancing the immersive experience of

both performance and viewing.

Figure 2. VibeShare system at a glance. Image from Yamazaki & Shirai (2021); translated and adapted by the authors.

In the practice of applying metaverse in music

industry, the cases of China and Japan are

noteworthy. As two countries with rapidly

developing information technology, the music

markets in China and Japan have quickly begun the

attempt to engage with metaverse. How has

metaverse been used in each of these two markets?

What are the successes and potential problems of

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634

each market, and what are the implications for the

development of China's metaverse music industry?

These questions will be addressed in this article later.

3 METHODOLOGY:

QUESTIONNAIRE AND

LOYALTY LOOP THEORY

To evaluate the efficacy of metaverse technologies in

both Chinese and Japanese markets, the following

part will then pay attention to the response of

consumers in the two nations, examining whether

they are attracted by and devoted to the use of these

new way of music consumption, as well as what

metaverse functions appeal to them most. The model

of Loyalty Loop, proposed by David Edelman (2010),

is used here for interpreting the journey that

metaverse music consumers take when engaging with

relevant products. As shown by Fig. 3, Edelman

argues that a consumer, when making a purchasing

decision, may take six actions: consider, evaluate,

buy, and enjoy, advocate, and bond (Edelman 2010).

Once the consumer has established robust bond with

the product in the process, he or she may enter a new

loop of loyalty, in which the consumer will only

keeping the circle of buying, enjoying and advocating

(Edelman 2010). In this article, we seek to explore

how the utilization of metaverse music technologies

may (or may not) drive consumers into loyalty loop

by conducting survey activities in order to collect

consumers’ opinions of metaverse music. We aim to

reveal whether these technologies are appealing, and

based on the analysis, some implications for the better

use of metaverse in music industry may be drawn.

Figure 3. The loyalty Loop model by Edelman (2010).

Adapted by the authors.

The Loyalty Loop model was applied in the

questionnaire design process. Based on some key

issues in metaverse music industry, we proposed 16

questions about the participation of virtual music live

events, which is a significant type of metaverse music

consumption, and we aim to use these questions to

reflect different parts of the loyalty loop. A total of

112 results were collected, which included

participants from both China and Japan. In the

questionnaire, these consumers of metaverse music

indicated their consuming habits and preferences for

specific functions, which can reveal the features of

both Chinese and Japanese metaverse music markets.

We also conducted brief interviews with some

participants for the purpose of exploring more in-

depth implications of our data.

4 COMPARING THE

APPLICATION OF

METAVERSE TECHNOLOGY

IN THE DEVELOPMENT OF

MUSIC INDUSTRIES IN CHINA

AND JAPAN

This section will conduct a comparative analysis of

the questionnaire results, explaining the differences

between answers given by Chinese and Japanese

participants. The first finding, illustrated in table 1, is

about the frequency of virtual music performance

participation across different age groups. Japanese

participants come from a wider age range, while

Chinese counterparts are predominantly under 30.

This suggests that the loyalty for virtual music is more

common in Japanese society, which attracts

enthusiasts from all ages, while this is not the case in

China.

The Impact of Metaverse Technology on the Development of Music Industry: A Case Study of Music Industry Development in China and

Japan

635

Table 1. The frequency of participation based on age group.

Age Region

Frequency of participation

Once Twice Thrice Four times and above

Below 20

China 19 5 2 2

Japan 1 0 1 4

21-30

China 18 13 6 1

Japan 4 1 5 6

30-45

China 1 2 0 0

Japan 0 4 3 5

Above 45

China 0 0 0 0

Japan 2 4 1 2

Proportion

China 55.07% 28.99% 11.59% 4.35%

Japan 16.28% 20.93% 23.26% 39.53%

The second finding is related to the platforms for

virtual music performance participation. As shown in

table 2, the platforms Japanese participants use are

much more diversified than the ones Chinese

counterparts use. While Chinese users mainly

participate on their domestic platforms, Japanese

participants show some significant interests to the

music events on foreign platforms like Bilibili.

According to the interview with one of our

participants, Japanese virtual music audiences may

download platform applications simply for watching

the live events held on these platforms, while

Chinese audiences tend to stick to a specific

platform and occasionally watch virtual live

performances on it once they notice them (see also

Zhou & Deng 2015). Such a difference is further

discovered in the question about the reason for using

specific platforms for virtual music events, which can

be seen in table 3. More Japanese participants choose

a certain platform because it has the show they are

interested in. This indicates that Japanese participants

are more motivated by attending a specific show and

thus are loyal to the music events they follow, while

the participation of Chinese counterparts are more

motivated by their consuming habits on certain

platforms.

Table 2. The use of platforms for virtual music events.

Region

Platform

QQ Music

Netease Cloud

Music

Tencent Video Bilibili Douyin

China 47.80% 47.80% 17.40% 72.50% 34.80%

Japan 16.30% 18.60% 25.60% 60.50% 51.20%

Wechat

Youtube

Niconico

Twitch

China 15.90% 18.80% 8.70% 5.80%

Japan 7.00% 81.40% 79.10% 69.80%

Average number of platforms a consumer use

China

2.695

Japan

4.095

Table 3. The reasons for using certain platforms

Region

Reasons for using this platform

Being a long-term

member of the

latform

Attending one

specific event

Seeing relevant

information on

social media

Influenced by the

recommendation from

friends

China 68.10% 62.30% 22.20% 17.40%

Japan 67.40% 72.10% 72.10% 62.80%

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Another finding seen in table 3 is that the

proportion of Japanese participants affected by social

media and recommendations are predominantly

higher than that of Chinese users, which suggests that

Japanese participants are much more enthusiastic for

sharing virtual performances to others. Table 4 is a

clearer indication of such a will of sharing.

Table 4. The will of sharing.

Region

The will of sharin

Yes No

China

65.20% 34.80%

Japan

81.40% 18.60%

The next finding involves the music genres that

virtual music performance audiences are interested in.

It is obvious from table 5 that the popular music

genres in Japanese virtual music market are much

more diverse than the ones in Chinese market.

Table 5. Music genres that participants engage.

Region

Music genre

Pop Rock&Roll Electronic Folk DJ Dance

Game/movie/TV

drama soundtrack

China 73.90% 24.60% 27.50% 23.20% 13.00% 43.50%

Japan 67.40% 81.40% 74.40% 30.20% 46.50% 62.80%

The last finding is about the problems that

participants of both countries wish to solve. As shown

in table 6, the overarching concern for Chinese users

is internet speed of virtual performances, which

impacts the video quality of these events. For

Japanese users, there is no specific area that needs

particular improvement. Also, the overall satisfaction

level for virtual music performance is higher in Japan.

Table 6. The opinions about improvement.

Region

Places for improvement

Overall

satisfaction

level for virtual

music

performance

(in

eneral)

Internet

speed &

video

quality

Personali

zed

service

The functions

for blocking

disliked users

Gamification

of music

performance

derivative

products

China 69.60% 59.40% 46.40% 34.80% 36.20% 79.13%

Japan 20.90% 25.60% 25.60% 16.30% 14.00% 89.30%

5 IMPLICATION AND

CONCLUSION

The comparative analysis of Japanese and Chinese

audiences’ attitudes towards virtual music live events

can provide some important insights for the status of

metaverse music in both countries. First, metaverse

music in Japan is more mature than the one in China.

Japan owns a full-spectrum metaverse music market

that covers a broad age range of consumers, and they

manifest high demand for metaverse music as they

are likely to attend events more than once. Using the

theory of Loyalty Loop to explain, more Japanese

consumers with diversified demographic

backgrounds form solid bonds with the products they

consume, and thus manifest more loyalty to these

products.

The maturity of Japanese metaverse music

industry is further supported by the data about

Japanese music market. According to the 2022 Global

Music Report released by the International Federation

of the Phonographic Industry (IFPI) (2022), Japan

still maintains its position as the second largest music

market in the world, and even under the extremely

severe situation of the COVID-19 pandemic, the size

of Japanese music market still expanded by 9.3%

compared to the one in previous year. According to a

survey report by the Ministry of Economy, Trade and

Industry of Japan (2020), the physical music market

continues to shrink in both the world and Japanese

domestic markets, while the digital music market is

on continuous expansion. From 2014 to the present,

the ratio of digital music to the total market in Japan

is higher than the world average. By 2023, such a size

difference will reach 6%, that is, the world market

The Impact of Metaverse Technology on the Development of Music Industry: A Case Study of Music Industry Development in China and

Japan

637

digital music scale accounted for 29% of the overall

amount, while the counterpart of Japanese domestic

market will reach 35%. The overall expanding status

of Japanese digital music market is the basis for the

music industry construction in metaverse perspective.

In comparison, Chinese metaverse music market

is still in a relatively nascent stage. From the findings

of this article, the consumption of metaverse music in

China is largely occasional activities based on

audiences’ reliance for certain platforms. As a result,

they have not become the loyal consumers like their

Japanese counterparts. In response, Chinese

metaverse industry participants should pay more

attention on how to enhance users’ bonds to their

products instead of platforms.

The next implication is the highly established

promotion system in Japan powered by both Japanese

metaverse music industry and their consumers. The

strong will of sharing shown by our Japanese

participants indicates that they have formed the habit

of spreading the metaverse music they love, which is

a key part of loyalty loop. The collective mouth-to-

mouth sharing behavior, as well as the marketing

campaigns conducted by relevant businesses, are the

driving force of metaverse music in Japan (see

Hwang & Lee 2022). Again, such a system of sharing

is not fully formed in China, which requires more

efforts from the domestic metaverse music industry.

Another key implication, which is related to the

highly diversified music genres of virtual music

performances, is that Japanese metaverse music is

supported by its globally renowned music industry.

The success of existing music products provides

abundant, mature and stable technical testing grounds

for metaverse technologies. Taking the example of

the Japanese cultural phenomenon "virtual idol", it is

a group of virtual characters born from Japanese

otaku culture and based on information technology,

which has sparked a global frenzy upon their

emergence (Lu et al. 2021). In the context of the

popularity of Internet technology, especially 5G

technology, it has become the norm for virtual idols

to rely on online platforms to conduct live music

performances, and thus these performance activities

have become the best destinations for metaverse

practices. For instance, a popular virtual idol “Virtual

Girl Nem” (バーチャル美少女ねむ) released her

seventh original song, "Meta Birthday", on August

, 2022. One of the promotional activities around

the single was a singing contest to select participants

for the 3D online performance of "Meta Birthday"

from Nem's fans. Participants were given a character

image that resembled Nem's look and had their own

avatar in this performance, as shown in Fig. 4 (Virtual

Girl Nem 2022). The concept of metaverse has

strengthened the popularity of these globally beloved

virtual idols, and the preexisting influence of virtual

idol culture has also in turn increased the acceptance

of metaverse and its related technologies among

consumers. As a result, the bond between certain

music genre and its consumers is further enhanced,

and such a bond exists within almost every genre in

the market, contributing to a comprehensive

metaverse music market system that allows all types

of music to survive and thrive.

Figure 4, Promotional image of Virtual Girl Nem "Meta

Birthday" campaign (Virtual Girl Nem 2022)

For the situation in China, the support from the

general music industry is still far from being adequate.

First, the fields of music industry development are

still relatively limited. For instance, although the

overall size of China's digital music market remains

high, the film, game, and animation music industries

have not made new breakthroughs from the previous

year, basically remaining at a scale of 700 million

yuan (Yinyuexiansheng 2022). This indicates that the

development of film and game works in China is still

limited to the products themselves, while the deeper

exploration and marketing of their derivative

products (e.g., music) is relatively missing. When the

market just worships the most popular products, it

becomes difficult for music producers of some niche

genres to survive in China. Second, there is still a

need for more highly recognizable metaverse

products that have a national and even global impact.

One author of this article, Zhichao Zhang, had an

interview with the chairman of TryHard Japan, a

leading music culture company in Japan. He

mentioned that "China has never had a world-class, or

at least East Asia-wide, leader and ‘mastermind’ to

lead the way of music industry, so people are just

blindly following the market trend." Against this

backdrop, accusations of the current domestic

metaverse boom are highly visible, mainly focusing

NMDME 2022 - The International Conference on New Media Development and Modernized Education

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on blind following, as well as the lack of continuity

and long-term planning (Kejihu 2022).

The last implication is that the infrastructure and

service for metaverse music should be improved in

order to attract more consumers. In table 6, one

finding is that Chinese participants tend to complain

about the internet speed of virtual events. It is curious

to see that while China has been featured by its

rapidly developing internet infrastructure (China

Internet Network Information Center 2022), internet

speed and video quality has become an issue in

Chinese metaverse music market. This might be

because the industry pays less focus on providing and

maintaining more stable service for their consumers,

which eventually undermines the popularity of their

products, as reflected by the lower satisfaction level

for virtual performances in China. Robust technical

support is the prerequisite for a complete music

ecosystem (as shown in the earlier case of VibeShare),

which is another significant boost of metaverse music

industry. Therefore, it becomes essential for Chinese

industrial participants to improve the overall quality

of metaverse infrastructure.

In summary, by making comparison between the

user feedbacks from Japanese and Chinese metaverse

music markets, this article is able to provide some

insights about the characteristics of metaverse music

industries of both countries. For Japan, the use of

metaverse in domestic music industry demonstrates

its advantages as a major cultural and technological

power, which are evident in the vast user base of

metaverse music that manifest high level of loyalty,

as well as the systemized production, distribution and

promotion process of the industry. In contrast,

metaverse music in China is still in its early stage.

Despite the rapid speed of development, there is still

much room for improving the depth and breadth of

Chinese music industry, which is crucial for the

formation of loyal consumer groups. The case of

metaverse practice in Chinese and Japanese music

industries shows that having a long-term plan and a

clear understanding of both music products and

consumer groups are the key to success in a rapidly

developing and changing technology field like

metaverse.

Future studies may address some other aspects of

metaverse music industry, such as copyright

protection. In the case of Japan and China, there are

also some significant insights for discussion. Japan

has established a comprehensive set of relevant legal

regulations. In comparison, the absence of systematic

music copyright brokerage and management is still a

major concern in Chinese metaverse music market.

The enhancement of legal framework and other areas

is necessary for building up a healthy metaverse

music market, which calls for more in-depth

understandings in relevant academic fields.

FUNDING

The author(s) disclosed receipt of the following

financial support for the research, authorship, and/or

publication of this article: this paper is supported by

Southwest Music Research Center of Sichuan

Conservatory of Music. Funded project: Research on

the insights of Japanese music culture industry for the

development and problem management of Sichuan

music culture industry (fund No.: xnyy2020049). All

members of the team reached common agreement on

publishing this paper and have no conflict of interest.

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