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This article references a not particularly scientific survey, but when they asked, why don't you buy CDs, the #1 answer was "I can just rent them at rental stores."

This makes a lot of sense. "Theoretically," you can rent any CD ever at Tsutaya for ¥340-¥390 — even less if there is a sale, and there's always a sale — and then rip those CDs and keep the files. For ever. This even makes iTunes look expensive, but since renting CDs is technically legal and accepted in the content industry, it feels less illicit than Megaupload/Rapidshare (putting aside the fact that only a handful of people in Japan are aware of torrenting or the ridiculous ease of finding download links.) 

To recap: Buying a CD in a store is ¥3000 ($37!!!). On iTunes, something like "Best of Mihimaru GT 2" (a band you have never heard a single song from but of course has two best of albums) is ¥2000. If you get the same CD at Tsutaya a few weeks after release, ¥390. And I would guess that 90% of people listen to the music on a mobile device that is not a Discman, so the value of owning the actual disc is near nil for anyone other than hardcore fans.

Overall, this makes me think the actual "price" for an album of recorded music in Japan is around ¥400. Maybe the gap between that price and the ¥3000 standard price is why no one buys CDs anymore.

http://news.mynavi.jp/c_career/level1/yoko/2012/06/cd.html
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@clairetanaka raised the good point on Twitter that you have to wait three weeks for new Japanese releases before you can rent them. And you have to wait a year for foreign releases. So the "cost" of getting a ¥3000 Japanese CD the first three weeks is basically ¥2500. Pretty pricey, which means that only super-fans are willing to buy CDs.
 
And I though the US/UK record industry had no clue.
 
Is it the same with libraries? Or do they even stock CDs?
 
In that survey some people did mention just borrowing CDs from libraries. 
 
I've always been amazed at the blatant stocking of cassette tapes, then MDs, and today blank CD-Rs by the rental shop counters. This method of amassing a music collection has never been even remotely under the radar, even when I was doing it with LPs in the 1980s.

My favorite place in my old neighborhood helpfully put stickers on all the albums telling you just how long each side was, in minutes and seconds; then you could choose the perfect blank tape from the bewilderingly large array of lengths available. I'd go back to the States and wonder why there were only 30, 45, 60, and 90 minute tapes available. "Where are the 72 and 48 minute versions?"
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