As explained in this article by The Verge[0], the Japanese are still very much tethered to physical media. They regularly rent/buy CDs, DVDs, and Blu-ray discs, for reasons discussed in the article, which has kept profits high in the Japanese entertainment industry, compared to the West. Physical album sales have actually risen 11% in Japan in 2012, compared to 2011[1].
This, combined with the Japanese market's size and the almost complete absence of piracy there, has obviated the need for Japanese artists to embrace the internet or market their products abroad. Korea, on the other hand, has a much smaller population, and one for which piracy is a way of life. Korean artists are thus forced to market abroad, and in fact get 80% of their profits from Japan[1].
Among domestic Japanese groups, on the other hand, there has also been a reliance on various gimmicks to boost physical single and album sales. For example, AKB48, a girl pop group with dozens of members (originally 48 of them), holds yearly elections (senbatsu) to determine the order in which the members are ranked. You get one voting code for each physical copy of a particular single/album that you buy. There are crazy fans that will literally buy thousands of copies of a single CD in order to repeatedly vote for their favorite member, so that member wins[2,3].
0: http://www.theverge.com/2012/11/15/3628376/japan-digital-con...
1: http://seoulbeats.com/2012/12/worry-for-the-right-reasons-k-...