MMW-07 -- Interview with Kazutomo Robert Hori, President and CEO of

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J@pan Inc Magazine Presents:
M U S I C M E D I A W A T C H
Commentary on the Week's Music Technology News
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Issue No. 7
Tuesday, February 26, 2002
Tokyo

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CONTENTS

++ Feature: Interview with Kazutomo Robert Hori, President and CEO of
Cybird

++ Noteworthy News
- Napster Scores Big Court Victory
- Garageband Pulls the Plug

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++ FEATURE: Interview With Kazutomo Robert Hori, President and CEO of
Cybird

Last week, I paid a visit to the Cybird office in Kamiyacho to speak
with Kazutomo Robert Hori, the company's president and CEO. Cybird
was the first content provider for i-Mode, and runs, among other
mobile sites, a highly popular ringtone site in Japan called 'Cool
Sound'. Here are some excepts from our conversation:

MMW: What distinguishes your ringtone site from those of your
competitors?

Hori: There is more depth to our site. For example, you can download
ringtone previews of songs from popular artists before they are
released on CD. Because of our exclusive agreements with artists, we
are able to offer ringtones of songs that have never before been
included on albums and are therefore free of copyright licensing
restrictions. We also include recommendations from record shops and
others. In short, our site is more like a music magazine -- there is
plenty more besides just the ringtones to keep you interested.

MMW: I've heard that Cybird will be one of a handful of Japanese
ringtone providers to open a site on the new European i-Mode platform
set to launch this March in Germany and the Netherlands. What are
your plans for Europe?

Hori: Basically, we plan to go wherever i-mode goes, initially
providing ringtones and logos. Ringtones are universal. Everyone
loves music, and we think ringtones will make money throughout Europe
and Asia.

MMW: What about issues with European copyright for the ringtones?

Hori: The ringtone business has never been as big as it is now, and
that's true for both Japan and Europe. There are many organizations
like JASRAC over there, and they don't know yet how to handle this.
There are many companies and organizations trying to get a piece of
the pie. They are still trying to decide how to divide it. All I can
say now is that nothing has been decided yet. What I do know is that
unless you have legal entity there, you can't even pay for the
copyright, even if the price were decided. The payment has got to be
done through the legal entity.

MMW: That would seem to put many of the Japanese ringtone providers
at a disadvantage.

Hori: Yes, I guess. One good thing for us, though, is that the
larger, more established companies will likely have to stay away from
unclear things such as copyright issues. The local ringtone providers
will be very small companies. I don't expect there to be any company
as big as say, MTV launching a site, at least not while the copyright
issue is still unclear.

MMW: How do you plan to address the copyright issue?

Hori: What we are doing is starting with non-copyrighted content.
There are many songs made exclusively for our site that have never
been put on CD by the artist. I think we're going to start with those
songs, see what happens and go from there. In the end, it's all a
matter of negotiation. Also, we have creators from our own staff who
are making many 'club-style' ringtones. In Japan, what is cool is
what is happening in the music scene in Europe.

MMW: What advantage do the Japanese ringtone providers have over
local providers?

Hori: Experience. For example, there are many ringtone sites and they
all use the same technology. We have very strong confidence in the
quality of our songs. if you compare the same Cybird song under the
same title with others you can tell the difference. It's like if you
want to shoot a film, it's better to go to Hollywood than to use your
friend. Why? Because they have experience.

MMW: How many songs do you need on your site to get started in
Europe?

Hori: The smallest Japanese ringtone sites have a couple of hundred
songs -- I guess you could think of that as the minimum.

MMW: What else is important in starting a European ringtone site?

Hori: I think for any kind of content business, exposure is one of
most important things. Your position in the i-mode menu -- that works
in accordance with your popularity. It's shuffled every month
depending on the popularity rankings of the sites.

MMW: Who decides the initial menu positioning?

Hori: Theoretically, it's the local operator. The operator has a 100
percent right to decide everything. At least, theoretically.

MMW: How is the initial menu positioning decided?

Hori: First come, first served. The first one who signs the contract
will be positioned at the top.

MMW: So in some sense, it's a race to see who can sign the contract
first?

Hori: Yes, and I'm sure the competition is not just among the
Japanese ringtone providers but also the local providers, so my
strategy is to go there as early as possible, earlier than anyone
else, and try to grab as many users as possible. And I hope there are
no politics involved in determining the menu position.

MMW: What else are you doing to prepare for the launch?

Hori: We, and our competitors too, are helping the operators in many
different ways: with test marketing , sharing information on the
European market, sharing our knowledge and experience with KPN
people, basically trying to support DoCoMo on good will, because all
of us want to see i-mode succeed outside of Japan.

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++ NOTEWORTHY NEWS: Napster Scores Big Court Victory

A federal judge gave Napster a significant court win last Friday,
ordering new investigations into the major record labels' ownership
rights to music. Although Napster's service has already been shut
down in previous legal decisions, the ruling is expected to provide
an obstacle to the record labels, who are trying to promote their own
online music-distribution services. Analysts expect the two sides to
settle more quickly as a result of the order.

http://news.com.com/2100-1023-843521.html

++ NOTEWORTHY NEWS: Garageband Pulls the Plug

Garageband Records, formerly known as Garageband.com, has closed its
site. Garageband posted a message on its site last Friday saying that
it has been forced to preserve its cash by taking the site offline.
The announcement follows a recent round of layoffs. Launched in 1999
and backed by VC firm New Enterprise Associates, Garageband's site
aimed to provide exposure to up-and-coming bands.

http://news.com.com/2100-1023-839312.html

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SUBSCRIBERS: 295 as of February 26, 2002

STAFF
Written by Steve Myers (steve.myers@l8tech.com)
Steve Myers heads the Theta Group at Layer-8 Technologies, which
specializes in the development of music-related software applications.

Edited by J@pan Inc editors (editors@japaninc.com)

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