MMW-103 -- The Effect of Mobile Number Portability on Music Content

J@pan Inc Magazine Presents:
M U S I C M E D I A W A T C H
Commentary on Japan's music technology news
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Issue No. 103
Wednesday September 20, 2006
Subscribers: 4,839 as of 20 September, 2006
Tokyo
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CONTENTS

++ FEATURE:
The Effect of Mobile Number Portability on Music Content

++ INTERESTING ARTICLES:
** Sonify Flash Lite

++ NOTEWORTHY NEWS:
** New Version of 'au Music Port' for LISMO
** Pixela To Sell New Digital Radio Device
** JVC Develops Spherical Audio Speaker
** Oki Denki Releases New MP3 Chip for Phones
** Vodafone to Sell Phone Packaged With iPod Nano

++ FEATURE:
The Effect of Mobile Number Portability on Music Content

On October 24, Japanese mobile phone users will be able
for the first time to change operators without having
to change their mobile phone number. This Mobile Number
Portability (MNP) scheme has been a long time coming in
Japan, and has been the subject of much recent
speculation among industry watchers. The general
consensus is that NTT DoCoMo will almost surely see a
net loss of subscribers, with most of the churn going
to rival KDDI.

But what of the mobile content providers, in particular
companies who produce music content? How will MNP affect
the business of these companies?

The bad news is that most of the larger music content
companies, especially those focusing on ringtones,
mastertones, etc. will likely see a drop in revenue.
Nearly all of these services are subscription-based,
with customers paying US$3.00 to US$6.00 each month for the
right to download a certain number of ringtones within
that month. As we have described in past features,
approximately 60% of these subscribers are 'sleepers',
meaning they don't download anything, but still continue
to pay the monthly subscription fee. Customers moving from
one operator to the other will automatically have their
existing content subscriptions cancelled, and most will
not bother to re-subscribe to the service, even if it's
available on their new operator's content menu.

That said, however, all three operators are anxious to make
sure that any new customers coming from one of their rivals
have the same selection of content services that they had
before their switch. This is particulary true for Softbank
(previously Vodafone), which has always had the smallest
number of offerings in terms of content services. This
situation has actually turned out to be a huge boon for many
music content providers, especially smaller companies
focusing on 3G services and catering to a particular
musical genre or niche.

Most new niche services - for example, a jazz-oriented
chaku-uta site - typically make their home first on KDDI's
official content menu. This is due to the fact that KDDI
has the most streamlined process of the three operators for
taking a new mobile content service from idea to reality.
At the beginning of this year, KDDI had roughly twice the
number of music content services as NTT DoCoMo, and four
times as many as Vodafone. Now that Vodafone is being
re-branded as Softbank, the operator seems intent on beefing up
its music content menu, and in particular filling in the missing
services that are available on KDDI and/or NTT DoCoMo.

So, we expect to see a large number of KDDI's niche services
- aimed at enthusiasts of particular instruments or genres - to be
replicated this fall on Softbank and NTT DoCoMo. Again, this is
good news for the smaller companies running these services, many
of whom were likely rejected the first time they pitched their
ideas to DoCoMo and Vodafone.

Another likely beneficiary of MNP will be full-song music
download services, especially those run by Label Mobile.
These services were strongest on KDDI (by far) to begin
with, and the most popular ones are pay-per-download
rather than subscription-based. Furthermore, new KDDI
customers coming from NTT DoCoMo will have to buy a new
handset and will likely opt for one of the many KDDI models
that now support full-song downloads.

Therefore, it is likely that full-song downloads
(on KDDI, at least) will see an increase with the onset of
MNP. Smaller niche services also stand to benefit. Large
ringtone providers, on the other hand - including karaoke
companies such as XING and Daiichi Koushou - are probably
going to see an even faster decline in their overall
subscriber base.

++ INTERESTING ARTICLES

** Sonify Flash Lite
In brief: Sonify.org has posted a series of articles which
explore the sound features of Flash Lite, Adobe's version
of Flash for mobile devices, and develops strategies for
effective integration of sound in Flash Lite content for
mobile devices. Part 1 focuses on device sound formats
supported by Flash Lite 1.1, and the ways developers might
use device sound in Flash Lite content.
Source:
http://sonify.org/cgi-bin/tutoriallinks/jump.cgi?ID=389

++ NOTEWORTHY NEWS

** New Version of 'au Music Port' for LISMO
In brief: KDDI recently upgraded its 'au Music Port'
PC software for LISMO to Ver.2.2. The new version allows
users to play music while performing other tasks such as
transferring tracks to their phone or backing up images
and address book information. The new version also
supports all of the new au models that were announced
on August 28.
Source:
http://k-tai.impress.co.jp/cda/article/news_toppage/30969.html

** Pixela To Sell New Digital Radio Device
In brief: Pixela announced on September 5 that they would
soon begin selling 'trial models' of a new mobile device
(not a phone) with receivers for digital radio, 'one-seg'
broadcasts, and terrestrial FM radio. The new device is
called 'Prodia', and Pixela will offer around 100 of the
devices at a price of JPY 150,000 (US$1,280). They will
mainly be sold to radio stations and content providers
for the purpose of checking their digital broadcasts.
Source:
http://www.pixela.co.jp/company/news/2006/20060905.html

** JVC Develops Spherical Audio Speaker
In brief: JVC announced last week that it had developed an
almost spherical audio speaker. Dubbed the 'Pulsating
Spherical Speaker', nearly all of the surface vibrates
to generate a uniform sound. Except for the bottom area
where the speaker is connected to its support, the same
quality sound is emitted from any surface, the company
announced. The speaker is made up of 12 penatagonal
segments, all of the same size.
Source:
http://www.jvc-victor.co.jp/english/press/2006/pulsating_sphere.pdf

** Oki Denki Releases New MP3 Chip for Phones
In brief: On September 5, Oki Denki announced it had
developed a new LSI chip that could be used in mobile
phones to allow up to 60 hours of continuous MP3 playback.
The new chip has been labeled 'ML2841', and will begin
selling in December at a price of 700 yen (US$6.00) each.
Source:
http://headlines.yahoo.co.jp/hl?a=20060905-00000012-inet-sci

** Vodafone to Sell Phone Packaged With iPod Nano
In brief: On September 13, Vodafone announced that it would
begin selling a special combination package that includes
a 2GB iPod Nano along with Sharp's 705SH phone.
Source:
http://www.vodafone.jp/japanese/release/2006/20060913j.pdf

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STAFF
Written by: Steve Myers (steve at thetamusic.com)
Steve Myers is president and chief enthusiast of Theta Music
Technologies, which specializes in the development of
music-related software applications.
Edited by J at pan Inc editors: (editors at japaninc.com)
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