MMW-110 -- Napster Japan - The First Six Months

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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 Japan's music technology news
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Issue No. 110
Wednesday April 4, 2007
Tokyo

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CONTENTS

++ FEATURE: Napster Japan - The First Six Months

++ NOTEWORTHY NEWS:
** Librazone launches hard rock chaku-uta site for guitarists
** KDDI hits one million subscribers for ringbacktone service
** Napster Japan teams with NetMobile on real-time point
exchange service
** Taito screens out adults with new ringtone service
** Nihon Enterprise starts off-portal service

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++ FEATURE: Napster Japan - The First Six Months

On October 3 of last year, Napster Japan launched the first
online music subscription service in Japan with an 'all-you-
can-eat' model - allowing subscribers to download and play
as much music as they like for a flat monthly fee.
Accompanied by a massive marketing campaign featuring
oversized bar-code poster ads, the Napster Japan launch
attracted a great deal of attention and media coverage.
When the company announced that over 2 million songs had
been 'shifted' (downloaded for playing) in the first week
after launch, it looked as though Napster might well be on
track to replace iTunes as Japan's most popular online music
service.

So how have the first six months gone for Japan's first and
(so far) only online subscription music service? Since the
initial first-week announcement, Napster Japan has not
released any figures, prompting speculation that subscriber
numbers are far short of their targets. While the company
has announced several partnerships (see newsbrief below)
and puts out regular press releases, you still get the
impression that they may be struggling a bit to build a
user base.

In addition, Napster appears recently to be putting more
effort into its mobile download sites than its subscription
service. The first site - Napster Mobile - was launched on
NTT DoCoMo last November, featuring full-song OTA downloads
as well as mastertones. This was no surprise, since NTT
DoCoMo owns 42% of Tower Records Japan, which in turn owns
53.5% of Napster Japan. On January 25 of this year, however,
Napster Japan launched a second mobile service on KDDI's au
EZWeb portal, and is rumored to be working on a similar
service for SoftBank. The mobile sites are not subscription-
based, and not much different from the many competing sites
on the menu portals. In fact, the recent focus on mobile
may be intended to provide short-term revenues while the
subscription service is ramping up.

So what is holding the subscription service back in Japan?

The service itself is easy-to-use, boasts catalog of 2.5
million songs, and is reasonably priced: 'Napster Basic'
(playback only on a PC) costs JPY 1,280(US$11.00)/month,
while 'Napster To Go' (allows transfer and playback on a
mobile phone or portable music player) costs JPY 1,980
(US$16.50)/month. The catalog features a tremendous assortment
of western music, especially from indies and alternative labels.

In a nutshell, though, the current service suffers from two
major weaknesses:

1. Lack of J-Pop catalog - Despite the 2.5 million total
songs, less than 1% of them are J-Pop, a genre which makes
up more than 80% of the Japanese music market.

2. Lack of support for mobile devices - the 'Napster To Go'
service at present supports only four phone models and just
a handful of portable music players.

People are very aware of the Napster brand and curious
about the service. However, the pattern of renting a CD
and then copying it is still the dominant one here, and
most Japanese consumers add new music to their iPods not
through iTunes but by ripping CDs they have rented. If,
however, Napster Japan can substantially boost the Japanese
side of its catalog and add support for more phones and other
mobile devices, they may well have a shot at establishing
the subscription model as a viable alternative here.

++ NOTEWORTHY NEWS

** Librazone launches hard rock chaku-uta site for guitarists
In brief: On March 19, Librazone started a new chaku-uta site
called 'Chaku-guitar Paradise' for NTT Docomo, KDDI, and
SoftBank. The service offers hard rock and heavy metal
music, with an emphasis on guitar solos. The service started
with about 1,000 tracks by bands such as Deep Purple, Iron
Maiden and Metallica. Librazone plans to add about 250 new
tracks a year.
Source:
http://www.librazone.co.jp/news20070315.html

** KDDI hits one million subscribers for ringbacktone service
In brief: KDDI and Okinawa Cellular announced on March 22
that the number of subscribers for it's ringbacktone service
'EZ Machi-uta' surpassed one million. For 105 yen (US$0.88)
per month, you can choose one track that is heard by someone
when they call you. Additional tracks cost extra. The service
began February 2005, so it's taken a little over two years
to hit the one million mark.
Source:
http://www.kddi.com/corporate/news_release/2007/0326b/

** Napster Japan teams with NetMobile on real-time point
exchange service
In brief: Napster Japan announced that it is partnering with
NetMile, a subsidiary of Mitsui Bussan that offers a point
exchange service. NetMile users will be able to apply their
acquired points directly toward monthly subscription payments
for Napster Japan's service.
Source:
http://headlines.yahoo.co.jp/hl?a=20070312-00000011-bcn-sci

** Taito screens out adults with new ringtone service
In brief: Taito has started a new ringtone service where all
the tones are around 20kHz. - at the very upper end of the
auditory range. As very few adults over the age of 30 are
able to hear these frequencies, the site is effectively
only usable by young people. The new service is called
'Kyukyoku EZ Melody Torihodai' on KDDI and 'Guru Melo'
on SoftBank.
Source:
http://www.taito.co.jp/mobile/news_mc/2007/mc_03_01.html

** Nihon Enterprise starts off-portal service
In brief: Nihon Enterprise launched an ad-supported off-
portal service last month called 'Muryo Uta Melo Games'
for NTT Docomo, KDDI and Softbank. The site uses a point-
based system offering ringtones and games. New members
start with a fixed number of points after registering,
and obtain additional points by clicking on ads.
Source:
http://www.c-direct.ne.jp/japanese/uj/pdf/10104829/00057178.pdf

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

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