MMW-36 -- The Debut of Chaku-Uta: A Look at KDDI's New Song Clip Download Service

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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. 36
Wednesday, December 18, 2002
Tokyo

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CONTENTS

++ FEATURE: The Debut of Chaku-Uta: A Look at KDDI's New Song Clip
Download Service

++ NOTEWORTHY NEWS:
- Beatnik Synthesizer to Appear in Siemens Phones
- Macrovision Creates Music Technology Division,
Buys Midbar Technologies
- Use of Music Download Services Continues to Rise

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++ FEATURE: The Debut of Chaku-Uta: A Look at KDDI's New Song Clip
Download Service

Earlier this month, KDDI launched its long-awaited song clip download
service for mobile phones. The new service allows users to download
15- to 30-second MP3 clips of hit songs (dubbed "chaku-uta" in
Japanese) onto the newest au handsets. At a time when Japanese
ringtone providers are struggling with rising costs, fierce
competition and dwindling subscriber numbers, "chaku-uta" is being
touted by some of the record companies in Japan as the next big thing
in mobile content.

The new chaku-uta download service is called "Record Gaisha Chokuei"
and is run by a company called Label Mobile. Formed in July 2001,
Label Mobile is a joint venture between several major Japanese record
labels, including Avex, Sony Music Entertainment and Victor. At the
top of its "Sounds and Images" menu item on the main EZWeb menu, KDDI
has added a new "Chaku-uta" category, which links directly to the new
service. Users can then choose from a catalog of about 500 songs, with
the price ranging from 85 to 105 yen per song plus a packet charge of
50 to 60 yen for each download. The average total cost per song
download looks to be around 150 yen. At present, only two handset
models, both recent au releases, are supported: Casio's A5302CA and
the A5303H from Hitachi.

In several ways, Label Mobile's service is identical to the two major
MP3 download services currently available in Japan for certain PHS
devices. Both DoCoMo's "M-Stage" and DDI Pocket's "SoundMarket"
services also allow users to download MP3 files onto mobile players.
Though they have been open since last year, neither M-Stage nor
SoundMarket have lived up to initial expectations, and the sluggish
market response has led some analysts to wonder about the viability of
Chaku-uta.

In response, Label Mobile's president Masakatsu Ueda has been quoted
in the Japanese press recently as saying that the failure of M-Stage
and SoundMarket to catch on has been due largely to the fact that
both services only support a few special PHS devices, which do not
allow voice communication. In contrast, the chaku-uta service is meant
for ordinary mobile phone users (albeit mobile phone users who have
one of the two newest models) and will have a much wider audience of
potential customers. Furthermore, whereas the PHS services have the
image of being an expensive and cumbersome method of obtaining
particular tracks from popular CDs, chaku-uta is being marketed more
toward ringtone service users, who are looking for quick and cheap
downloads.

Compared to the ringtone business, MP3 song clip download services
offer many advantages to Japanese record labels. For starters, they
provide a chance for the labels to make some revenue. While ringtones
have been by far and away the biggest moneymaker for mobile content
providers, the record companies claim to have been left out in the
cold. Jasrac takes a 5 yen cut on each download, but this money (or at
least a fraction of it) goes to the composer and lyricist of the song,
not the artist or record label. Second, because copyright licenses for
the CD source of a song are much harder to obtain than those for
ringtones, there are very few potential competitors who are able to
start their own rival "chaku-uta" services. Finally, the mobile
song clip download service gives the record company a new forum for
promoting their artists and CDs to a potential audience of millions.

Still, the big question now is whether the general public will embrace
"chaku-uta" song clips with anything remotely resembling the
enthusiasm shown toward "chaku-mero" ringtones. While the record
companies are promoting the new service as the next step in the
evolution of ringtones, chaku-uta in its present form still leaves
much to be desired. Much of the appeal of polyphonic ringtones
(especially 16-voice) stemmed from their novelty, imagination and low
cost. At only 20 yen a shot, it's easy to get hooked on looking up
your favorite songs just to see how they sound on your phone. Paying
150 yen for a 25-second MP3 clip, on the other hand, seems a bit
excessive, especially as an increasing number of Japanese teenagers
are starting to discover file sharing services on the wired Internet.

For the time being, though, the chaku-uta service provides Label
Mobile with a way into the mobile music distribution business and a
chance to start building a user base and song catalog. Furthermore,
they can do it without having to start at the bottom of the heap, as
would a new ringtone provider. It also gives the phone manufacturers a
new selling point -- Casio, in particular, has been aggressive in
marketing its new model as one that is "enabled for chaku-uta." While
these song clips are probably not going to be replacing ringtones in
the near future, they will nonetheless serve as an initial stage on
the path to full MP3 download services for mobile phones.

-- Steve Myers

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++ NOTEWORTHY NEWS

** Beatnik Synthesizer to Appear in Siemens Phones

In Brief: Siemens announced on Monday that it has licensed Beatnik's
music synthesizer (see MMW #5, February 13, 2002) for use on some of
its upcoming phones. Beatnik has been licensing a compact version of
its Beatnik Audio Engine software since early 2001 for use on mobile
devices. The smaller version of the software is optimized for ringtone
creation and sound in cellphone games and is also used by Nokia in
some of its phones.

Source:
http://news.com.com/2110-1033-978067.html

Link:
Music Media Watch #5
http://www.japaninc.com/newsletters/index.html?list=mmw&issue=5

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** Macrovision Creates Music Technology Division,
Buys Midbar Technologies

In Brief: Macrovision, a provider of digital rights management (DRM)
and copy protection technologies, announced last week that it was
forming a new Music Technology Division, which will focus on
anti-piracy technologies for CDs and DVDs. At the same time, the
company also announced that it has completed the acquisition of one of
its main competitors in the DRM sector, Israel-based Midbar
Technologies.

Source:
http://www.europemedia.net/shownews.asp?ArticleID=14154
http://news.com.com/2100-1023-976830.html?tag=cd_mh

** Use of Music Download Services Continues to Rise

In Brief: According to a recent report published by the Tempo research
team at Ipsos-Reid, 60 million Americans over the age of 12 have
downloaded a music or MP3 file from an online site. This translates to
28 percent of the general population and marks a 2 percent increase
since the publication of the last Tempo report in June. The report
went on to state that over a quarter of these downloaders also claimed
to have paid for at least some of the music they downloaded,
suggesting that users of online music services may be moving toward
acceptance of payment for music downloads.

Source:
http://www.ipsos-reid.com/media/dsp_displaypr_us.cfm?id_to_view=1685

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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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