MMW-44 --Ringtone Royalties Still Increasing

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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. 44
Wednesday, June 4, 2003
Tokyo

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CONTENTS

++ FEATURE: Ringtone Royalties Still Increasing

++ NOTEWORTHY NEWS:
** Loudeye Signs with EMI for European Digital Distribution
** New MP3 Service Launched in Spain
** RIAJ Cracks Down on Universities

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++ FEATURE: Ringtone Royalties Still Increasing

I'm often asked why MMW features have focused so heavily on the mobile
and ringtone sector of music media over the past several months. Part
of the reason, of course, is that we are based in Japan, and nowhere
have ringtones been as popular as they are here. Also, much of the
software developed here at Theta Music Technologies is mobile-based,
and we tend to write most about those areas we know best. Finally,
ringtones are just an incredibly big business and continue to generate
huge amounts of revenue. This last point was brought home strongly a
few weeks ago by the official announcement of ringtone royalty
earnings for last year.

On May 21, Jasrac (the Japanese Society for Rights of Authors,
Composers and Publishers) announced that it had collected over 7.32
billion yen (about $61 million) in royalties for "interactive" music
downloads (95.6 percent of which are ringtones) for fiscal 2002. This
figure is nearly double the 3.8 billion yen collected for the previous
year, and ringtone royalties have increased more than 20-fold since
1999. It is estimated that over 110 million ringtones were downloaded
each month in fiscal 2002.

While a Jasrac representative said that ringtones have reached their
peak in Japan (an opinion echoed by many others in the industry),
there is no question that the more than 100 ringtone providers here
are, for the most part, still making very good money. In fact, many
providers are saying that even if the domestic market doesn't expand
over the next year, they are still optimistic about being able to
maintain their current level of sales well into 2004. And as we've
reported in earlier features, the larger providers are continuing to
increase their presence overseas, especially in the US.

This is certainly good news for the thousands of musicians, software
developers and others who have relied on ringtone production for their
livelihood over the last few years. In spite of the pessimistic
predictions, most of the providers we know are continuing to expand
their offerings, gearing up to take advantage of the new sound
improvements on the upcoming DoCoMo 505i models. In addition, we see
these companies continuing to add staff as they move into larger, more
comfortable offices. Vibe and For-side.com are but two examples of
providers who have shown impressive growth over the last year.

And even if the analysts are right and the market shows zero growth
for fiscal 2003, well, that's still another 7 billion yen in royalties
for Jasrac and the music copyright holders, and much more in revenue
for the top providers. Not bad at all for an industry that many
thought would be on its way out five years ago.

-- Steve Myers

Link:
"Ready to Rock" on KDDI's new song clip download service (02/03)
http://www.japaninc.net/article.php?articleID=1014

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** Loudeye Signs with EMI for European Digital Distribution

In Brief: On May 21, Seattle-based Loudeye Corp., a digital media
management and distribution company, announced it had reached an
agreement with EMI whereby Loudeye will handle encoding and
distribution for EMI's digital music service in Europe. Loudeye, which
currently has a catalog of over 3.3 million digital tracks, has
already begun encoding of tracks from 3,000 artists for distribution
to EMI's worldwide partners.

Source:
http://biz.yahoo.com/prnews/030521/sfw010_1.html

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** New MP3 Service Launched in Spain

In Brief: Last week, a new, somewhat controversial music download site
called Puretunes.com was introduced in Madrid. Puretunes operates
without permission from any of the record labels, but claims that its
service is legal due to a loophole in the Spanish copyright law.
Puretunes offers unlimited downloads at $3.99 for eight hours, and
$9.99 for 48 hours. File sharing service Grokster has said that it
will be marketing Puretunes to its users, either via a button in the
Grokster program or by bundling the Puretunes software with Grokster
when it is downloaded.

Source:
http://news.com.com/2100-1027-1007920.html

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** RIAJ Cracks Down on Universities

In Brief: Apparently taking a cue from its US counterpart, the RIAJ
(Recording Industry Association of Japan) sent letters to more than 20
universities last week asking them to cooperate in preventing students
from using school networks for swapping copyrighted music files.

Source:
http://www.japantoday.com/e/?content=news&cat=2&id=261250

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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.

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

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