MMW-55 -- From Ringtones to MP3s

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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. 55
Wednesday, February 11, 2004
Tokyo

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CONTENTS

++ FEATURE: From Ringtones to MP3s

++ NOTEWORTHY NEWS:
** Index Buys Mobliss for $15 Million
** Music Industry Officials Raid Australian Offices, Homes
** Napster Offered at University of Rochester
** Infobrand Survey Bodes Well for 'Chaku-uta' Services

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++ FEATURE: From Ringtones to MP3s

Throughout the two years we've been covering the ringtone market here
in Japan, one question I've been asked repeatedly is, "Aren't
ringtones about to be replaced by MP3s on the phone?" It has seemed
for a long time that we were just a step away from having online
"mobile music stores" similar to i-Tunes for the 3G phones here. Yet,
despite the fact that MP3-like download services have been available
in the form of DoCoMo's M-stage and DDI Pocket's Sound Market, the
popularity of these offerings still pales in comparison with that of
the ringtone download sites here. How is it that the ringtone market
has managed to thrive for so long in Japan?

Three factors have been critical in helping the ringtone market grow
to its current status. Compared to original song recordings, ringtones
are by far:

1. Easier to obtain copyright licenses for
2. Lighter in size (less than 20KB)
3. Less expensive in price

For 2.5G phones, the size factor alone was enough to ensure that
original recordings were never a serious threat to their ringtone
counterparts. However, with the introduction of KDDI's high-speed 3G
service and subsequent launch of "chaku-uta" (15-30 second audio clips
from the original song), the picture has changed dramatically.

Chaku-uta also became enormously popular in a short time. The KDDI
service is now averaging around 6-7 million downloads per month. Last
December, Vodafone launched its own chaku-uta service, and DoCoMo is
expected to follow suit this month with the release of its FOMA 900i
series. It seems that everyone is jumping on the chaku-uta bandwagon,
including Japanese ringtone providers, many of whom will be announcing
their own chaku-uta offerings in the coming months.

So does this mean we're finally about to see a full-fledged music
download service that provides direct MP3 downloads of entire songs to
the phone? Not exactly. At least not this year, and probably not even
next year. Even though the hardware and bandwidth capabilities are
getting closer to the level required, it is still going to take some
time before the mobile phone services can compete with iTunes in terms
of fast, cheap, high-quality MP3 downloads. The 8KHz sampling quality
of chaku-uta still leaves much to be desired, and it is not yet
feasible to offer the larger files that higher quality audio would
require.

Still, we should see an increase in users playing MP3s on their phones
that have been downloaded to a PC and then transferred via cable. At
the same time, expect chaku-uta to go through a few iterations of
improvements (longer clips, better audio quality) on the path to
mobile phone MP3 download services. For the time being, though,
chaku-uta will likely continue to be marketed as more of an enhanced
ringtone rather than a viable alternative to services such as iTunes.

And what will become, then, of the market for ringtones and the
providers who have made small fortunes producing them? Check out the
next MMW for our views on this topic.

-- Steve Myers

Link:
"Ready to Rock," from Feb. 2003 (Our first article on chaku-uta)
http://www.japaninc.net/article.php?articleID=1014

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++ NOTEWORTHY NEWS
** Index Buys Mobliss for $15 Million

In brief: Index announced recently that it has acquired Seattle-based
Mobliss, a mobile entertainment content provider for $15 million. The
move by Index is one of the latest in a recent series of partnerships,
acquisitions and mergers involving Japanese content providers looking
to expand overseas.

Sources:
http://www.mobliss.com/jsp/news/pr/pr_ai3_1-27-04.jsp
http://www.indexweb.co.jp/english/index.php

Link:
"Blast from the Past" from April 2003 (Index brought us voices from
beyond the grave)
http://www.japaninc.net/article.php?articleID=1056

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** Music Industry Officials Raid Australian Offices, Homes

In brief: The Australian offices and homes of executives for Sharman
Networks and Brilliant Digital Entertainment (BDE) were raided by
officials from Music Industry Piracy Investigations (MIPI) on Feb. 6.
MIPI obtained the court order and began the raids to look for
documents and other evidence to support their case against music
file-sharing companies. Sharman Networks operates the popular P2P
service Kazaa, while BDE owns the Altnet service.

Source:
http://www.zdnet.com.au/news/business/0,39023166,39116016,00.htm

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** Napster Offered at University of Rochester

In brief: Following Pennsylvania State's recent announcement that the
Napster music file-sharing service would be offered to students there,
the University of Rochester announced this week that it too would be
offering Napster to the 3,700 students living in its residence halls.
Napster has also agreed to work with the university's music school to
find ways for students and faculty to distribute their original
compositions via the network.

Source:
http://story.news.yahoo.com/news?tmpl=story&cid=1093&ncid=1093&e=&u=/pcw...

** Infobrand Survey Bodes Well for 'Chaku-uta' Services

In brief: A recent market survey of Japanese mobile phone users
conducted by Infobrand found that although 84 percent of the users had
never tried "chaku-uta" (song tones), 47 percent of those same users
said they were interested in trying the service.

Source (Japanese only):
http://japan.internet.com/research/20040206/1.html

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Subscribers: 2,362 as of February 11, 2004

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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