MMW-69 -- The Mobile Phone as Digital Music Player

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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. 69
Tuesday, January 18, 2005
Tokyo

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CONTENTS

++ FEATURE: The Mobile Phone as Digital Music Player

++ NOTEWORTHY NEWS:
* Full-song Master-ringtone Service Reaches 1 Million Downloads
* KDDI to Start Ringbacktone Service in February
* XING Starts Ringtone Album Download Service
* Study Ranks Ringtone Providers in Japan
* Report Predicts Growth For Broadband Music Distribution
* Japanese Record Industry Targets Individual File Sharers

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++ FEATURE: The Mobile Phone as Digital Music Player

For portable music players, 2004 was a watershed year all
over the world, and Japan was no exception. On Tokyo trains
and subways, we saw a big jump in the number of people using
iPods and other players. At the same time, massive
advertising campaigns touted the benefits of taking your
music collection with you on your daily commute to work
or school.

With the introduction of full-song master-ringtones from KDDI
last November, the mobile phone moved one step closer to
competing with devices such as the iPod in the portable music
player space. But just how big a threat are these devices to
makers of dedicated music players?

First a quick look at the features of three relatively new
mobile phones - one from each of the major Japanese
carriers - which are being touted as "music player" phones:

1. W22H
Maker: Hitachi
Carrier: au (KDDI)
Price: JPY18,000 (US$175)
Features:
- Plays full-song master ringtones (chaku-uta) in HE-AAC format.
- Able to download song over-the-air straight to the phone.
- Can store about 20 songs in memory on the phone.
- 16MB miniSD card holds about 80 songs.
- Users can make playlists and have songs played in random order.
- Stereo speakers.

Limitations:
- Can only play master ringtone (chaku-uta) files.
- Songs must be purchased from an au chaku-uta service.
- Catalog currently limited to about 10,000 songs.

Other:
- Slide-style design.

----------------------------

2. NTT DoCoMo

Model Name: Music PORTER (Mitsubishi)
Price: JPY20,000 (US$194.00)

Features:
- Able to transfer music files from PC to handset's 64MB memory
stick via USB cable.
- Comes with FM radio tuner and Beatjam audio software.
- Has player control buttons on both phone and remote control
unit.

Limitations:
- Can only play ATRAC3 files.
- Capacity limited to 64MB (using external memory stick).
- Not 3G.
- Not eligible for flat-rate data plans.
- Has no camera, realtone or video capability.

Other:
- Square-body design.

------------------------

3. Vodafone

Model Name: V602SH (Sharp)
Price: JPY7,800 (US$76.00)

Features:
- Able to play MP3 files in addition to realtones.
- Songs transferred from PC to handset via SD card.

Limitations:
- Song storage limited by SD capacity.
- Not 3G.
- Not eligible for flat-rate data plans.

-----------------------

As you can see from the above, KDDI is taking a different tack
from the other two carriers by focusing on full-song master
ringtones rather than phones that can double as MP3 players.
Currently, NTT DoCoMo and Vodafone offer only partial-song
master ringtones, and their digital music player functionality
is still light years away from even the most basic dedicated
player.

As phones with hard disks begin to enter the market in 2005,
it's only a matter of time before the mobile phone will have
the capacity to store the thousands of songs that most portable
music players are able to hold now. The question
is 'how much time?'. We think it will be at least a year,
probably two or more before a mobile phone comes out with
enough storage space to mount a serious challenge as a
stand-alone music player.

A more immediate threat to the iPod comes from the full-song
master-ringtone service offered by KDDI (with DoCoMo and
Vodafone sure to follow). It took KDDI's service only 48
days to achieve 1 million full-song downloads, despite being
available on only four handset models. As with polyphonic
MIDI-based ringtones, the key to success for master-ringtones
has been the ease with which songs can be downloaded straight
to the phone.

Another big factor working in favor of the mobile phone as a
music download platform is the rate of subscriber growth.
There are presently over 25.6 million 3G subscribers in
Japan, and the number has been growing at a rate of nearly
1 million per month since January 2004. Contrast this with
the present number of Japanese broadband subscribers
(around 15 million) and the future for digital music on the
mobile phone begins to look even brighter still. Given the
choice of using a PC/player combination versus downloading
songs straight to the phone, the average Japanese consumer
is more likely to go for the latter, even if it means having
fewer songs on the player.

----------------------------
++ NOTEWORTHY NEWS

** Full-song Master-ringtone Service Reaches 1 Million Downloads

In brief: On January 5, KDDI and Okinawa Cellular Telephone
announced that they had achieved one million downloads on
the EZ Chaku-uta Full service for full-song master ringtones.
The service reached this milestone just 48 days after
launching on November 19. There were 410,000 Chaku-uta
full users at the end of December.

Source:
http://japancorp.net/Article.Asp?Art_ID=9133

** KDDI to Start Ringbacktone Service in February

In brief: KDDI announced that it will be starting its own
ringbacktone service from February 1. Called 'Machi-uta'
("wait song"), the service will compete with NTT DoCoMo's
Melody Call service, which has been available to i-mode
subscribers since early last year. Ringbacktones are songs
that are heard by a caller as they wait for their party to
answer. The basic fee for the service costs JPY105 per month
(US$1.02). Each song costs up to JPY100 extra and is
downloaded from a separate content provider.

Source:
http://www.kddi.com/corporate/news_release/2004/1220a/besshi.html

** XING Starts Ringtone Album Download Service

In brief: Ringtone provider XING, which runs the popular
Pokemero Joysound site, has recently started a new service
whereby users can download ringtone 'albums' (ringtone
versions of all songs from a CD release) and play them in
an 'album player' appli designed specifically for the service.
Available only to users of FOMA 900/901i handsets, the new
service costs JPY315 (US$3.06) per month for 15 songs,
enough to download about one album per month.

Source:
http://k-tai.impress.co.jp/cda/article/news_toppage/22148.html

** Study Ranks Ringtone Providers in Japan

In brief: On January 14, Net & Security Soken released the
results of a study it conducted in September 2004 which covered
the top 20 ringtone providers on each of the three carriers in
Japan. The study scored companies on various criteria including
name recognition, number of visitors, number of subscribers,
revenue, customer satisfaction, ease of use, and sound quality.
The study ranked the top five overall providers as follows:
1. Dwango
2. Infocom
3. Yamaha
4. Taito
5. Giga Networks

Source:
http://headlines.yahoo.co.jp/hl?a=20050114-00000023-zdn_m-sci

** Report Predicts Growth For Broadband Music Distribution

In brief: According to a recent research report issued by Fuji
Kimera Soken, the market for online music distribution over
broadband connections in Japan is expected to grow to over
JPY40 billion (US$388 million) by 2008, an amount 65 times
the JPY6 billion reported for 2003.
Source: Nikkei Sangyou Shimbun (2005/1/1)

** Japanese Record Industry Targets Individual File Sharers

In brief: An association of 7 Japanese record companies, all
members of the Record Industry Association of Japan and led
by Toshiba EMI, recently made formal requests to various
internet service providers to turn over names and addresses
of 14 individuals it suspects of copyright infringement through
illegal file sharing. This is the third time since November 2004
that the group has requested such information, bringing the
total number of Japanese individuals targeted to 45.
Source: Nikkei Sangyou Shimbun (2004/12/30)

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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 editor: (editors@japaninc.com)

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