MMW-70 -- Branching Out and Tying Up -- How Ringtone Providers Continue to Thrive in Japan --

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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. 70
Tuesday, February 1, 2005
Tokyo

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CONTENTS

++ FEATURE: Branching Out and Tying Up
-- How Ringtone Providers Continue to Thrive in Japan --

++ NOTEWORTHY NEWS:

** Latest Sony Ericsson Handset Includes FM Radio Tuner
** Oricon to Start New Japanese Music Download Service
** Ibaraki Man Arrested For Selling Pirated CDs Online
** International Expo Ties Up With KDDI to Offer Chaku-uta Full
** Yamaha Releases New Digital Amp For Mobiles
** Taito Adds 21-yen Chakumelo Course to Service Offerings

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++ FEATURE: Branching Out and Tying Up
How Ringtone Providers Continue to Thrive in Japan

At a recent conference for mobile music providers in Tokyo,
one of the presenters made a rather surprising statement:
Even though his company's ringtone service (one of the
largest in Japan) has been steadily losing subscribers,
their overall revenues have actually been increasing for
the last six months, and have just reached an all-time high.
An informal survey of other providers revealed similar
stories, and most attributed this phenomenon to two factors:
1) Expanding their service offerings beyond ringtones; and
2) Tying up with related magazines, radio and TV shows

In previous features, we described how the large Japanese
ringtone providers have structured their main service as a
portal for other specialized sites, often aimed at a
particular musical genre. Recently, several providers have
been zeroing in on the more popular genre sites, and filling
these with all kinds of "rich" content that costs a good bit
more than your average ringtone. Examples of rich content
include realtones (chaku-uta), videotones, interview clips
(both audio & video), movie trailers and 3D "surround sound"
effects for the newer phones.

Each of these files costs 3-5 times the amount of a single
ringtone. By selling more of this expensive content, some large
providers have managed to increase sales even as their
subscriber numbers dwindle.

And how is this rich content promoted?

While the carriers and phone makers do a good job of pushing
realtones and 3D ringtones in general, the best way for a genre
site to reach its target audience is through exposure in TV,
radio and print media aimed at the same audience. By tying up
with a magazine or TV show, a ringtone provider is able to
promote its newest (and highest-priced) content to many people
who may have forgotten about the ringtone service they joined
years ago.

Here are some current examples of high-profile tie-ups between
ringtone providers and magazines/radio stations/TV shows in Japan:

1. XING tied with Space Shower Music Channel
2. Vibe (Guitarheadz) tied with Young Guitar Magazine
3. Yamaha (Melodic Lover) tied with Teengirl and Popteen
4. Victor (Pro Melo) tied with Bay FM radio station
5. Cave (Sakuretsu Rock) tied with Rittor Music's magazines

With more than 600 official ringtone sites and over 400
official realtone sites in Japan, it is crucial for a
provider to know its target audience and be able to reach
it easily. Tie-ups with magazines and shows give ringtone
companies a chance to promote their services through
articles and celebrity "interviews," which have proven
far more effective than most traditional advertising.

These new marketing outlets have also encouraged ringtone
service providers to move beyond music-related content and
into other areas that relate more to the lifestyles of their
target customers. XING has one service devoted entirely to
contact sports such as K-1, boxing and wrestling; Vibe has
a service for snowboarders; and Yamaha started a free social
networking site last year that now has over a half million
registered subscribers.

By continuously seeking out new niches and revenue streams,
some of these companies are able to maintain (and in some
cases even grow) their overall sales, even as their ringtone
subscriber base decreases.

++ NOTEWORTHY NEWS

** Latest Sony Ericsson Handset Includes FM Radio Tuner

In brief: On January 28, Sony Ericsson began selling the
A1404S handset for KDDI's au service. The A1404S is the
latest model to include a built-in FM radio tuner, which
has proven to be a popular feature on other au models. The
list price for the A1404S is 12,900 yen (US$124.00).

Source:
http://www.itmedia.co.jp/mobile/articles/0501/28/news032.htmlpar

** Oricon to Start New Japanese Music Download Service

In brief: Oricon Digital Distribution announced last week
that it's new music download service, called "Oricon Music
Town," will open on February 8. The new service features more
than 10,000 songs from over 20 different record labels.
Songs are priced at about 200 yen (US$1.94). The file format
is WMA, with DRM enabled. Each song can be transferred to a
portable player a fixed number of times (three on average),
which varies depending on the song.

Source:
http://oms-watchers.net/2005/01/1028.html

** Ibaraki Man Arrested For Selling Pirated CDs Online

In brief: On January 24, a 36-year-old man was arrested in
Ibaraki Prefecture for selling pirated CDs and DVDs of popular
Japanese artists on Internet auction sites. The arrest was
made based on information provided to the police by JASRAC
and the RIAJ.

Source:
http://www.jasrac.or.jp/release/05/01_1.htmlpar

** International Expo Ties Up With KDDI to Offer Chaku-uta Full

In brief: The 2005 International Expo, to be held in Aichi
Prefecture from February 25 through September 25, will feature
a dedicated radio station on which all songs will be downloadable
as full-song chaku-uta (mastertones). FM LOVEARTH, the official
station for the 2005 expo, will broadcast from 7AM to 12 midnight
daily throughout the expo. A web site and KDDI ezweb site will
display the songs played on the station and links to the song
downloads (MP3 for the web site, chaku-uta full for the mobile
service).

Source:
http://k-tai.impress.co.jp/cda/article/news_toppage/22396.html

** Yamaha Releases New Digital Amp For Mobiles

In brief: On January 31, Yamaha announced the release of a new
digital amplifier for cell phones and portable audio devices.
The YDA139 is a stereo digital amp IC with 2.5 W/channel. The
new chip will begin shipping on March 31 at a price of 525
yen (US$5.10) per IC. Yamaha expects to sell about 500,000
of these chips per month.

Source:
http://www.yamaha.co.jp/news/2005/05013101.html

** Taito Adds 21-yen Chakumelo Course to Service Offerings

In brief: Continuing a trend among polyphonic ringtone
providers toward lower rates and bigger variety of
subscription plans, Taito has added a new course for its
"Gurumelo" service that offers 1 monthly ringtone download
for 21 yen (US$0.20) per month.

Source:
http://www.itmedia.co.jp/mobile/articles/0501/24/news070.html

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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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