JIN-526 -- The Island Of Dr. Galapagos

J@pan Inc Newsletter
The 'JIN' J@pan Inc Newsletter
A weekly opinion piece on social, economic and political trends in Japan.
Issue No. 526 Wednesday, February 2, 2011, Tokyo

The Island Of Dr. Galapagos: Reframing Japan's isolation as a valuable business laboratory

In recent months the term known as the "Galapagos Effect" has once again been thrust into the spotlight in regards to describing Japan's separate and often rarified manner of business, cultural and technological development. With China being hailed as the new hot spot in Asia, as well as the new number two economy, some Japanese interests have decided that a cultural jujitsu approach may be in order. Sharp defiantly released a tablet computer recently called the Galapagos, and in January the Asahi Shimbun's editorial ranks optimistically coined the phrase "Cool Galapagos" (i.e. Japan's differences born of isolation are what make Japan cool, and thus still globally relevant).

In truth, the isolation-fed "only in Japan" gadgets, cultural quirks, and wholly unique approaches to all manner of areas are often the very things that attract so many Westerners to the shores of Japan either as wide-eyed visitors, or intrepid transplants hoping to experience what life on "another planet" might be like. But in practice, these differences in execution and expression often make it difficult for Japan to connect to the rest of the business community and consumers around the world.

But even in the face of such globalization crippling cultural perspectives, for the local expat living in Japan, this Galapagos Effect actually serves as an invaluable opportunity to witness a number of uncommon sociological and business experiments that one would never have the chance to witness anywhere else. One such Japan business experiment that recently drew my attention was the Only Free Paper store (www.onlyfreepaper.com) based in Shibuya, Tokyo.

Located on the edge of one of Tokyo's priciest shopping districts (Omotesando) the shop lives up to its name by displaying a variety of print publications—all available free of charge. You might expect that there is some other aspect that frames this enterprise, such as a lucrative café business (drink expensive cappuccino while reading your free publication), or ancillary merchandise for sale (a selection of pricey book/magazine enthusiast ephemera, for instance), but you would be wrong. Within the Only Free Paper shop exists…only free papers (about 400 different publications, according to the shop).

Created by former salaryman Kouta Ishizaki, the shop's website indicates that there will be occasional events at the shop and guests can rent out a section of the tiny store as a kind of gallery display space, but nothing indicates that this will be the shop's primary source of revenue. Perhaps the most amazing thing about the Only Free Paper shop is the fact that on its website the owner states that the publications distributed at the shop are meant to primarily service the teenager to 30-year-old demographic—a group seen by many as having already passed print by for more tech-savvy content delivery options like iPads and smartphones.

Fascinated by the prospect of such a counterintuitive move in these days of "print is dead" nay-saying by many tech pundits in the West, I had to visit the store in-person to try to get a sense of what Ishizaki was trying to do with this shop. Upon arrival, I opened the door and received none of the usual enthusiastic "irashaimase!" greetings I've come to expect when entering a Japanese shop. Instead, a young woman sat behind a counter with her head buried in a magazine, while a man near the counter silently unpacked the shop's latest supply of free magazines. Due to the small size of the shop, my tour was brief, but informative. As the website states, most of the free magazines seemed geared toward a younger demographic, there were no flyers or racy publications on display, and most of the magazines I saw were in Japanese.

While I have no data to confirm what the shop's rent is, I know the area quite well and even old, small retail spaces in that area typically run in the neighborhood of 150,000 to 250,000 yen a month (on the low end of the scale). Taking that into consideration, and assuming the shop's workers are volunteers with at least a transportation stipend, Ishizaki's road to profitability, much less sustainability, is unclear. Nevertheless, the shop exists and, according to Ishizaki, has a healthy stream of visitors since its opening about a month ago.

Despite the apparent lack of a revenue model, the shop has been largely greeted with enthusiasm, which tells me two things that I had already suspected: 1. In Japan, print is far from dead, and 2. Although it may not be readily apparent, there is valuable business intel to glean from this experiment that may be relevant to Japanese (and Western) publishers attempting make sense of the new digitally disrupted publishing landscape.

In some ways the Only Free Paper store reminds me of the startups in Silicon Valley, a place where many services are launched with no revenue model in place, as the founders bet their time and money that their unique offering will somehow reveal its inherent value as it comes into heavy public use. Immediate examples that come to mind are Twitter (currently valued at $4 billion) and Facebook (currently valued at $50 billion), services that seemed to most pundits, at least initially, to be interesting curio businesses with no real future in the way of profitability.

The difference with Only Free Paper is that the experiment involves a medium that is so universally tagged as obsolete, one could be excused for using the "only in Japan" trope to describe why this shop even exists. But therein lies the value for the observant non-Japanese business person. Although Japanese business may still suffer from the Galapagos Effect, as they watch their Korean and Chinese neighbors more rapidly and effectively embrace Asia's new status as a global business leader, the unique business offerings and experiments present in Japan offer the local, open-minded non-Japanese business person priceless data on new business models and approaches that might not be available outside of the country. "Cool Japan" and "Cool Galapagos" may be a hard sell for infrequent visitors attempting to pierce the business culture of Japan, but for the experienced Japan observer, the isolated business experiments buttressed by the country's so-called Galapagos Effect are probably one of the most attractive aspects of doing business in Japan.

-Adario Strange

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