Net Year 1999: A time of change, challenge, and choice--
The Computing Japan 1999 year-end wrap-up (continued)
by John Boyd

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The third way
But the chain has also begun offering an Internet version of the Lawson proprietary terminal experiment. And by shrewdly extending the concept to include users of Fujitsu's now wholly-owned @Nifty, NEC's BigGlobe, and other online services, 7-Eleven has opened up the service to those who prefer to buy goods on the Internet from home PCs, yet pay for and pick up the purchases at its stores.

Critics of such hybrid approaches say they cannot be deemed true e-commerce transactions, when payment is made in cold cash. Nevertheless, it works and suits the current Japanese psyche. As other businesses take up this hybrid approach, Japan can expect to significantly boost business-to-consumer online trade that amounted to just JPY65 billion in 1998, compared to JPY2.2 trillion in the US, according to MITI estimates.

No wonder, then, that MITI, all too aware of how the new economy is changing the way business is being conducted, is busy working to accelerate the development of e-commerce in Japan. To this end it has helped establish various business consortia to deal with a range of fundamental technologies, including security, authentication, certification, and encryption. It is also helping implement a number of test bed projects around Japan, ranging from consumer Smart Cards to Electronic Data Interchange between industries, and building an infrastructure that will help foster a much-needed venture business in Japan.

Yet while MITI huffs and puffs to drive Japanese corporations deeper into cyberspace, the person in the street in some ways appears to be a light year or two ahead of the game, and is now shining that light on the badies.

Using the new media
It all began last spring when a disgruntled purchaser of a Toshiba VCR in Kyushu got upset with the discourteous service he apparently experienced when complaining about the machine's shortcomings. He recorded rude phone conversations with Toshiba employees and published them on his own webpage, garnering millions of hits and generating news for the Japanese media. After several attempts to block the site, including a failed court order, an exasperated Toshiba ended up apologizing and meeting the man's demands, and the mollified customer withdrew his very public complaint.

The anonymous Kyushu man's success encouraged other citizens who felt similarly aggrieved with the big and powerful. A Tokyo man claimed two offices of the Tokyo Metropolitan Police Department were blackmailing him. Though a district court ruled twice against him, he put the courts' findings up on a website, along with his own argument to the contrary. The site created enough interest that the MPD felt compelled to counter with its own website refuting the man's charges.

A female college student in Tokyo used the Web to describe a sexual harassment experience she underwent during a job interview, after being asked if she had ever had sex with a married man. And when the president of a firm in Wakayama used his company's website to criticize school officials, after his son had been bullied in primary school, the school principal eventually resigned, saying he was exhausted by the ordeal.

Trading online
The next candidate for stress exhaustion could be the securities industry, if Softbank's tireless founder, Masayoshi Son, gets his way. Softbank is now involved in so many Internet-related startups, no one is still counting. But one venture that everyone is sitting up to take notice of is Son's partnering with US-based Nasdaq. The plan is to create a Nasdaq Japan electronic stock exchange to sell shares in Japanese startups.

Though Nasdaq Japan is not due to start trading until near the end of 2000, as of October 1999, it had already counted 3,100 companies asking to be listed on the new exchange. Son says his goal is to "stimulate capital growth and entrepreneurial activity that has been long dormant." Except in Son, that is, who apparently never sleeps.

In response to the Son move, Mitsuhida Yamaguchi, president of the Tokyo Stock Exchange, declared he was not concerned about the new competition. "I don't believe we will be up at bat against each other," he told the Japanese press. Maybe not, but any competition in the clannish financial markets is music to the ears of most.

Net music
So is MP3, the shortened name for Motion Picture Experts Group-1 Audio Layer 3. MP3 is a digital compression technology akin to that used to compress video on DVD; it lets users download and play music files on PCs and MP3 players from over the Net.

Virtually unheard of in Japan when 1999 began, MP3 is already facing competing formats, including SolidAudio, a joint venture between NTT and Kobe Steel, and a Windows-based format from Microsoft. Together, these new technologies threaten to turn the traditional recording industry on its head.

"Record companies as we know them will soon be gone," Keith Richards of the Rolling Stones was quoted in the press as saying. "There are too many other ways to distribute music, and once those are established, there will be no place for record companies."

For why would big-name recording artists want to remain under the control of record companies such as Sony Music and Toshiba EMI, when the Internet and MP3 provides the means for selling their music directly to the public? There doesn't appear to be a convincing answer for the long term. But for the time being the record companies have come out with their own competing music format, dubbed the Secure Digital Music Initiative, which does have the advantage of incorporating copy protection technology.

Copyright protection is something supporters of MP3 will have to address. While millions of music files are free for the downloading, many others are copyright pieces that have been illegally copied and posted on the Net. In May the first Japanese was arrested for downloading and selling illegally copied music via his own website. He now faces music of a different kind: jail house rock, perhaps?

But to end on an upbeat note, the Internet celebrated its 30th birthday in 1999. Three decades ago, the first ever data packets were successfully transmitted by computer scientists at the University of California at Los Angeles, as part of the Pentagon's ARPANET experiment. By 1979, the number of computers connected to ARPANET approached 200. Just one decade later, the UK's Tim Berners-Lee proposed a system for hypertext information sharing, and in 1999 NTT DoCoMo's i-mode short-messaging service made logging onto the Net as easy as using the phone.

With 2.23 million i-mode users as of October 1999--the world's largest group of wireless data users--the Japanese are showing they are indeed up to the challenge of ringing in the changes.

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John Boyd is a freelance technology writer in Tokyo.
Contact him at boyd@gol.com.

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