MMW-120 -- RIAJ Releases 2007 Figures, Mobile Still Going Strong

J@pan Inc Magazine Presents:
Commentary on Japan's music technology news

Issue No. 120




RIAJ Releases 2007 Figures, Mobile Still Going Strong


** Google settles with JRC over YouTube copyright royalties
** DeNA puts out CD of winners from mobile auditions
** Roland releases latest model in portable recorder series
** RIAJ starts new TV campaign to combat mobile piracy
** Logitec releases iPod karaoke microphone


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RIAJ Releases 2007 Figures, Mobile Still Going Strong

On April 3, the Record Industry Association of Japan officially
released the 'RIAJ Yearbook 2008,' its annual roundup of sales
figures, statistics and trends from the previous year. As
expected, CD sales continued to decrease for the ninth straight
year. However, total recorded music sales are up for the third
year running, thanks to strong growth from the digital sector -
or more specifically from the mobile sector, which still
accounts for the bulk of digital music sales in Japan.

Total music sales for 2007 in Japan came to JPY 466 billion
(US $4.66 billion). While CD/DVD sales declined 4% from the
previous year, digital downloads jumped up 41% to JPY 75.5
billion (US $755 million), comprising 16% of all music sold
in Japan. Mobile downloads accounted for JPY 68 billion
(US $680 million), more than 90% of the total figure for digital
sales. Within the mobile sector, full-track downloads showed the
strongest growth, rising 91% over the previous year.

So why, despite the popularity of the iPod and nearly three
years since the launch of the iTunes Music Store here, does
mobile still continue to so thoroughly dominate digital
downloads in Japan?

One of the main reasons is that the youth market here has long
been accustomed to using their mobile phones to find music, and
sees no reason to change. The majority of this group was first
introduced to digital music through the polyphonic ringtone boom
back in 2000. Now in their teens and twenties, mobile is still
the fastest and most natural way for them to find new music.
Faster networks, attractive handsets and flat-rate data plans
have all made it even easier to download large amounts of music
to the phone. In addition, the mobile sites run by Label Mobile
(a joint venture of major record labels) have a far more
complete catalog of J-Pop music than any one PC-based online
music store.

Of course, the iPod has also proven to be highly popular in
Japan, and leads the market here for dedicated digital music
players. However, this does not seem to have translated into
significant download sales for the iTunes Music Store in Japan,
or any other online store for that matter. One possible reason
is that iPod users here tend to be a bit older than the teens
and twenty-somethings who use their phones for music. This older
iPod group would much rather just go to one of the many large CD
rental chain stores, rent the CD and rip the songs onto their

Interestingly, the problems associated with P2P file-sharing
services have never been as big in Japan as they have been in
other countries. This is due in part to the fact that the main
Japanese-language P2P application (called 'Winny') acquired an
early reputation for viruses, worms and spyware, and its
developer was arrested and later fined JPY 1.5 million (US
$15,000). Unlike in most other countries, the decline in CD
sales has been caused not by illegal file sharing but by the
rise of mobile phone downloads - first in the form of polyphonic
ringtones, then progressing to mastertones and full-track songs.
Fortunately for the Japanese recording industry, consumers have
paid for these downloads, and the decline in physical sales has
largely been made up for in mobile sales.

Over the past two years, however, piracy has emerged as a major
threat in Japan as well, in the form of mobile music file
sharing. The RIAJ estimates that more than 400 million mobile
tracks were illegally downloaded in Japan last year, mostly from
anonymous BBS-type mobile sites. Piracy is mentioned as a major
problem in the RIAJ's annual report for 2008, and the
organization has recently embarked on a series of TV ad
campaigns featuring major Japanese artists warning their fans
not to use illegal mobile sites for downloading music. Because
mobile has emerged as such a key part of the Japanese music
industry, we can expect to hear more a lot more about this issue
over the next year or so.



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** Google reaches agreement with JRC over YouTube copyright
In brief: On March 27, YouTube's parent company Google announced
it had signed a deal with Japan Rights Clearance (JRC), in which
it will pay an undisclosed royalty for videos posted on YouTube
of singers covering popular Japanese songs. The contract will
cover the use of about 5,000 songs from the catalog managed by

** DeNA puts out CD of winners from mobile auditions
In brief: DeNA, which runs the popular Mobagei Town game/SNS
site, began selling a compilation CD featuring songs from 11
new artists who passed the auditions held on the 'Music
Creators' corner of the site, where amateur artists are
encouraged to submit their work. The new CD is called 'Mobagei
Music Creators Vol. 1', and will sell for 1,500 yen (US$15).

** Roland releases latest model in portable recorder series
In brief: On March 28, Roland Corporation began selling the R-09
HR portable digital recorder, the latest in the company's series
of high-end handheld WAV/MP3 recorders. The R-09 HR features
24-bit 96 kHz sound recording, a larger display screen and
improved usability. Pricing is open, but expected to be around
40,000 yen (US$400).

** RIAJ starts new TV campaign to combat mobile piracy
In brief: On March 19, the Recording Industry Association of
Japan announced the start of a new campaign aimed at reducing
mobile piracy. The campaign includes a new TV commercial
featuring popular Japanese artists such as DJ OZMA, Bonnie Pink,
and mihimaru GT. The RIAJ estimates that over 400 million files
were downloaded illegally to Japanese mobile phones in 2007.

** Logitec releases iPod karaoke microphone
In brief: Tokyo-based Logitec has started selling a special
'karaoke microphone' for the iPod. The mic includes a 'vocal
cut' feature that reduces the volume of the vocal part from any
song stored on the user's iPod, allowing the user to perform
karaoke with tracks from their own music collection. The price
of the microphone is open, but is expected to sell for around
6,000 yen (US$60).
Nikkei Sangyo Shimbun (March 17, 2008)