MMW-65 -- The Changing Face of Mobile Music in Japan, Part 1

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

Issue No. 65
Friday, October 29, 2004



++ FEATURE: The Changing Face of Mobile Music in Japan, Part 1

** KDDI Announces Full-song Realtone Download Service
** Mobile CD Shop to Debut on EZweb in November
** Microsoft Launches MSN Music In Japan

++ EVENT: MMC 2004: The Mobile Music Conference

==== Entrepreneur Association of Tokyo - November Seminar ===
This November, Kaori Sasaki, CEO & President of ewoman Inc & President
of UNICUL International, will present ewoman's Secret of Success. Don't
miss this great opportunity to hear from one of Japan's leading
entrepreneurs. For more information please visit the EA-Tokyo website.

Date/Time: Tuesday, November 2nd 7:00 pm
Location: City Club of Tokyo - Maple Room (Canadian Embassy Complex)
Language: English

++ FEATURE: The Changing Face of Mobile Music in Japan, Part 1

It has been nearly five years since 4-voice polyphonic ringtones were
first introduced in Japan, creating an instant sensation among mobile
phone subscribers. During the ringtone boom that followed, a new wave
of companies devoted to ringtone services flourished and the digital
music industry here received a much-needed shot in the arm. Now, the
technology has developed to the point where a full song download of
CD-like audio (realtones, or "chaku-uta" in Japan) is possible, and
KDDI has announced that just such a service will be introduced in
Japan in late November (see newsbrief below).

So what effect has this technology shift had on the mobile music
industry as a whole? In this multi-part series, we'll examine the current
state of the mobile music market in Japan from the perspective of both
music content providers and consumers. We'll then look at the impact of
chaku-uta and chaku-motion on the ringtone business and see how ringtone
providers have adapted to the evolving market for mobile music services.

Some History: Ringtone Providers vs. Realtone Providers

First, there are some important differences between the two different
groups of companies competing in the mobile music space:

1. Ringtone Providers
These companies make their money primarily through the sale of MIDI-like
instrumental renditions of popular songs. MIDI files are typically small
in size, and require fairly high musical and arranging skills to create.
A company selling a MIDI-like version of a song needs only to acquire
the publishing rights for the song, which are easily obtained by anyone
through a central agency (JASRAC in Japan).

2. Realtone Providers
Realtone "chaku-uta" services in Japan were pioneered by the record
companies. A chaku-uta file is a CD-like version of (at present) a 20-60
second audio clip from a song. The first chaku-uta service was started in
December 2002 by Label Mobile, which began as a joint venture between five
Japanese record labels, and has expanded to include eleven labels as
shareholders. Although a chaku-uta file is relatively trivial to create,
in order to offer the file for sale, it is necessary to acquire the master
rights for the song, which are held by (you guessed it) the record labels.

Although there is actually some overlap between ringtone and realtone
services, in this article we refer to a ringtone provider as one whose
primary catalog is MIDI-based, while a realtone provider offers a catalog
of CD-like audio.

The Rise of Realtones

The number of realtone services on all three Japanese carriers has been
increasing rapidly, and is now estimated to be around 200 sites in all.
The top service, Label Mobile, expects to have a total of 150 million
chaku-uta songs downloaded in 2004. Each song costs between around
US$0.90 and $1.90.

While the ringtone providers have realized for some time that the bulk
of their subscribers would eventually quit ringtones for chaku-uta, most
of the large providers did not see a large decrease in subscriber numbers
in 2003 and early 2004.

According to most reports, however, the past six months have seen a dramatic
drop in ringtone subscriptions, as much as 25% in some cases. This is
attributed mainly to a huge increase in users upgrading to 3G handsets, both
on KDDI and DoCoMo. When users upgrade to a new handset, they are given a list
of all services to which they currently subscribe, and are asked explicitly
if they wish to continue them.

At this point, many users realize they are still subscribed to a ringtone
site they joined back in 1999 but haven't used in years. In fact, it is
estimated that 40% to 60% of all ringtone subscribers do not download
anything during any given month, despite paying the monthly subscription
charge. The high number of these "sleeper" subscriptions has allowed
ringtone providers to continue generating strong revenues while they
ponder their next moves.


** KDDI Announces Full-song Realtone Download Service
In brief: KDDI Corp. announced that it would start a full-song realtone
download service called "Chaku-uta Full" in late November. The service
will be available on four handsets and have a catalog of 10,000 songs at
launch. Each song will cost 300 yen (US$2.80) to download.

** Mobile CD Shop to Debut on EZweb in November
In brief: KDDI, together with Okinawa Cellular, has announced that it will
start a new mobile CD shopping service called "au Records" for KDDI's EZweb
portal. The service will offer a catalog of 90,000 titles and promises
delivery within 2 days of order. The service is set to start on November 12.
Source (Japanese only):

** Microsoft Launches MSN Music In Japan
In brief: Microsoft launched the Japanese version of its online music
download service last week. MSN Music started with a catalog of 50,000
songs, expected to grow to 100,000 in the first year. The download cost
ranges from 158 yen ($1.49 US) to 367 yen ($3.46) per song.

++ EVENT: MMC 2004: The Mobile Music Conference

The Miami MobileMusiCon will be held November 18-19 in Miami. The
conference brings together more than 400 music, carrier, handset and
technology executives, and is a focused discussion of the challenges,
opportunities, models for success and solutions for the successful
development and growth of music-based mobile entertainment and services.

More information:

Subscribers: 3,006 as of October 29, 2004

Written by: Steve Myers (
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: (


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