TT-590 -- Radio's Last Stand, e-biz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, November 14, 2010, Issue No. 590


- What's New
- Short Takes
- News
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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This last week, Japan's largest advertising company,
Dentsu, announced that it would be launching a new company
in conjunction with 13 terrestrial radio broadcasters, to
start transmitting station content over the Internet.
Significantly, one of the participants will be the nation's
own broadcaster, NHK. Dentsu will head up the new business,
and their business model will be online ads -- no talk of
subscriptions yet.

Online radio stations may not sound like a momentous event,
given that there are thousands of such stations active
abroad. However, here in Japan, it seems that radio
stations, like print publishers, have shied away from
putting their content on the Internet. Partly this has been
because they can't figure out how to efficiently monetize
their audience once on the Internet.

Basically radio, being a one-way medium, allows the
broadcasters to "fudge" the size of their audience.
They take a vague set of audience responses and extrapolate
that out over the entire in-range population, thus
arriving at a theoretical number of listeners.

Advertisers have traditionally accepted these make-believe
numbers, and paid their money down in the hope of getting
results. Before the Internet, probably there actually were the
alleged number of listeners, and therefore a radio campaign
really could get results for the advertiser. However, over
the last five years or so, advertising on radio has been
largely an act of faith, with ever diminishing returns from
money invested.

The Internet of course offers much more pinpoint
identification of just who is listening and for how long --
which means that advertisers have more power in negotiating
just how much they are going to pay the broadcaster. In
addition, thanks to lower-grade (in terms of content quality)
audience-generated website content that is nonetheless
compelling, there are now enough sites with such massive
page view numbers that they swamp and dilute the ability of
more conventional content sites to charge for that content.
Thus, broadcasters cannot earn enough online to pay their
bills, and so they stay wedded to their terrestrial model in
the hope they can last a few more years.

[Continued below...]

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[...Article continues]

But time has now caught up with the radio stations, and with
advertisers are staying away in droves no one is making
money any more, no matter how many staff and services they
cut. Thus, it is, we believe, that Dentsu has been able to
gather a bunch of them together for what could be radio's
last stand. In reality, we wouldn't be surprised if many of
these radio stations, once associated with this project,
will be forced over the coming years to merge together,
leaving Dentsu with not just a strong Internet content
channel but also potentially some spare terrestrial
broadcasting licences. What it will do with these we're
not quite sure. Use them for low-cost Internet data
distribution channels perhaps?

The problem of course is that many people don't use radio
any more. They don't have cars, so no drive-time hot hits,
and they either watch TV or surf the web while they are at
home. So the issue for the radio stations isn't just
getting on line but also staying relevant. Luckily
consumers still love music, so the way forward seems to be
that the radio stations, whether on Internet or not, are
going to have to give up their one-to-many broadcasting
model and instead become on-demand and personalized music
serving businesses. Not quite, since radio
stations will always have someone in the background
knitting the entertainment together and helping the
audience find new music that they would have otherwise
missed. Further they can handle copyrighted content.

The challenge is that once the audience starts requesting
specific sets of tunes and on demand, the radio stations
have to invest in large multi-serving and multi-session
tracking systems that will look more like Akamai and less
like a radio station. This means that the royalty folks at
the Japanese Society for Rights of Authors, Composers and
Publishers (JASRAC) will start wanting cash for each song
served and things will get very complicated very quickly.
Radio was popular because it offered (essentially) a
flat-rate royalty, ad enhanced, free-to-audience content
model, much as most of the web does today, and it is hard
to imagine how it can serve up content online in a useful way
for the same low/no price. Maybe Dentsu has worked a special
deal with JASRAC for volume licencing? We'll see in due

In the meantime, there is a way for the Dentsu group of
radio stations to survive, and that is by working directly
with artists and not through JASRAC at all. The idea of
more flexible royalty arrangements for online radio
stations, including concepts such as: i) fixed fees per
month paid by the broadcaster to the publisher, and
connected to station's ad revenue (but no limit to
downloads or streams). Or, ii) a micropayment per
download/stream basis through a user's Suica or
PayPal account. Then there is iii) conventional
all-you-can-eat user subscriptions. All are possibilities.

These types of services will require broadcasters and
their Music Publisher partners, to have direct relationships
with the artists and thus contracts with a high degree of
flexibility that JASRAC just doesn't seem capable of. Go to
JASRAC's website and see the pages and pages of billing
methods to see what we mean. In contrast to JASRAC, we know
of some companies doing direct-to-artist contracting and
royalties handling in the USA, such as

These companies actively recruit hundreds of acts a year,
and AudioSocket already has over 1,400 artists and 35,000
tunes on its list -- none from Japan yet. All these artists are
willing to get paid less and offer more flexibility so as to allow
AudioSocket to supply web partners on the new pricing
paradigm. The company is quite innovative and is
already supplying licenced audio content to social media
websites (such as home video sites), on a micropayment
basis -- something that Dentsu and its radio station
partners could well be doing.

AudioSocket also sorts its tunes database according to act,
genre, price, and a bunch of other parameters, that could
let an radio station producer could easily figure out how
to use his/her budget effectively. This level of detail and
partner empowerment is the wave of the future and is
where Dentsu needs to be taking its flock of radio

...The information janitors/



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+++ NEWS

- Avatar rock star makes it big
- Exam for foreign nurses to be revised?
- Walmart looking for Japan acquisitions
- Save-and-search software co. has big hit
- Cigarette sales plummet 70%

-> Avatar rock star makes it big

Ever heard of Miku Hatsune? Nope, neither had we, maybe
we're just getting old, because apparently there are
thousands who do know and love her. Which is weird,
because as they stream to concert halls to see her perform,
they are watching nothing more than a laser hologram of a
anime style pop princess. Apparently Miku,
who was created by a digital production company called
Crypton Future Media, is a big hit and is about to go
international. ***Ed: You need to see the video referred to
in this article...** (Source: TT commentary from, Nov 10, 2010)

-> Exam for foreign nurses to be revised?

A philippine newspaper, the Inquirer, is reporting that the
Ministry of Economy, Trade and Industry (METI) may be
considering changing the rules about requiring Filipino
nurses to pass their exams in Japanese, where they have
to start the first exam only six months after arriving in
Japan and where they only get three opportunities to sit
before being required to leave Japan. The new thinking is
that the nurses will be allowed longer periods to acquire their
language skills, and possibly allowed to take the exam more
often. ***Ed: Maybe they should set up special
English-speaking hospital zones in Japan and let those
Japanese who want quicker, cheaper care to go to the zones
and be cared for in English?** (Source: TT commentary from, Nov 14, 2010)

-> Walmart looking for Japan acquisitions

While industry watchers look at the disappointing results
of Seiyu, Walmart's main presence in Japan, and many even
actively speculate if the retailing giant will pull out of
Japan, in fact Walmart is giving the exact opposite story
to the press. The company's CEO and President of Walmart
Asia said that he is looking for larger scale operations in
Japan and is actively looking for acquisitions to bump the
business upwards. Currently Walmart operates 414 stores in
Japan. (Source: TT commentary from, Nov 13, 2010)

-> Save-and-search software co. has big hit

A Software-as-a-Service (SaaS) company called Evernote has
been having significant success with its notes and data
storage software. The company has made Japan its second
largest market, after the USA, with about 1m users and
revenues of approximately JPY500/user/month. The firm just
scored a deal with DoCoMo to supply Evernote bundled with
DoCoMo's Android phones and tablet PCs. (Source: TT
commentary from, Nov 13, 2010)

-> Cigarette sales plummet 70%

Who says higher taxes are a negative event? In the case of
cigarette taxes, we'd be happy if they went up another 40%
every year. As a result of the latest price rises, shipment
volumes of tobacco products within Japan have fallen 69.9%
year -on-year, to 6.1bn packets. Sales value has also
fallen dramatically. Observers say that this is typical of
previous tax increases, where volumes would drop up to 50%
in the following weeks but recover to virtually the same
levels of consumption within a couple of months. This time
around, pundits are betting the disincentive factor will
last about 3 months. ***Ed: Addiction is a powerful
thing.** (Source: TT commentary from, Nov 13,

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.



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Date:Friday, 19th November 1:30pm-5:00pm
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