The Nihon Keizai newspaper in Tokyo reported yesterday that Apple plans to start a music download service in Japan by March 2005 and aims to offer more than 100,000 songs with an emphasis on Japanese music at its iTunes Music Store, which is expected to be the largest music download service in Japan.
With two of the three international Apple Retail Store locations in Tokyo and Osaka leveraging the iPod in tandem, a Japanese iTunes Music Store seems a natural move though for a Japanese version of iTunes Music Store to work, however, Apple will need to be sensitive to the unique dynamics of the Japanese marketplace.
” In order to have a successful iTunes Music Store launch in Japan, Apple needs to provide Japanese consumers with a strong library of Japanese music from top Japanese record labels and pop stars,” commented Yankee Group senior analyst Mike Goodman recently on News Factor. Apple “can’t just translate its North American catalog to Japan,” Goodman continued. “They have to be sensitive to that market to succeed.”
Earlier in the year ITMS Japan met with opposition from a number of local music labels who claim that FairPlay is “inadequate” and refused to license their songs to Apple.
While Japanese companies are world leaders in making the gadgets that are driving the expansion of the online music business abroad, that business has been surprisingly slow to take off in Japan. Market leader Label Gate Co., funded by 18 major domestic recording companies, including heavyweights Sony Music Entertainment (Japan) Inc. and Avex Inc., launched a music download site called Mora this April and plans to expand its offerings to 150,000 songs from the current 70,000.
Apple will also face oppositon from several other Japanese download sites that have emerged in recent months and unlike Apple’s iTunes service, whose downloads can be burned onto CD-Rs, most downloads from the Japanese sites are copy-protected and cannot be copied onto CD-Rs. While a single download typically costs 99 cents (about 110 yen) from iTunes Japanese domestic download services typically charge at least 200 yen per song.
Another market ‘quirk’ typical in Japan is audio CD rental. Tsutaya is the largest chain of video stores in Japan. They operate ‘Culture Convenience Clubs’ where you can not only rent tapes and DVDs but also audio CDs. Last year the chains profits rose a massive 90% as the retail giant expanded to over 1100 stores and a signed up membership base of over 18 million.
According to reports, Apple executives recently visited Japan to discuss pricing and DRM parameters with major record companies in the country, including Avex Group Holdings Inc., Warner Music Japan Inc., and BMG Funhouse Inc. Apple is expected to price its a-la-carte downloads at a competitive 100 yen, beating other Japanese music services that charge between 150 to 350 yen per track. Apple has already sold 500,000 iPods in Japan, making the iTunes Music Store glaringly absent and prohibiting users from legally downloading digital songs for portable playback.
Canada to Get iTunes, Japan Next?
Apple to Launch Download Service in Japan [CBS Marketwatch]
iTunes Japans Hits ‘Inadequate DRM’ Hurdle [the Register]
Music Industry Warms to Downloads [Asahi.com]
Innovations Push Japan Towards Online Music [International Herald Tribune]
A Portal into Japanese Pop Culture [JPop.com]
A Lesson From Japan’s CD Rental Industry [Copyfutures]
Japan and US: Two Cultures of Piracy [Smartmobs.com]
Dial M For Music [Time Asia]
Cultures of Music Piracy:An Ethnographic Comparison of the US and Japan [Ian Condry-Massachusetts Institute of Technology. 31pg pdf]