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Apple Finally Launches iTunes in Japan (2005.08.06)

Well, after months of speculation and several false alarms, Apple Computer on Aug. 4 finally announced that it will launch a Japanese version of its iTunes Music Store.

Apple says that to begin with some 1 million songs from 15 record companies will be available on iTunes Japan and that 90% of the songs would be available at a cost of 150 yen, with the rest costing 200 yen.

The 15 record companies include Toshiba-EMI, Universal Music and Avex - but not Japan's biggest record company, Sony Music Entertainment (Japan), nor Warner Music Japan and Victor Entertainment. Those labels want iTunes Japan to include competing file formats like Windows Media Audio and ATRAC, which Apple has so far resisted.

The basic problem is that Sony is embarrassed by the success of Apple's iPod portable digital music on its home turf in Japan. Sony says it's negotiating with Apple about the possibility of its repertoire becoming available on iTunes Japan.

Apple's launch of iTunes Japan was quickly followed by announcements of price cuts by several Japanese music-download services to match iTunes Japan's 150-yen price point, which is significantly lower than what rival services in Japan have been charging. Many industry observers have criticized Japanese record companies for not fully getting behind PC-based downloads by keeping prices relatively high.

It's also worth noting that this is the first time that Apple has adopted a two-tier pricing policy for iTunes.

The high-profile launch of iTunes Japan will likely give a boost to Japan's relatively weak PC-based music download market. Industry sources say that Japan's 10 legal music-download services have sold just a few hundred thousand tracks in total. (It's also worth noting, by the way, that unauthorized music file-sharing is not as widespread in Japan as in other major music markets.)

In contrast, Japan's second-largest mobile phone operator, KDDI, says its "Chaku-Uta Full" mobile-based full-song download service has racked up more than 10 million song downloads since the service's November 2004 launch. It is currently Japan's only mobile-based full-song download service, featuring some 37,000 MP3 titles.

Japan's mobile download market should also benefit from the launch of NTT DoCoMo's own mobile download service, which many industry observers expect this fall.

Factors working in favor of mobile music services in Japan include effective marketing and promotion by mobile operators, simple billing systems that don't require credit cards, and the rapid rate of adoption of third-generation phones, which feature improved Internet access and data-storage capabilities. Nearly 30 million people in Japan now have 3G mobile phones.

One reason why PC-based music downloads have yet to catch on in a big way in Japan is that just 15.2 million people subscribe to broadband Internet service providers, according to a recent survey by Tokyo-based Fuji Chimera Research Industry. The survey projects, however, that the number of broadband users will rise to 35.5 million by 2008.

Japan's nascent online music distribution sector got a boost in February when Yahoo Japan and Tokyo-based download service operator Label Gate, which is owned by several Japanese labels, launched the Yahoo Music Download service. It currently offers some 73,000 songs.

MSN Music launched a Japanese site last October, with individual tracks costing between 158 yen and 367 yen and albums selling for between 1,300 yen and 2,200 yen.

And hot on the heels of the iTunes Japan announcement came the news that Napster and Tower Records Japan had formed a joint venture to launch Napster Japan within the next 12 months. Tower will own about 70% of the joint venture and will provide most of the personnel, local music content and marketing know-how.

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Originally submitted by: Steve McClure | See Edit History | Edit Article