In Japan, Mobile Phones Threaten Apple's iTunes Business

Apple Computer, Inc. of the US has launched its iTunes Music Store (iTMS), the world's leading paid online music service, in Japan. But some observers think it will face its greatest rival in the mobile phone, as the habit of buying music online may not yet be established among the Japanese. With iTMS, you can download a song to a PC from a dedicated website, and then transfer it to an iPod player. So far, things have gone well for this service. In Europe and America, 500 million tunes have been downloaded using iTMS, and in Japan, the company has sold over 1 million iPod players.

1 Million Songs Downloaded in Four Days

iPod mini, capable of saving up to 1,500 tunes

 Since the launch of the service in Japan on August 4, 2005, over 1 million tunes have been downloaded over four days. Similar services are also offered by Sony Music Entertainment (Japan) Inc. (SMEJ) and 17 music companies under the name Mora, but this has not yet taken off partly because of the high usage charge of 210 yen per song.
iTMS arrived in Japan two years and four months later than in the US, reflecting stringent copyright management by Japanese recording companies. Apple finally reached agreement with Toshiba EMI, AVEX, Colombia and other companies, and has prepared the launch of 1 million tunes, but the great sticking point in negotiations has been setting the charge.
In the US, iTMS charges 99 cents (about 110 yen) for all tunes, but in Japan Apple had to accept two-tiered pricing, of 150 yen or 200 yen per tune. SMEJ, which was unwilling to give up price-setting rights, is not involved with iTMS.
However, it is not exclusive practices in the local music business which are slowing the spread of iTMS in the Japanese market. The greater threat-one that is hardly imaginable in the west-is the mobile phone, and its wide range of services.

Bypassing the PC

 Chaku-uta Full is KDDI Corporation's new service launched in November enabling a mobile telephone terminal to receive an entire song. This feature has proved very popular.
   As of August 1, the total of downloaded songs stood at over 14 million, and the service has became a main driver of growth in subscribers for the company.

Can mobile phones compete with Apple? Mobile phone carriers are developing various new services

 

 The cost of downloads varies for different tunes, but averages out at a high 300 yen. A key factor in its success is the fact that you don't have to mess around with a PC to make it work.
 Says a KDDI executive: "We sell a lot of terminals including FM Radio functions to young people, and they like the fact that, when they listen for long periods, it is easy to download tunes that appeal to them right away. Apple has sold over 1 million iPods in Japan. But 3.1 million of 19 million subscribers to KDDI's third-generation mobile phone services already have Chaku-uta Full-enabled terminals. NTT DoCoMo plans to offer a similar service from next year. If it does so, the mobile telephone will become a powerful entertainment tool.
 iTMS has started with a flourish in Japan. However, some observers worry that it could end up a specialist product for Apple fans in the Japanese market, as has happened with the company's computers.