Pc Downloads Get Big In Japan

PC-based music downloads in Japan doubled in volume from July to September compared with the previous quarter.

But labels body the Recording Industry Assn. of Japan says mobile downloads remain vastly more popular in the world's second-biggest music market.

Either way, growth looks set to accelerate over the coming months with Napster Japan launching and Sony Music Entertainment (Japan)—the country's biggest label—expected to finally make its catalog available through iTunes Music Store Japan.

Napster president Brad Duea says Japan is ripe for a subscription-based music download service—currently there are none.

"Japanese consumers are used to paying subscription fees for services such as mobile phones, Internet access and content on mobile phones," Duea claims. "We think we can grow the [download] market."

The RIAJ has been collating quarterly digital-sales data since January, but only started releasing it in August. It says PC download sales by its 41 member companies in July-September totalled 2.3 million units, up 125% over April-June, with trade value up 87% to 436.7 million yen ($3.7 million).

The actual number of tracks involved remains unclear, as the RIAJ treats singles, albums, mini-albums and "other related content" sold over wired networks as single-unit transactions, regardless of the number of tracks contained. Singles account for the overwhelming majority of download sales, according to the RIAJ.

PC-based download sales were dwarfed by mobile downloads during the quarter, according to the RIAJ. A total of 72.1 million units (including polyphonic ringtones, master ringtones and full-song downloads) were sold in the July-September period, a 25% increase over the previous quarter. Trade value rose 23% to 9.1 billion yen ($76.5 million).

The third-quarter stats show only a partial picture, though, since the Japanese version of Apple Computer's iTunes Music Store was not online until Aug. 4. So there is no full quarter against which to measure iTunes' impact yet. Apple claims it is already Japan's No. 1 legal music download service, although independent verification is unavailable. Other leading download services here include mora.co.jp, MusicDrop, Yahoo Music Download and Oricon Style.

The only sales data for iTunes Japan released by Apple to date was the claim that 1 million songs were sold in the four days following the service's launch. "The RIAJ data tells me Apple's sales of downloads slowed way down after the first four days," one industry observer says. "I don't think they sold as much in the rest of the quarter as they did [then]."

Napster and retailer Tower Records Japan plan to launch Napster Japan in June. Duea says the companies have met with local authors body JASRAC and Japanese labels to explain the joint venture's subscription model.

However, some observers are skeptical. "I can't see how subscriber services would work here," one source says. "iPods are doing so well purely on the strength of [CD] rentals. People are using their iPods or other digital players to burn copies from rentals. Why download a track at iTunes for 150 yen when you can rent a whole album for a comparable amount?"

SMEJ, Warner Music Japan, Victor Entertainment and BMG Japan have yet to make their catalogs available on iTunes. However, a well-informed industry source tells Billboard that an SMEJ deal is likely in the spring.

The other major Japanese labels, meanwhile, are paying more attention to developing the download market.

Universal Music Japan, for example, projects that digital downloads will account for 18% of its sales of non-Japanese product in 2006. The company recently set up a "downloading business group" to coordinate the digital sales activities in Japan of its international labels, which include Interscope Geffen A&M, Polydor and Island Def Jam.

"Times are changing," Universal Japan international managing director Hiroshi Aono says. But, he adds, he expects physical CDs to coexist with the digital marketplace. ••••