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SUMMARY
" Mobile music services adoption are already well above those of western
markets", says Benjamin Joffe, Vectis' Japan market analyst. "Japanese
operators recorded a whopping 2 billion polyphonic ringtones downloads in
2004. While there were over 200 million master-recording based ringtones (real
tunes) downloaded sold since the service launch two years ago, the market has
not even reached its full potential due to the relative low penetration of
compatible handsets."
At the same time, Korea has maintained a clear advance in ringback tone
service quality and adoption level. The service was first introduced in March
2002. Within six months, monthly revenues from ringback tones exceeded
ringtone revenues. Today, close to 45% of SK Telecom subscribers use ringback
tones, generating roughly U$100 million in annual revenues for the operator.
"With such long experience, Korean operators were able to implement
clearly-defined business models for all aspects of the music value chain: from
the creation of ringback tone content, management and collection of
copyrights, promotion of new soundtracks, operation if servers and platforms
to the collection and sharing of end-user fees", says Simon Bureau, managing
director and co-author of the report. "When we compare the distinct service
deployment paths followed by operators in the two countries, it becomes
apparent why ringback tone services have not been successful in Japan so far".
While operators worldwide are still making announcements about future
full-length music song download services, both countries have already made
significant headway. In 2004, Korean operators sold an estimated 2.2 million
handsets equipped with an MP3 player, which have now become standard features
in all new handsets. In Japan , a different approach is taken by introducing
services that allow users to download full songs through the operator's 3G
networks. KDDI's new " chaku-uta full " service topped 2 million downloads in
ten weeks. "The direct connection combined with fixed service data service
plans introduced by operators are key to higher adoption" said Joffe.
While telecom and industry executives worldwide all realize that music sells
mobile phones as much as mobile phones sell music, the point remains in
knowing how. Japanese content providers have signed up millions of paying
users, accumulating a wide range of best practices for service design and
deployment, marketing, promotion and brand building, key issues for long-term
sustainability in mobile content markets worldwide.
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