The Present State of Databases in Japan

Need up-to-date business data? It's as near as your modem - for a price.

by John Drake

The increasing ease of telecommunications, and the continuing expansion of the Internet, are making access to the information contained in online databases easier, faster, and more cost-effective. One advantage of using online databases over packaged databases on tape or CD-ROM is the elimination of the need to locally store massive amounts of information. The service provider will store the data for you, and you can search for and download only the data relevant to the task at hand. Plus, you don't have to wait on an upgrade or supplement to stay up-to-date; you always have access via your modem to the latest version of the database.

One disadvantage, though, is that you have to spend more time online (in Japan, at per-minute rates), and often pay by the line or kilobyte for downloads. And if the phone lines are busy, or the service provider is "down," your search will have to wait. But all-in-all, online databases make more information accessible, more quickly, to more people.

Supply status of commercial databases
Japan still lags behind the US and Europe in its use and development of databases, but is rapidly catching up. The first known Japanese database of corporate business information and stock prices was provided on magnetic tape in 1970 by Nikkei. Business-oriented online databases began to emerge soon afterwards, as did Japanese databases in science and technology.

Japan's initial delay in developing domestic databases was due in part to the lack of suitable hardware and database software, and the difficulty of handling kanji. But it was also due to the traditional social and cultural mores, chief among them being a reluctance on the part of Japanese corporations to sell (or buy) something as intangible as "data." And since Japanese copyright laws have not yet caught up with the realities of the computer era, there is still a prevalent attitude that "the only way to protect our information is to hide it."

So, how much information is available for data-hungry users today? Over 3,300 commercial databases were accessible in Japan in 1995, an 8% increase over the previous year. Nearly two-thirds of those (2,184) were domestic databases, a fivefold increase in the past decade.

According to statistics compiled by the Ministry of International Trade and Industry, by category these commercial databases were about 37% business databases, 32% general databases, 28% scientific-technical databases, and 3% humanities databases. The ratio of general databases has been growing steadily (up from just 21% in 1988), while the proportion of business databases has been falling (down from 43% in 1988).

The most frequently used categories of information among Japan's domestic databases in 1995 were news/journals (73%), corporate profiles (66%), and who's who/ organization information (50%). The most frequently used categories among overseas databases, meanwhile, were patents (56%), corporate profiles (48%), and news/journals (42%).

In terms of number of contracted users, the largest database services in Japan in 1995 were Nihon Keizai Shimbun (Nikkei, with 85,400 subscribers), followed by G-Search (61,900), TKC (56,400), and QUICK (45,000). The most frequently used online databases on a revenue basis were Nikkei Telecom (55%), JOIS (54%), PATOLIS (42%), DIALOG (39%), STN International (23%), G-Search (22%), and COSMOS (13%).

Database market statistics
According to MITI statistics, overall database services in Japan constituted a JPY197 billion market in 1995, which was 3.1% of total information services industry sales. The value of Japan's database services market has been falling since reaching a peak of JPY 216 billion in 1991.

Offline services (packaged products purchased as CD-ROM, magnetic tape, or other media) account for only about one-quarter of Japan's database services market. Online services bring in the lion's share of the database services revenue (76% in 1995). This is a significant seven percentage point growth from 1991, when online databases accounted for 69% of revenue. Still, with the rapid diffusion of PC communications and continued growth of the Internet, it seems almost certain that the online database market will continue to expand.

An autumn 1995 survey of database usage by the Database Promotion Center found that 41% of small and midsize Japanese companies and 71% of large companies had subscriptions to commercial database services. On average, the small and midsize companies had contracts with 5.2 database service systems and spent JPY 3.3 million per year on database services. Large companies had contracts with 8.8 systems and spent JPY 46.5 million per year.

The Japan database market still lags its US counterpart, though. In 1995, North America (the US and Canada) had 5.2 times as many domestic databases as Japan, 10.9 times the number of database producers, and 8.7 times the number of database users (passwords). In terms of database sales, the database services revenues in the US and Canada are 6.6 times those in Japan.

Database service industry trends
Among firms providing databases in Japan, about 44% have database services as their main or only business. This percentage has been growing in recent years, and if the trend continues this should increase to over 55% by the end of the century.

The ratio of Japanese database sales to foreign database sales in 1995 was about 7-to-1, a ratio that has remained relatively constant since 1985. Among the domestic Japanese databases, only a slight majority (52%) were online databases; over 12% were sold on magnetic tape and 12% on CD-ROM. In contrast, nearly 72% of foreign databases were online services; CD-ROMs had just an 8% foreign database market share, and magnetic tape accounted for just 4%.

In terms of revenues by vendor, the average growth rate of database sales between 1994 and 1995 was 25%. Some 13% of companies suffered a sales decline, however, while 16% reported a 70% or more growth rate.

When vendors were asked in 1995 to estimate the average annual growth rate of database sales through 2000, 4% predicted an industry growth rate of less than 10%, 30% estimated a growth rate of 10% to 20%, 29% pegged future growth at 20% to 30%, 15% foresaw industry growth of 30% to 40%, and 22% expected 40% or greater growth. The average of their answers was 26% market growth.

When asked about their problems in creating new databases, 89% of database producers cited the high cost of data entry while 67% specified high maintenance costs. The difficulty of recovering initial investment was cited by 39% of producers, while insufficient standardization and shortage of qualified staff were each mentioned by 21%.

The database services industry in Japan enjoyed steady growth throughout the 1980s and into the 1990s. And in spite of the slight slowdown in 1992 that continued through 1995, the database services industry looks ripe for further growth. Predictions are that the overall information services market will mushroom to some 20% of Japanese GNP by 2010, and the database services market will grow along with it.