MMW-112 -- JASRAC Wins Again

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J@pan Inc Magazine Presents:
M U S I C M E D I A W A T C H
Commentary on Japan's music technology news
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Issue No. 112
Friday June 8, 2007
Tokyo

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CONTENTS

++ FEATURE: JASRAC Wins Again

++ NOTEWORTHY NEWS:
** Warner Music Japan to sell music on iTunes
** Napster, NTT DoCoMo start 'Uta-houdai' flat-rate
subscription service
** Label Mobile records 100 million full-song downloads
** Dwango releases Flash application for making music
** NTT DoCoMo starts new i-mode service in Hong Kong

++ FEATURE: JASRAC Wins Again

For the past few weeks, much of the buzz in digital media circles
here has centered around a recent court victory claimed by
JASRAC, the main copyright collection organization for Japan,
over a local company that had attempted to operate an online
digital music storage service.

Back in November 2005, Tokyo-based Image City (called Computer
City at the time) announced the beta launch of MYUTA, a new
service allowing subscribers to store their digital music files
(for their own personal use) on a central server. A key feature
of the service was the capability for subscribers to access and
play the stored music tracks on their mobile phones. JASRAC
immediately stepped in and contacted Image City, claiming the
service required its approval in order to launch. Image City
disagreed, saying the service was outside of JASRAC's domain,
and the stage was set for a legal battle.

Not wanting to operate under the cloud of legal uncertainty,
Image City suspended the MYUTA service in April 2006. The company
then filed a motion with the Tokyo Court seeking confirmation
that MYUTA fell under the category of 'private use' copying for
a single individual, and was therefore not subject to JASRAC's
authority. On May 25 of this year, however, the court ruled that
because Image City owns the servers from which the stored files
are downloaded, the company is responsible for public
transmission of copyrighted works, and therefore subject to
JASRAC's authority.

The decision has sparked a storm of protest from many in the
Japanese online and digital media community who feel a dangerous
precedent has been set. If online services for individuals can be
shut down because the servers might be storing copyrighted
material, then JASRAC could apply similar pressure to other
existing 'personal use' services such as Yahoo's Briefcase and
Apple's .Mac.

As Japan's primary copyright organization, JASRAC has always
drawn mixed reviews from those in the music and tech sectors. On
the plus side, JASRAC has played a major role in the overall
success of mobile music in Japan. The organization was quick to
establish a single 'one-stop clearing house' system for paying
royalties on ringtones, and kept the rates down to a reasonable
5% of sales. Japanese music content providers who venture out
overseas to deal with other rights organizations often return
with a renewed sense of appreciation for JASRAC.

On the other hand, JASRAC has also acquired a reputation in some
circles for arbitrary and high-handed behavior. Night club and
restaurant owners in particular have been critical of the way
fees are collected, calling for more transparency and clarity in
both the calculation of payments and distribution of royalties.
If JASRAC determines that a venue has not been paying its dues
properly, it can charge the owner for up to 10 years of
retroactive payments. And when it wins a major court battle such
as the one against Image City, it is quick to get the word out
and use its victory as a deterrent to other would-be challengers
of authority.

It is unclear at this point if Image City will appeal the ruling,
but even if they did, the odds of a reversal are practically
negligible. Of perhaps more far-reaching importance is the degree
to which this case will act as a precedent for similar conflicts
which are bound to arise in the near future.

---------------- ICA Event - June 21 ----------------------

Speaker:Peter Butterfield
Vice President and General Counsel, KVH Co., Ltd.
Speaker:M.S. Rangaraj
Vice President and Chief Technology Officer, KVH Co., Ltd.

Topic:Offshoring to India-Key Factors to Consider

Details:Complete event details at
http://www.icajapan.jp/(RSVP Required)
Date:Thursday, June 21, 2007
Time:6:30 Doors open, Light buffet and Open Bar included
Cost:3,000 yen (members), 5,500 yen (non-members)
Open to all-location is Ristorante Conca d'Oro
http://www.websanko.com/b_info/akgardencity/details.html

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++ NOTEWORTHY NEWS

** Warner Music Japan to sell music on iTunes
In brief: Apple Japan announced on June 6 that it would begin
offering tracks from Warner Music on the iTunes Music Store in
Japan. Warner had been a notable holdout on iTunes Japan since
the service started nearly two years ago, and the inclusion of
its catalog is expected to give a the iTunes store here. The only
major label that is still missing for iTunes is Sony.
view source

** Napster, NTT DoCoMo start 'Uta-houdai' flat-rate subscription
service
In brief: With the release of the N904i and SH904i handsets on
May 25, Napster and NTT DoCoMo officially kicked off the start of
their new 'Uta-houdai' service. For JPY1,980 (US$16.50) per
month, subscribers have unlimited access to over 300,000 songs.
From June 9-17, a promotional campaign will run allowing users to
sample songs from the service for free. Songs downloaded during
this time will be playable for 24 hours. The current 'Napster to
Go' service is also being extended to support the new 904i DoCoMo
models.
view source

** Label Mobile records 100 million full-song downloads
In brief: On May 21, Label Mobile announced that it had recorded
a total of 100 million paid full-song downloads since starting
the service on KDDI in November 2004. This figure includes
downloads from not only KDDI, but also SoftBank and NTT DoCoMo.
It is estimated that over 75% of all full-song downloads in Japan
come from the Label Mobile site. Label Mobile is joint venture of
record labels in Japan, and has also been the target of an
ongoing investigation by the Japanese Fair Trade Commission for
cartel-like behavior.
view source

** Dwango releases Flash application for making music
In brief: Dwango recently introduced a new Flash application
called 'Hasshin Melody' on its dwango.jp mobile music download
service that lets users make music by pressing the number keys
on the phone. Each key corresponds to a particular instrument or
vocal pattern, which is synched to a short animation.
view source

** NTT DoCoMo starts new i-mode service in Hong Kong
In brief: On May 30, NTT DoCoMo announced it had started a new
i-mode service in Hong Kong, in conjunction with Hutchison
Telephone. The new service will initially be supported on three
handsets made by Motorola, Samsung and NEC. The new Hong Kong
offering marks the 18th i-mode service started by DoCoMo.
view source

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Start a Company in Japan

Entrepreneur's Handbook Seminar 9th of June, 2007

If you have been considering setting up your own company,
find out what it takes to make it successful.
Terrie Lloyd, founder of over 13 start-up companies in Japan,
will be giving an English-language seminar and Q and A on
starting up a company in Japan.
This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally answered
in business books.
All materials are in English and are Japan-focused.

For more details: http://japaninc.com/terrie_lloyd/
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