MMW-123 -- Cutbacks at EMI Causing Artists to Jump Ship

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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. 123

Tokyo

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CONTENTS

++ FEATURE: Cutbacks at EMI Japan Causing Artists to Jump Ship

++ NOTEWORTHY NEWS:
** Japanese take 'wait and see' attitude toward iPhone
** Yudo launches new site for music games
** RIAJ opens J-Pop music information sites in English
and Chinese
** New Vocaloid-based product announced
** Rittor starts online lessons on Yahoo! Japan

++ FEATURE: Cutbacks at EMI Japan Causing Artists to Jump Ship

A recent feature in the Nikkei Sangyou Shimbun put EMI Japan
under the spotlight, focusing on the label's cost-cutting
measures and the negative reaction of Japanese artists, several
of whom have defected from EMI in the past few years to sign on
with other labels. In 2007 alone, five major artists chose
either not to renew their contracts with EMI, or to opt out
early in order to move to another record company. Elephant
Kashimashi, Anri and Hideki Togi all left EMI for Universal
Japan, while Ulfuls went to Warner and Noriyuki Makihara found
a new home at Avex. In addition, Kyougo Kawaguchi departed the
label in 2006, while Hitomi Yaida ended her contract with EMI
in 2005.

While this kind of label-hopping is not unusual for artists in
the west, it is still fairly uncommon in Japan, where major
artists are more likely to stay with one label for the bulk of
their careers. Furthermore, these are all very high-profile
performers whose albums have consistently sold well here. While
labels such as EMI and Universal have an incentive to promote
western artists in Japan, more than half of their sales come
from Japanese artists, and both companies have worked hard in
the past to attract and retain popular Japanese artists.
Considering that non-Japanese music now accounts for only 20%
of the market in Japan, it has become even more important for
international labels here to cultivate a strong roster of J-Pop
artists.

So why are so many Japanese stars who built their careers at
EMI suddenly jumping ship and switching labels? The simple
answer appears to be that in its attempt to cut expenses and
boost profitability, EMI may have gone a bit too far in slashing
the budgets for promotion of new releases by some of its key
artists. The Nikkei article quotes the management agency of one
of the departing artists (but doesn't say which one) as being
upset that the marketing budget for a new release went from 30
million yen (US$285,000) suddenly down to 8 million yen
(US$76,000).

Since being purhcased by private equity firm Terra Firma Capital
Partners in August 2007, EMI has announced a massive
restructuring plan with roughly 2,000 jobs to be cut worldwide
in 2008. Several international artists, including Radiohead,
have also left EMI since the takeover. Furthermore, Terra
Firma's Guy Hands, the who took over as CEO after the purchase,
has had numerous well-publicized run-ins with managers and EMI
staff. Hands stepped down on July 7, taking a non-executive
chairman position and turning over the CEO job to Elio
Leoni-Sceti, who was previously with European firm Reckitt
Benckiser.

The cuts in Japan, though, appear to have been underway for
more than three years now, and are primarily the work of EMI
Japan CEO Shoji Doyama, who took over in January 2005 (when
it was still Toshiba-EMI) with a mandate to restructure the
company. Doyama began by selling off buildings and factories,
then in 2006 he cut the Toshiba-EMI workforce nearly in half,
slashing 240 jobs. When mobile download revenues soared the same
year as Utada Hikaru broke all the digital sales records, Doyama
was able to boast of greatly increased profits due to the
layoffs.

Now, however, many in the industry are starting to question the
wisdom of cutting back to such a high degree. Both Doyama and
the EMI strategy in general have been criticized in the Japanese
media for putting too much emphasis on short-term profits and
not enough on the formation of a broader long-range vision and
strategy. Universal Japan, in contrast, has taken a clear and
well-publicized strategy of strengthening its roster of Japanese
acts, and it is no surprise that several of the artists who left
EMI ended up at Universal. To make matters worse for EMI, Doyama
resigned his own post at the end of June to take an executive
position with Microsoft Japan.

Only time will tell if EMI Japan (along with the rest of EMI
Group) is able to effectively regroup and rebuild itself from
its current down-sized state. At least for the coming year or
so, though, the cuts at EMI are expected to continue, and it's
likely that several more disgruntled Japanese artists will move
on to look for greener pastures.

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++ NOTEWORTHY NEWS:

** Japanese take 'wait and see' attitude toward iPhone
In brief: In the days leading up to the July 11 launch of the
3G iPhone, a survey by Kakaku.com found that half the people
responding said they would at least consider purchasing an
iPhone. While 17% said they either 'wanted to buy' or
'definitely wanted to buy' the new iPhone, 33% answered that
they would wait and think about it, while 43% said they would
not buy one. Several Japanese telecom analysts, including Yusuke
Tsuda, have voiced their doubts about the demand for the iPhone
in Japan, pointing out that the device faces stiff competition
here from other phones with advanced technology and features not
found on the iPhone.
Source:
http://plusd.itmedia.co.jp/mobile/articles/0807/07/news013.html

** Yudo launches new site for music games
In brief: On June 10, Yokohama-based Yudo Corp opened a new site
offering a free online rhythm game which users can customize
using their own music. Yudo has contracted with JASRAC to license
the entire catalog of music controlled by JASRAC for use on the
site. Users must register in order to use their own music in the
game.
Sources:
http://pan2music.net/
http://bb.watch.impress.co.jp/cda/news/22137.html

** RIAJ opens J-Pop music information sites in English and
Chinese
In brief: Aiming to boost the presence of Japanese music
overseas, the Recording Industry Association of Japan has
launched new sites in English and Chinese for fans of J-Pop.
The English site is dubbed 'Japan Music Entertainment' and
features news, interviews, videos and rankings. Also
participating in the project are Oricon and Japan Music Data.
Source:
http://www.riaj.or.jp/release/2008/pr080605.html
English site:
http://www.jp-musicet.com/en/

** New Vocaloid-based product announced
In brief: Following on the success last year of Hatsune Miku,
a virtual singer program that utilizes Yamaha's Vocaloid 2
technology for voice synthesis, Osaka-based Internet Corp (which
makes the 'Singer-Songwriter' sequencer software in Japan) has
announced a new product called 'Gackpoid' which features the
voice of J-Pop star Gackt. Like Hatsune Miku, the user enters
lyrics and melody, and the program synthesizes the vocals.
Gackpoid will go on sale July 31, at a price of JPY 18,900
(US$175).
Source:
http://www.ssw.co.jp/products/vocal/gackpoid/

** Rittor starts online lessons on Yahoo! Japan
In brief: Rittor Music has started offering online lessons
through Yahoo! Japan's 'Yahoo! Step-up' e-learning site.
Initially, Rittor will have three series: guitar, bass and
drums. Each series consists of 25 key points for beginners.
Each series costs JPY 1,500 (US $16) for one year's worth of
access.
Source:
http://guitar.digimart.net/2008/06/yahoojapan.html

-- Steve Myers

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