MMW-30 -- Intro to the Japanese Ringtone Production Business

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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 the week's music technology news
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Issue No. 30
Thursday, August 15, 2002
Tokyo

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CONTENTS

++ FEATURE: Intro to the Japanese Ringtone Production Business

++ NOTEWORTHY NEWS:
- Faith Buys Digiplug for 2.3 Billion Yen
- Sony Develops Technology for Copyright, Distribution
Management
- Tonos Signs Deal with Music Publishers

++ FEATURE: Intro to the Japanese Ringtone Production Business

Over the past two years, the popularity of ringtone download services
in Japan has provided a steady source of income for Japanese musicians
who are able to create MIDI data that can be converted into the
various ringtone formats. During this time, I've often been asked
about how much it costs to create ringtone data for a single song.
Also, many musicians both in Japan and abroad are curious about how
much they can expect to earn as a freelance MIDI/ringtone creator. In
this feature, I'll give a brief introduction to the ringtone
production business in Japan, based on some of the things we've
learned here in the theta team during the past six months.

First, many of the top players in the Japanese ringtone business are
companies whose main business for many years was the production of
karaoke systems and/or song data for such systems. XING, Yamaha and
Daiichi Koushou are just a few of the major ringtone service providers
who were able to leverage their expertise and connections from the
karaoke industry in making their ringtones. These connections include
not only relationships with record companies and copyright protection
organizations, but also a vast network of companies, agents and
freelancers who create and arrange the MIDI data for the songs.

The network of MIDI creators is significant because ringtone services
must constantly add new songs to their catalogs. Typically, these
services must prepare weekly or monthly lists of songs, then try to
figure out how much of the work can be done in-house. For the
remaining songs, production orders are placed to companies and
freelancers. Most of the larger service providers issue production
orders only for the MIDI creation, preferring to handle the more
complex MIDI-ringtone conversion process in-house. As I've described
in previous features, the conversion of MIDI to ringtone data requires
special software and hardware which is not readily available to
individual freelancers.

In general, the production process in Japan works like this: MP3 files
for the songs are provided to the creation company (often through an
agency), along with arrangement guidelines for the creator, who must
then figure out which 'hooks' and other characteristic features of a
particular song to use for a 45 second arrangement. Each part is then
worked out by ear from the MP3 file and entered as a track in the MIDI
file. The finished files are then submitted to the ringtone service,
which checks them over and issues a 'testing report,' saying which
things need to be redone for the order. Following a favorable testing
report, the production company then issues a 'delivery statement,' for
which it receives a corresponding 'acceptance of delivery statement.'
Only after receiving the acceptance document can the production
company issue an invoice for the entire order.

And that brings us to the issue of pricing for song production. The
general cost range for producing a single song in 16-voice formats for
all three carriers is between JPY30,000-60,000 ($250-500). The high
end of this range is claimed by a few companies in Tokyo with
extensive experience in MIDI creation that also have the capacity to
handle large orders on short notice and that can also handle the
MIDI-to-ringtone conversion process. There are also several companies
and individuals who are especially proficient in certain styles of
music (e.g., J-Pop or Hip-Hop), and they too are able command higher
prices for their work.

From the standpoint of the individual freelance MIDI creator/arranger,
rates run roughly from 10,000 yen to 35,000 yen ($80-290) for creation
of a single 16-voice MIDI file. In some cases, it is possible to find
people who will do this for as low as 5,000 yen per song, but the
quality of the arrangement is also usually pretty low. One MIDI
arranger with whom I spoke recently complained of massive low-quality
ringtone "dumping" being done by some of his acquaintances at prices
far below the market rate, which subsequently forced him to lower his
rates.

Finally, nearly all service providers are looking for ways to increase
production speed while minimizing costs. At present, the two main
bottlenecks are the MIDI-to-ringtone conversion process and the
middle-layer agencies and companies that simply take their cut and
pass the work on to the next company in the chain. Huge demand
exists at the moment for a tool that could even partially automate the
conversion process. Likewise, an increasing number of service
providers are cutting costs by breaking ties with some of the
middlemen left over from the glory days of karaoke production and
going straight to the companies and individuals who actually do the
work or hiring freelancers to work in-house on a contract basis. Of
course, this is great news for MIDI-capable musicians in Japan, many
of whom are finding MIDI/ringtone creation to be an excellent
opportunity to increase their income in an otherwise difficult
economy.

-- Steve Myers

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++ NOTEWORTHY NEWS

** Faith Buys Digiplug for 2.3 Billion Yen

In Brief: Last week, we reported on some of Faith's activities in the
US. Turns out the Kyoto-based company has been busy in Europe as well.
On August 9, Faith announced that it was buying Digiplug for 20
million euros, or 2.3 billion yen. Faith is the maker of the ringtone
file format used on all Docomo phones as well as many KDDI models.
Digiplug, based in Paris, has 39 employees and is also active in the
mobile music and ringtone industries.

Source
http://sg.biz.yahoo.com/020809/15/31g5f.html

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** Sony Develops Technology for Copyright, Distribution Management

In Brief: On August 12, Sony announced the release of a technology
called OpenMG X that will be used for copyright protection and
distribution of digital music and motion picture files. OpenMG X is a
client-server system that allows content providers to limit the number
of times a file can be played.

Source
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/news/2009
67

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** Tonos Signs Deal with Music Publishers

In Brief: Tonos Entertainment, which runs a Web site aimed at helping
musicians break into the recording industry, recently announced a deal
with five music publishing companies, including EMI Music Publishing
and Warner Chappell Music. The companies have agreed to sign at least
two aspiring songwriters who are members of Tonos' network.

Source
http://news.com.com/2110-1023-949422.html?tag=cdshrt

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SUBSCRIBERS: 914 as of August 15, 2002

STAFF
Written by: Steve Myers (steve.myers@l8tech.com)
Steve Myers heads the Theta Group at Layer-8 Technologies,
which specializes in the development of music-related
software applications.

Edited by J@pan Inc editors: (editors@japaninc.com)

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