Japan tuning in to on-line music

Business Asia, Sept 13, 1999

The rapid spread of Internet use in Japan is waking major companies up to the idea of on-line music, a medium that is already rocking fans in America.

While there are still major question marks over how to distribute and charge for downloaded music, big Japanese firms are keen not to be left behind in an industry that some predict will be firmly in the mainstream by next year.

"It will start replacing the 700 billion yen (US$6.25 billion) compact disc industry next year," Hiroshi Fujiwara, president and CEO of Japan's Internet Research Institute, said of the potential market for on-line music distribution.

"The technology is already in place."

Such high hopes have prompted Sony Music Entertainment (Japan), 71 per cent owned by Sony Corp, to consider selling songs of contracted domestic artists on the Internet by the end of the year.

It has already started test marketing, distributing a full-length, listen-only version of a new single by pop star Mariah Carey on its web site for six days.

Warner Music Japan, a fully owned unit of Time Warner of the United States, also plans to sell songs by domestic artists by the end of the year.

Industry officials said the growth of Internet use in Japan -- which has seen a number of on-line business startups in the past year -- has made major recording companies consider entering the on-line music market, previously the preserve of independent artists.

"It's been said that Internet use in Japan is behind the United States by two or three years ... But it has grown considerably this year," said Katsuo Hori, an analyst at International Data Corp (IDC) Japan, who predicts Japanese Internet use will soon reach US levels.

The US Internet music industry has mushroomed this year, spawning sites where web surfers can listen to music from popular artists as well as buy songs that can be transmitted to a user's computer.