iTunes Japan: Sony vs. The Jimushos

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Hats off to Jeans Now for pointing me to this article (link expire) about Japanese artists signed to Sony attempting to go around their label’s anti-Apple directive and get their songs into the iTunes Japan legal downloading frenzy. Sony — maintaining the business strategy of sticking cotton in its ears until Doc Brown finds a way to transport the world back to 1985 — refuses to offer its artists’ songs on iTunes, much to the chagrin of the artists and their management companies who are losing a very serious business opportunity. Most management jimusho own the master rights and publishing to their artists’ work, so this is not about missed “promotional opportunities”: The production firms generally make a large chunk of cash directly from music sales.

I’ve always liked Sony. They have a heart-warming success story and used to make very high-quality products. And if it weren’t for the Playstation 2, I would have never let my thuggish avatar virtually pick up a prostitute, have sex with her in an abandoned alley, pay her, and then run her over with my car to get the money back (I’m talking about Parappa the Rapper.) But lately, Sony has been the epitome of what we call in the academic business world, “an industrial cockblock.”

Sony used to take up about 20% of the Japanese music market, but its market concentration has frequently dipped towards a mere 10% in the last couple of years. Although Sony’s myriad labels are back up to being about 17% of the market (2004 Oricon figures), I’m not sure that they sleep well at night knowing that they profit from tricking consumers into thinking Orange Range is a music group and not a fungal infection afflicting the ear.

In the past, Sony probably had enough market power to actually stop unwanted technological progress (well, they bit it big-time on Betamax), but now, nobody has anything to win from their stonewalling — except, of course, Sony itself. But the end is nigh, and the company comes off like a hubristic king trying to keep the dying peasants from fleeing a plague-ridden castle. But once the powerful jimushos get angered that Apple is not laundering enough of their funny money, I very much doubt that Sony can really keep holding out on this anti-iTunes crusade.

W. David MARX (Marxy)
August 11, 2005

Marxy wrote a lot of essays back on his old site Néomarxisme. This is one of them.

11 Responses

  1. Jrim Says:

    We ran an article about this in the mag I work for a while back (http://www.japan-zine.com/page1.php?id=103). Seems that both the record companies and the record stores themselves strongly opposed the iTunes Way (and the fact that the two enjoy such a close relationship wouldn’t have helped matters much, either). Part of the problem was the labels’ refusal to recognise legal downloading as a source of (rather than threat to) profit. Sony spokesperson Yasushi Ide’s quote is rather revealing: “if we made songs too cheap – made them a commodity – we’d only end up hanging ourselves.” As you suggested, it’s a pretty blinkered, wind-back-the-clock outlook.
    That said, Sony also has a vested interest of its own to promote: mora.jp, formerly Label Gate. Here, individual tracks range in price from ¥150 to ¥210, with entire albums costing ¥1500-2000 to download. Not all that different from the iTunes store, then, though I think the files come in a different format. Let’s see how long they can keep up the fight…

  2. Chris_B Says:

    Dang you JeanSnow! I was gonna hit Marxy with that link. Just kidding, your site is real pretty and I bet you are a prince among men.

    Jrim: Aint that Ide-san a funny one?

    On Apple vs Sony: Here we have an odd one. Full disclosure, I own alot of Apple product as well as being a shareholder. I have owned a bunch of Sony product but have no financial interest in any of their enterprises. That out of the way, for a while I’ve been asking myself why I chose one company’s proprietary way over the other; why exactly do I like all the proprietary products and services of Apple over those of Sony? In regards to digital audio I’ve owned both company’s products and for me the difference is not in the hardware but purely software, the “user experience” of it all. I just dont like Sony software at all. Not on a computer and not on any other gizmo I’ve owned.

    Anyways, I’m looking forward to signing up to iTMS-J as soon as they fix the little problem of not recognizing my credit card. Oh the irony…

  3. r. Says:

    another interesting thing with this whole japan itunes store is that you have to have a japanese credit card to actually by things there. what on earth could the logic of this be? naturally, they want to limit and control the ‘who’ and ‘where’ as much as possible.

  4. Jrim Says:

    another interesting thing with this whole japan itunes store is that you have to have a japanese credit card to actually by things there. what on earth could the logic of this be? naturally, they want to limit and control the ‘who’ and ‘where’ as much as possible.

    You’re wrong there, actually – you can buy prepaid cards and gift certificates to use on the iTunes store. As for limiting and controlling the ‘who’ and ‘where’, as you put it – this is done with iTunes stores in every country. Hence the fact that, say, people in Japan can’t buy from the US iTunes, and vice versa. I’m not sure exactly what the logic behind this is, but I think it has to do with the complexities of getting record labels onboard in the first place – i.e. it’s one thing to negotiate rights for distributing music in a single country, but another thing altogether to get worldwide distribution.

  5. Nathan Says:

    Interesting point there Chris. I think that maybe the reason is that Apple (of late) only takes the proprietary route when it has a benefit to the consumer, whereas Sony takes it to lock people in. (I see this, because Apple also pushes a lot of open stuff too, when it’s the best option).

    I used to own a lot of Sony myself, but have lost faith in recent years, only being interested in their digital cameras and tv’s now. audio wise, they’ve gone to #1 to out of the park and on the bus home in my eyes. Sonicstage isn’t helping their cause either.

  6. jean Says:

    So sad for Sony, considering in the US, an average of 1 million songs are sold through iTunes per month, and in Japan, 1 million songs were sold in 4 days.

  7. marxy Says:

    I should have put this in the essay, but basically, Japanese record companies’ primary responsibilities are manufacturing and promotion. And seeing that the artist management companies often own the master rights and publishing, that means a digital delivery system would pretty much net the label almost nothing and start making the way for jimusho to do everything themselves, which is already the trend of the moment (Johnny’s own labels, Zetima, etc.).

  8. Chris_B Says:

    nathan: I still like my sony digicams but my next purchase is up in the air.

    marxy: in theory that is good for the consumer, then again without knowing the details of the iTMS-J contracts, its hard to guess where the money is gonna go.

    r: they formally require only a japanese billing address. I expect that the card verification code they are using only looks at the first four digits to determine if it is issued on a japanese bank rather than trying to deal with the variances of actually doing address checking. That is even more odd because the signup page in iTunes forces you into Japanese text entry mode even for numbers but converts all the text back to single byte text.

  9. Dave Says:

    The reason they only accept Japanese billing addresses is to allow record companies to maintain price differentials between different countries (and related to that is the difficulties in getting record companies ‘on board.’) So people in Japan can buy at 200 yen, in the US it costs US$1, in Australia AUD$1 etc.

    Naturally this means that someone, somewhere is paying a lot more than someone somewhere else. It’s a bit harder to say whether this is really record companies ripping consumers off though. (It stands to reason that offering songs at a low price to people in poorer countries is better overall than not offering them at all, or offering them at a high price, since more people buy a product that is basically free to produce – but if *everyone* paid that low price, the record company might lose money instead of make money on the band deal. The same idea applies to drugs – sell AIDS drugs cheap in Africa, but make sure that they still earn enough in the developed world to cover the cost of development, otherwise it wouldn’t be worth doing.)

    Commercial enterprises will try to use this to maximise profits of course.

  10. Jrim Says:

    The reason they only accept Japanese billing addresses is to allow record companies to maintain price differentials between different countries (and related to that is the difficulties in getting record companies ‘on board.’) So people in Japan can buy at 200 yen, in the US it costs US$1, in Australia AUD$1 etc.

    Yeah, exactly. That’s the reason the iTunes store was so long coming in Japan in the first place – it sounds like the negotiations involved were pretty tortuous/torturous. As for all that stuff about consumers in poorer countries – well, I think that’s where rampant CD/DVD copying/piracy steps into the divide.

  11. ndkent Says:

    Regardless of there only being a couple multinationals controlling most of the music product out there, music is still being licensed to specific companies to sell in a particlular territory. Every established company has existing contracts that would be violated if iTunes as their sublicensor/vendor or whatever they legally do is in fact freely exporting into other teritories. Is everyone saying something about ex-pats and their foreign issued credit cards not being able to download the latest hit of Ayu? Not sure I follow. Seems easy enough to team up with a friend with a Japanese card and work out an arrangement.

    For what it’s worth, in most of the 90s I don’t think any Japanese company could take a foreign issued credit card via phone or the net without swiping it in person or using a foreign based office to do that service.

    I don’t see the cost per tune being a big deal. There is some actual marketing being paid for and costs to be agreed on. It’s not going to be the same in every country.

    Strain your wisdom to brew your own Ponsi scheme –

    Ever notice that after an initial 4000 yen CD price (133% over LP prices), Japanese CDs settled at more or less typical LP cost (100% of LP price) while American CDs debuted at about 250% of LP prices and settled at 200%. In 1985 the dollar got you 260 yen. Today it’s 105.