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Mobile Innovation and the Music Business in Japan: The Case of Ringing Tone Melody ("Chaku-Mero") (Research Note)

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This paper examines the development process and successful factors of the ringing tone melody downloading service, or "Chaku-Mero," in Japan. Chaku-Mero is a mobile Internet service in which a subscriber could download from a wide selection of music melodies his/her favorite with some fee to get it ring when the mobile phone receives a call message. This service is arguably the most successful m-commerce business in the world. According to three major mobile communication carriers, NTT DoCoMo, KDDI, and J-Phone, Chaku-Mero accounts for 40 to 60% of their paid service sales on the mobile Internet. Industry sources estimate that annual payment for Chaku-Mero reached approximately 80-90 billion yen in 2002 (currently US$1=120yen). Also, it has been argued that the Japanese Chaku-Mero service is the sole example of Internet cultural content business, be it fixed or mobile, in the world that has successfully overcome complicated conflicts and concerns of copyrights among different parties and created a significant market. The paper describes the process of how this business has evolved. It traces back the pre-mobile-Internet phase of related services such as the "Sky Melody" service by J-Phone and the wireless Karaoke business, which served as precursors of Chaku-Mero. Then the paper examines the business structure: the parties involved in the business, their relations, and how values are created and distributed among them. Also, the paper analyzes why some content providers have been more successful than others. A leading Chaku-Mero provider, for example, maintains more than 6.5 million subscribers and annual sales of 12 billion yen. Over all, the paper provides a preliminary study of mobile innovation in the music business, which is a part of a larger study of the history of interactions between technologies to create, record, distribute, and promote music and the music business. It would give some implications for the prospects of mobile Internet b
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... Beginning with NTT DoCoMo, Japanese operators defined and upgraded the interface standards for screen savers and ringing tones many times. Phones capable of transforming a downloaded graphical interface format (GIF)-compatible picture into a screen saver were available by the spring of 1999 and those capable of downloading ringing tones using a compressed form of the MIDI musical instrument digital interface (MIDI) protocol were available by late 1999 (Takeishi & Lee, 2006). Improvements in chips and displays caused members of the emerging value network for screen savers and ringing tones to continuously modify these interface standards largely through the direction of the operators. ...
... These interface standards for screen savers and ringing tones also depended on the existence of more basic interface standards such as packet, micro-payment (i.e., billing), and user authorization that enabled basic data connections between phones and operators (shown in the middle of Fig. 2). Users were charged for these screen savers and ringing tone services in their phone bills from the operators where the operators passed on about 90% of the content fees to the content providers (Funk, 2007a(Funk, , 2007bHaas, 2006;Takeishi & Lee, 2006). ...
... Other organizations and firms filled other structural holes between the content providers, music owners, and phone manufacturers. Japanese Society for Rights of Authors and Composers (JASRAC) handled the distribution of copyright fees from the ringing tone providers to the owners of the music compositions, Faith provided the software technology for MIDI, and Yamaha and Rohm (and later Qualcomm) provided the chips that supported Faith's software (Takeishi & Lee, 2006). And large numbers of the early providers of this entertainment content made Coleman rents This competitive situation began to change as the second and third largest operators in Japan copied NTT DoCoMo's imode service and as the continued improvements in phone technology have provided opportunities for these other operators to introduce new services that are based on new interface standards, some of them before NTT DoCoMo (See Table 2). ...
Article
This paper considers how the mobile phone industry is changing from a value chain to a value network using the Japanese market as an example. Value networks involve a larger number of firms, a more complex set of relationships between them, and agreements on a greater number of interface standards than do value chains. Building from this concept of a value network, the paper shows how: (1) agreements on many of these interface standards are enabling connections to be made between the mobile phone and other industries; (2) the resulting products and services often reflect the technological capability of phones and the existing products and services in these “other” industries; (3) each new interface standard requires a new critical mass of users; and (4) a critical mass of users for a new interface standard partly builds from previously created critical masses of users. On a practical level, this paper's analysis adds to a growing list of evidence that the growth in Western mobile Internet markets is nowhere near its potential and that the change from a value chain to a value network requires a different form of standard setting, policy making, and management than are currently used in the mobile phone industry.
... The first critical mass of phones, services, and content in Japan was created for entertainment content such as screen savers, ringing tones, and later games in 1999 and 2000 (Fransman, 2002;Funk, 2007a). Following the introduction of the first mobile internet phones from NTT DoCoMo in February 1999, phones capable of transforming a downloaded GIF (graphical interface format)-compatible picture into a screen saver were available by the spring of 1999 and those capable of downloading ringing tones using a compressed form of the MIDI (Musical Instrument Digital Interface) protocol were available by late 1999 (Takeishi and Lee, 2006). These interface standards for screen savers and ringing tones also depended on the existence of more basic interface standards for packet, micro-payment, and user authorization and the compatibility of these basic standards with the standards for screen savers and ringing tones. ...
... These interface standards for screen savers and ringing tones also depended on the existence of more basic interface standards for packet, micro-payment, and user authorization and the compatibility of these basic standards with the standards for screen savers and ringing tones. Micro-payment and user authorization systems enabled service providers to collect content fees from users on monthly bills and distribute some of these revenues to content providers (Takeishi and Lee, 2006). The creation of a critical mass of phones and content providers is reflected in the rapid growth in the number of content providers (tripled) and in the percentage of them that offered entertainment (from 9 per cent to more than 50 per cent) between February and September 1999 (Funk, 2007a). ...
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Purpose The purpose of this paper is to analyze standard setting and how a critical mass of users emerged in an industry in which multiple interface standards co‐exist and a critical mass of users was created multiple times. Design/methodology/approach This paper is based on research conducted for almost ten years using the case study approach. Data were gathered through more than 100 interviews with Japanese firms and through analyses of published sources. Findings The paper finds that growth in mobile internet services required agreements on multiple interface standards where some of these interface standards exhibited interdependencies and thus required integral design, while others have been built on top of these “basic” interface standards. Agreements on the former interface standards enable basic data connections between phones, services, and content and this required integral design. The latter interface standards connect the mobile phone with content and applications from other industries (e.g. music, video, publishing, broadcasting, and payment) and each critical mass of phones, services, and content for them partly builds from previously created critical masses. Research limitations/implications The research focused on a single industry in a single country. Practical implications This paper helps scholars and practitioners better understand how interface standards and critical masses for them emerge. Originality/value This is the first paper to analyze multiple interface standards in a single industry and the emergence of a critical mass of users or complementary products for these standards.
... The first critical mass of phones, services, and content in Japan was created for entertainment content such as screen savers, ringing tones, and later games in 1999 and 2000 (Fransman, 2002;Funk, 2007). Following the introduction of the first mobile Internet phones from NTT DoCoMo in February 1999, phones capable of transforming a downloaded GIF (graphical interface format)-compatible picture into a screen saver were available by the spring of 1999 and those capable of downloading ringing tones using a compressed form of the MIDI (Musical Instrument Digital Interface) protocol were available by late 1999 (Takeishi and Lee, 2006). These interface standards for screen savers and ringing tones also depended on the existence of more basic interface standards for packet, micro-payment, and user authorization and the compatibility of these basic standards with the standards for screen savers and ringing tones. ...
... These interface standards for screen savers and ringing tones also depended on the existence of more basic interface standards for packet, micro-payment, and user authorization and the compatibility of these basic standards with the standards for screen savers and ringing tones. Micro-payment and user authorization systems enabled service providers to collect content fees from users on monthly bills and distribute some of these revenues to content providers (Takeishi and Lee, 2006). The creation of a critical mass of phones and content providers is reflected in the rapid growth in the number of content providers (tripled) and in the percentage of them that offered entertainment (from 9% to more than 50%) between February andSeptember 1999 (Funk, 2007). ...
Article
This is one of the few papers to analyze multiple interface standards in a single industry and it finds that standard setting in such an industry is much more complex than those covered in the existing literature. In the mobile Internet, some of the interface standards initially required so-called integral design while others have been built on top of these “basic” interface standards. The former interface standards enable basic data connections between phones, services, and content while the latter ones connect the mobile phone with content and applications from other industries such as music, video, publishing, broadcasting, and payment. This paper shows that in connecting the mobile phone and other industries, each critical mass of phones, services, and content partly builds from previously created critical masses.Highlights► Some industries include multiple interfaces and thus multiple interface standards. ► Many interface standards require a critical mass of users or complementary products for growth to occur. ► Critical masses partly build from previously created critical masses in the mobile phone industry.
... For more detailed description of Japanese mobile music businesses and their development process, seeTakeishi and Lee (2003). ...
Article
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This paper examines how mobile music businesses have been developed in Japan and Korea, two countries that have led the world in creating and developing the mobile music industry. We pay attention to the music copyright institution as a "reverse salient," which we argue has played an important role to determine the direction and timing of mobile music innovation in the two countries.
... For more detailed description of Japanese mobile music businesses and their development process, seeTakeishi and Lee (2003). ...
Article
This paper examines the development process of music businesses on mobile Internet in Japan and Korea, two leading countries in the world that have been enjoying rapid growth of mobile Internet businesses. Based on the "Large Technological System" perspective (Hughes 1983, 1989), this paper sees music copyright management institutions as a "reverse salient" in the large technological system of mobile music businesses. We argue that the development of mobile music business has been and will be dependent on how to revise copyright management institutions in accordance with changes and advancement of technologies and other sub-components in the large technological system.
... Whereas the world internet music download market (excluding ringing melody in Japan) was estimated to be 341 million US dollars in 2004, the Japanese ringing melody market had already reached 664 million US dollars by 2002. While there were several factors to explain this success, Japan's copyright management institution played a key role in the smooth and rapid development of the ringing melody service (Takeishi and Lee, 2006). ...
Article
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This paper aims at exploring a mechanism of new business development. To understand how a business develops, we move our analytical focus from the level of a focal business to the level of the "business ecosystem," a collection of related businesses and institutions. We pay special attention to slowly advancing component as a "reverse salient." We comparatively examine the developmental process of the mobile music business in Japan and Korea, and show how the interactions among related businesses and music copyright institutions as a reverse salient shaped the directions and speed of the development in each country.
Chapter
While mobile intrusion comes to life insidiously, it has been affecting our lives in many different ways. At first social networking and some implementations such as mobile dating comes to mind. On the other hand, mobile literacy and educational implementations are evolving and spreading rapidly with the facilities of mobile systems. Having turned into one of the most important elements that trigger and develop the social genes in the twentieth century, communication technology is also drawing the attention with its impacts that direct socialization. Internet and cyberspaces which are used in mobile communication create communication organs with their multi but non-conflicting features for person to person connections, where individuals focus on a unity through the utilization of different modes to connect (Urry, 2002). This environment is suitable to create virtual societies where many people join with various reasons and they should also be considered in terms of marketing. The inclusion of people on the Internet as social actors evokes gathering metaphor on the background. General behaviors of any kind of gathering such as chatting, discussing, challenging and keeping secrets are also seen on this platform (Sproull & Faraj, 1997). Chat rooms, organized clubs, facebook type of websites, and virtual games are places where people spend time or perform communication-based activities.
Chapter
The human being benefits from his or her ability to communicate and turn knowledge into action in order to sustain its ability to survive on this planet, the earth. As a result of the fast life conditions imposed on humanity, point-to-point relationships have begun to be established in a faster way and the idea to use technology to acquire and share knowledge has become widespread. Doing the right thing leads to improving and advancing the standard of life. The products of the mind can now be produced easier than ever by scope of technology. Intercommunication between people begins with talking; humans first talk and then express his or her emotions and opinions. Mobile telephone is the name of the latest technology which creates a worldwide area to talk in. One can easily notice how much the sector and its applications have developed only by looking at the first mobile phone which was launched in the world. Motorola Dyna TAC 8000x is one of these telephones. Its dimensions are 13x1.75x3.5. This is a brick-size device and you had to pay US $3,995 to own it in 1983. In return, what you would get was just a telephone which provides just voice communication and which could be used while moving. This affected concurrently users, families, types of entertainment even health issues and payments. The positive and negative effects have appeared in the evolutionary stage. Like the virtual environment (Han, Kim & Lee, 2005), the mobile environment which is used in order to cover customers’ needs for communication, information and entertainment is related to marketing with its different spirals and own sanctions. In this chapter we would like to give short notices for future researchers about the present conditions of major important topics and some new trends of these subjects.
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In order to understand how IT impacts at the industry level, this paper adopts a theory of the coevolution of technological innovations and copyright institutions and applies it to examine how the mobile music business in Japan and Korea has developed. In Japan, mobile music business is controlled by incumbent recording companies and is complementary to offline CD sales. In Korea, however, the online music business (including mobile and fixed-internet) is dominated by mobile carriers and has replaced offline businesses, which has caused disruptive changes in the music industry structure. This paper suggests that diverging national copyright institutions give rise to the contrasting industrial changes, which in turn emphasizes how political processes drive the interactions between technologies and institutions.
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