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To: Dave Swanson who wrote (7573)	8/29/1999 11:09:00 PM
From: bob	Read Replies (1) \| Respond to of 18366

Very interesting article on Web music distribution from Japan. Warner Music Japan to Offer Music on Web, Chairman Says August 19, 1999 (TOKYO) -- Hiroshi Inagaki, chairman of Warner Music Japan Inc., said the company will start music distribution over the Internet within this year. The move was encouraged by a technical advance made by Secure Digital Music Initiative (SDMI), which is moving toward realizing a viable Internet music distribution service. Many companies have joined SDMI, including the five largest recording companies in the United States. It is a standardization group for music distribution technologies over the Internet. Inagaki said that some problems have hampered music distribution services in Japan. He noted that the development depends mainly on the spread of mobile communications devices. Nikkei NetBusiness The Warner Music group in the United States is taking part in the Madison Plan, an experiment for distributing music over the Internet. What developments are you pursuing in Japan? Inagaki We will start distributing works of some of our artists within this year to ascertain if our business model is workable. Warner is accumulating music sources in its music database, which is being constructed by the Japan Record Sales Network (JARECS). It is a record wholesaler jointly founded by major recording companies. The plan is to use this database as a source for Internet distribution after the autumn of 2000. I know 70 to 80 artists who have found it difficult to release CDs because recording companies say it's unprofitable. There are many pieces of music that are no longer available on CDs because of scant orders, even though their CDs are listed in catalogs. Distributing music over the Internet will truly benefit these artists. Q Will mobile MP3 players like "Rio" become popular? A These players will not be very popular as long as they are used in combination with personal computers. The core business will be distribution services oriented toward mobile phones like "iMode" services. Demand for music distribution over the Internet will skyrocket if music players with built-in high-speed mobile phones of the next generation are launched after 2001. If mobile phone operators charge for content together with a communications fee, this will be ideal. Payments could easily be made for small amounts. Because we are anticipating this era will come, we're making major preparations for setting up the distribution business. The concept of album CDs may even disappear in that new era. Q What are the prerequisites for offering music distribution services in Japan? A I think that the distribution business prevailing in the United States won't adapt itself to the Japanese market in the exact same way. In Japan, more than 4,000 record rental shops rent single CDs for 100 yen apiece per day. And Mini Disc (MD) players for recording rental CDs are widespread. Consumers here may not readily accept music distributed over the Internet. When the MD system was launched, software producers didn't come on strong enough. And this created a situation in which people can copy rental music on their MDs. Thus, we decided not to permit copying of music data distributed over the Internet. This decision was made from a totally different standpoint as compared to that in the United States, where limited copying is legal as a consumer right. We have submitted our request to the SDMI group through the Recording Industry Association of Japan to work out technical conditions by which recording companies can prohibit copying. The Warner Music group teamed up with Matsushita Electric Industrial Co., Ltd., Toshiba Corp., IBM Corp. and Intel Corp. in proposing to SDMI that electronic watermark technology be developed. Such technology is common for packaging media like DVD-Audio and for music distribution. In Japan, we are now at a very important point for the future of the music industry. Q Some experts contend that because artists will be able to distribute their music by themselves, record companies will lose much of the reason for their existence. A Naturally, there will be some conflict between artists and the "backstage" comprised of recording companies and production companies. Also, music pieces distributed by artists themselves will increase in number. However, the role of recording companies won't disappear. Newspapers still exist despite the advent of the Internet. And the ability to distinguish good artists and the ability to present top-notch artists will remain a skill of recording companies even if physical music discs disappear. (Jun Honma, Staff Editor, Nikkei NetBusiness)