sample deck for Apple Inc. (Japan)

1. How to become a successful
music streaming platform
in Japan
— Leanings from Chaku-uta —
Monday, April 1, 13

2. The integration of a communication function within a
streaming music platform is a key driver for its success
in Japan.
• chaku-uta, a benchmark in digital music distribution
service in Japan, has successfully integrated a
communication function to its platform
• “communication functions” are not limited to
“integration with multiple SNS”, but also refer to
“functions that drive internal and external conversation
within and beyond the platform”
Monday, April 1, 13

3. In essence, chaku-uta is a ringtone with the ability to play real music.
(“chaku” means to receive, “uta” means a song)
Supplementarily, it serves as a conversation driving tool,
like a jukebox or other social smartphone apps.
©123RF
©123RF
“Dowango Group [one of the biggest web entertainment providers] initially
started as a digital music distribution service, but we did not just see ourselves as
an online music seller. We considered chaku-uta as a service that initiates
conversations between the purchaser and the listener. We believed that people
would adapt to and depend on this type of service”
- Seiji Sugimoto, Executive of Dowango Subsidiary Niwango
[Source: Bessatsu Kadokawa “souryoku tokushu nikoniko douga” ]
Monday, April 1, 13

4. After its introduction in 2004, chaku-uta reached its peak in
2008 and started seeing its decline from 2010 onward.
Life Cycle of Chaku-uta
Growth Stage Maturity Stage Decline Stage
500M 100,000M
375M 75,000M
Quantity (Download)
Price (JPY)
250M 50,000M
125M 25,000M
Quan%ty Price
0M 0M
2005 2006 2007 2008 2009 2010 2011 2012
[Source: RIAJ ]
Monday, April 1, 13

5. From 2011 to 2012,
the number of chaku-uta download* dropped by 41%
while the single downloads on smartphones increased by 27%.
Yet, overall single downloads decreased by 16%.
70%
200M
43M Smartphone Shipment Ratio (vs. Feature Phone)
38M 45M 58%
55M
150M -16%
142M 143M
Quantity (Download)
138M 70M
+27%
109M
100M
22% Singles purchased on Smartphones
Singles purchased on Feature Phones
65M
50M
-41%
8%
3%
0M
2008 2009 2010 2011 2012
[Source: RIAJ ] [Source: MM Souken]
*Note: Singles purchased on feature phones are counted as chaku-uta. Singles purchased on smartphones are NOT considered as chaku-uta.
Monday, April 1, 13

6. Why has the overall number of downloads shrunk?
The rapid penetration of smartphones replaced chaku-uta’s tools with
smartphone applications, consequently declining overall usage of chaku-uta.
after smartphone penetration
(2011-2012)
the substitutes for chaku-uta impact of the substitutional apps
before smartphone penetration ✓Lower frequency usage of
•iTunes
(2008-2010) •Spotify
Chaku-uta
g ✓Higher frequency usage of
e nin •Soundcloud etc.
list substitutional apps
F
3R
c
usi
12
©
m
music downloading ✓Decrease of single downloads
•iTunes Music Store through chaku-uta
© 12
3R
F
•Play Store ✓Growth of single downloads
co •Amazon etc. through apps
nv
F
er
3R
12
sa
©
ti o
chaku-uta as a toolbox for nd
- music listening riv
ing
- music downloading
??
•YouTube (Generates Conv.) ✓Declined usage of chaku-uta as a
- conversation driving •Facebook (Social Conv.) conversation driver
•Line etc. (Personal Conv.)
RF
23
©1
decay of chaku-uta
Monday, April 1, 13

7. Online music platforms need to embrace the conversation driver
function in addition to the music functions for success in Japan;
otherwise may follow the same path as chaku-uta.
©123RF
©123RF
• Implementing the following measures is vital for success
1) highly functional on smartphones (for the rapid spread of smartphones)
2) offering free and conversation generating service (against YouTube, etc.)
3) incorporating social communication tool (against Facebook, etc.)
4) integrating personal communication tool (against Line, etc.)
Monday, April 1, 13

8. Coca-Cola Japan’s “Share a Coke and a Song” Campaign has
successfully implemented the four measures.
“I know
“Remember this song
this song from our from 1996 he
highschool prom?” just posted....
maybe I
should
comment on
©123RF
it”
©123RF
enter password listen to the hit
buy a campaign tap a share
on the label on songs of the year
Coke with a year button to share on
the campaign with or without
number SNS
website frineds
©123RF
[Source: the Coca-Cola (Japan) Company]
• highlight of this campaign:
- requires no purchase for songs (1 Bottle of Coke= ¥150)
- provides seamless listening experience on a smartphone
- the hit songs from the past give listeners a sense of nostalgia, which sparks conversation
- the platform incorporates a tool to physically and digitally share the personal listening experience
Monday, April 1, 13

9. Thank you.
Monday, April 1, 13