Japan’s iPod Tax Plan Fails

July 11, 2008

In a nutshell, Japan was pressured by the Japanese record industry to put a tax on all portable digital music players. Let’s break it down with my own commentary dropped in there…

THE MAIN PLAYERS:

Basically the battle was between the music industry and electronics makers, including but not limited to Apple, and other major players in the portable music industries. For companies like Sony that are entrenched in both worlds, I guess they had to choose based on their profits.

THE OTHER PLAYERS:

I think the unseen player in all this is the cell phone makers. Most of the cell phones in Japan are equipt to play music and there are music download services associated with them all. Needless to say if the tax didn’t affect them at first, it soon would.

It’s important to note that there are devices in Japan for which a copyright tax is paid, so there is precedent for this kind of thing.

THE FUTURE:

I don’t think this is going to be the end to the talk of taxing electronic devices and things like that. To put it straight, the government here in Japan does whatever it wants with taxes and the people gripe, then bear it (sans grins).

What complicates all of these music copyright issues for me in Japan is the whole rental CD system in Japan. As anyone who’s lived here knows, you can go down to your local video store in Japan and half the place will be rental cds. You can’t find CDs when they first come out, but after a few months, any CD will be available for rental.

You will also notice all the Black CDs, MDs, and audio tapes at the counter for impulse buyers who had forgotten to buy media to record the rental CDs on. It’s very open and accepted that these CDs are going to be recorded. The only reason to buy CDs at all is if you want the music immediately. If you can wait, you can have it all – 5 CDs for one week for 1000 yen!

The point I’m trying to make is that charging royalties for music over 6 months old in Japan (or rather paying royalties on them) or even buying music that old from iTunes is kind of crazy because the real CD is right there waiting to be rented for a couple hundred yen.

Japan is fighting an uphill battle against royalties and electronic copies of songs, so it will be interesting to see how the industry adjusts to survive. It seems to me that because of the rental system and electronic downloads to cell phones, the Japanese recording industry is in more dire straits than America’s. Obviously, a tax on the players is the first answer, but I think they’re going to have to do much better than that if they want to keep the hard copy industry alive.