TOKYO — The Japanese government’s Fair Trade Commission on March 24 accused five local record companies of monopolizing the distribution of master ringtones, which it refers to as ringtunes.
The regulator says the labels — Sony Music Entertainment (Japan), Avex, Toshiba-EMI, Universal Music K.K. and Victor Entertainment — are violating fair trading practices under Japan’s anti-monopoly law.
The FTC accuses the labels of servicing master ringtones exclusively to their joint venture, Label Mobile, and not allowing other ringtone providers to use their master recordings. The FTC says the five companies must change this practice and state publicly that they will no longer conspire to refuse access to masters to others.
The FTC has given the labels until April 4 to comply or face legal proceedings.
Avex says in a statement that its views on the case “differ greatly from the FTC’s perception of the facts.” Rather than comply with the warning, Avex says, “we will seek fair certification of the facts and application of the law through a hearing.”
The other four labels named in the FTC’s warning are understood to be taking positions similar to that of Avex.
As of October 2004, sales from Label Mobile accounted for roughly half of the entire domestic market for master ringtones, according to the FTC. Japan’s market, which has grown rapidly in the last couple of years, is estimated to be worth ¥12 billion ($113 million) annually.
The FTC’s warning follows a series of raids it conducted on 20 record company offices last August aimed at uncovering information about their dealings with Label Mobile.