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 businesses for music and other cultural contents.
