The newspaper industry is in a downward death spiral, having been severely impacted by new technologies, the ubiquity of internet access, and a rise in citizen journalism. Here in the U.S., some papers are filing for bankruptcy, others are close to doing the same, and there's even a proposal to give the newspaper industry a bailout plan of its own. Elsewhere in the world, it's more of the same. In Japan though, the country's high population of elderly citizens is keeping the papers afloat...for now, at least. But like everywhere else, they will soon have to face the future: young people don't do newsprint.

"I am in a dying industry," said Kenichi Miyata, a senior editor and writer at the Asahi newspaper, a daily with a circulation of 8 million. "Young people do not read newspapers, and our population is getting very old very rapidly."

Japanese Papers Collaborate on Mobile App

In many parts of the world, individual newspaper companies are trying different things to revitalize their industry. For example, we've seen a lot of innovation from the New York Times lately, as they embrace open data and APIs. (Disclosure: The NYTimes is a syndication partner of ReadWriteWeb.) 

However, there's still a feeling of "it's everyone for themselves" when it comes to developing new business models. In Japan, however, three of the major newspapers have decided instead to band together. The papers are all members of the Nikkei-Asahi-Yomiuri Internet Business Partnership, a group formed nearly a year ago to launch a web site that featured all their articles together in one place.

Now, those papers have once again collaborated on a new effort to bring their content to the tech-obsessed youth. Last week, the three collectively introduced an iPhone/iPod Touch application which delivers the cover stories, city news items, editorials, and pictures to the owners of Apple's smartphone.

The application is unique as it lets consumers browse and compare the coverage of news stories by the different papers all within one single interface.

Some Problems

The application is not without its faults, though. Although it sits at the top of the free apps section in the Japanese App Store, it's not very highly rated. This is because the app doesn't provide the full text of the papers, only abstracts. In order to read the complete article, users must click a link to go to the paper's main web site. That extra effort probably frustrates users, leading to its low rating of only 2 stars. In comparison, another news organization, Sankei Shimbun, has an app which does provide the full text. In time, through download counts and popularity ratings, it should become apparent how important full text is to a newspaper app's success.

At the moment, the new collective iPhone/iPod application isn't monetized, but the companies involved hope it will motivate customers to actually read the physical newspapers. We doubt that will happen, but it will certainly be interesting to follow the success or failure of this newspaper triad. Will there be safely in numbers? We don't know yet, but it's a possibility worth looking into.

At the event, Nobuyuki Hayashi will brief attendees on the state of the iPhone market in Japan while also taking questions from the audience. Nobuyuki, aka "Nobi," will present along with twelve other leading iPhone app developers including Ryo Shimizu, the CEO of UEI, creators of Zeptopad (video).

Of course, we couldn't wait for Macworld to find out what those other apps were, so thankfully, Nobi posted some more details. According to his post, the developers attending are the creators of numerous apps including those that let you watch TV on your iPhone, draw on your screen, play MahJong and Samurai Chess, enjoy a private geisha dance, or see real-time 3D animation.

Specifically, some of the developers and apps are as follows:

• Conit (Samurai Chess)
• GClue (iKoto, iGeisha)
• HIcorp (Mascot Capsule)
• Hudson Software
• J's Avenue (Realtime 3D animation library)
• JYProduct (FingerPiano)
• Royal Gadget - Teru Teru Bozu
• PokeDía (PokeDía)
• SunSoft (Mahjong Solitaire)
• UEI (aka Zeptotools / ZeptoPad 2.0, ZeptoLiner, iShodo)

To see videos of these apps, check out Nobi's blog post where he links to several Japanese YouTube video demos. Or to see the developers introduce each of their apps individually, check out this video instead.

Note: Some of these apps are available in the U.S. iTunes app store, but your country may be different.

This event was organized by the OpenWeb.Asia Workgroup and prominent entrepreneurs and bloggers within Asia's web industry.

While a good local startup in a European country can soon go international, having users from Europe and the United States, in Asia language is the top issue. Attracting users from neighbouring countries is difficult.

Each local web market in Asia is potentially huge, but these markets are still restricted and the global audience still lacks communication channels to understand the Asia web. Social networks are very popular in China. The mobile market is fascinating in Japan. Online gaming originated from and is still driven by Korea.

The India and Singapore markets could be easier entries for English-only service. Local markets like Vietnam are still quiet, but will be a battlefield for big names from China, Korea and Japan when ready for expanding. 

Social Web is Theme

Spurred by a desire to create a high-quality, informative and practical technology conference focused on the Asian Internet industry, Open Web Asia '08 was organized with 'The Social Web' as its theme.

Socialization has been a game-changing development on the Internet, and the social web is an area where Asia has its own strength and vibrancy. Asian countries have a distinct Internet culture and market players, so cross-country comparisons can be made.

Topics expected to be discussed at Open Web Asia '08 include: 1) How the Asia web sees trends in the global Internet industry; 2) The innovations in Asia's web; 3) The mobile and online gaming markets; 4) What are the challenges of internationalizing an Internet business to and from Asia?

Open Web Asia '08 provides a stage where leaders Kim James Woo (CEO, Yahoo Korea), Kevin Day (CEO, Comsenz China), Yoonjoon Hyoung (founder of Cyworld, Korea), Shusaku Maruko (corporate strategy, Felica, Japan) can share their insights with Western experts and entrepreneurs such as Loic Le Meur (CEO, Seesmic) and Kent Lindstrom (SVP, Friendster).

In association with one of the most prestigious conferences in Asia, World Knowledge Forum, the event will be held on October 14, 2008 in Seoul, Korea. For more information, go to the official web site.

It's Open Season

'Open' is one of the hottest words right now in the Asia web. Google is focusing on Asian markets and promoting its open strategies. Sohu has localized Netvibes' UWA. Yiqi was the first Chinese open platform fully supporting OpenSocial.

IDtail brought OpenSocial to Korea, and Mixi said yes the day OpenSocial was announced. Comsenz has developed its own ManYou Open Platform (MYOP) to target the China market.

With many open platforms announced and imminent, China and the Asia web need to assess how to monetize the Open web and prepare for the widget economy. Though the global Internet industry is still dominated by Western giants, opening up Asia will benefit both the regional and global Internet industries.

Jane: I was born and bred in Singapore but had always wanted to go abroad. My chance came when I won a scholarship to go to Japan as an exchange student in my third year of University. I've always had an affinity for Japan since I was young and after coming to Tokyo I felt at home and settled down very quickly. After returning back home to finish up my final year, I returned again with another scholarship to do a one year language and two years Masters program in Japan. Back then, I had passed the highest level of the Japanese Language Proficiency Test already so I was bored to tears in language school. I took up all kinds of jobs to keep myself sane while I was going through the language school, and I built up a network and gained experience which would prepare me for my future business venture. After one year of graduate school and three months of graduate school in Sophia University, I found work to be more satisfying and stimulating than school so I gave up my scholarship and student life to start up my own business. I never regretted the decision. In fact, I wished I had quit school earlier.

How did you get involved in the web?

I was always interested in business although I can't remember when and how I got interested in IT. I was never formally trained but I listened to some web 2.0 related podcasts and read up a bit here and there. I also got to know many entrepreneurs in Japan through friends and got most of my knowledge from conversations with CEOs of IT companies. The more I learned, the more interested I became. Through those conversations, I realized that there is a big gap between Japan and the US and I thought how much faster the world could advance if this information were to be shared and disseminated more rapidly. What the world needs now is more communication and better information transfer between countries, I don't know how this can be done but this is one thing I hope to achieve via GI JANE.

Although I wasn't an expert in web or IT, I kept up with the latest in IT through the internet and shared what I knew with my Japanese business friends and this information proved useful because they had no access to it. One of them hired me to assist him with his overseas expansion. It was a web analytics company so I was very much into analytics for a while. Later on I was involved in media and I guess it was just a natural progression for me to start up a web media. I wanted to change the world and what better tool other than the Internet which connects the world together?

What kinds of work do you do now on the web?

I stopped watching TV for a long time so my greatest wish is to be able to watch TV on my laptop. The internet is facing a piracy problem for a long time, DVD sales are falling, content holders want to stream their content online but there are no proper platform on the internet that allow them to monetize their content. To be exact, the world wants anime but anime companies are hesitant to release their content online so easily. To solve this problem, you need lots of money, the right business model, a cultural mediator and a proposal that these big Japanese companies can swallow without feeling defeated (because they are proud of their own works and won't let it go so easily or cheaply).

With that in mind and with limited resources, I came up with a grand plan for GI JANE and have managed to actualize a part of what I have set out to achieve at the beginning - but there is still a long more way to go. I observed that most web businesses started with the end consumer in mind which is great but eventually to monetize it you need a strong B2B arm or at least have the B2B clients in mind when setting up the business. For a web business to be stable, a strong offline presence is required. Akibanana is a web media with a focus on Akihabara, the otaku holyland with an online guide about the town as well as news and features about anime, manga, games and otaku culture. Offline, we have an actual tour in Akihabara and we are currently preparing an English map to be distributed around Akihabara. On the B2B side, we have plans to help local shops and businesses have a more intimate relationship with their patrons online.

Eventually, we hope to help Japanese companies expand overseas and foreign companies enter the Japanese market. Akibanana would be a useful tool when we start doing that. Via Akibanana, we can do market research, help do promotions and actual sales both online and offline. The synergy between the offline and online arm as well as the B2C and B2B connections will make this business model stable and strong.

Currently, while Akibanana is our main business, it is still a beta version and is at an early stage to bring in any revenue. Apart from building the business we have been providing some B2B services for overseas media coming into Japan. We have also already gone faster than planned to help companies in their cross-border expansions. On the side, I give advice and devise strategies for other web companies for fun.

Back to the original plan of bringing the TV to the computer; this would probably have to be achieved by a different plan. If I were a programmer, I would have been able to save much money by starting up the platform myself but I am not and I was fresh out of school, without any experience or money. I locked myself at home, and spent one week writing the business plan and spent months finding the right angels while supporting myself. I finally found seven and gathered enough to start off; the funds weren't enough to bring TV to the computer but enough to achieve what I intend for Akibanana so far. TV on computer problem must be solved by Plan B.

What do you think about the environment in Japan concerning innovation online? Is it supportive? Difficult? What do you wish was different? What do you like best?

The education system in Japan is much in want. Most companies pride themselves in on-the-job training and job rotation so people don't care what you specialize in at school; it won't be applied at work anyway. All they care is the University that you graduate from. This is a great pity. Most engineers in Japan today are not trained professionally, they either learn at work or from books. Having said that, the group-oriented Japanese have a great information-sharing culture because the "self-interest" logic doesn't apply here. In the West, information is withheld for fear of jeopardizing one's chances in climbing up the corporate ladder but here in Japan everyone helps each other to succeed as a team.

[Right: Japanese idols Stylish Heart perform their music and sell CDs on the streets of Akihabara.]

Another difference is that while roles tend to be compartmentalized in the US, with one person specializing in one task, in Japan one person can do everything. Being a generalist helps you to see things from various perspective and come up with ideas that the specialist may not be able to come up with.

The group-orientation and generalist-type workers make for a conducive environment to innovate and execute ideas but decision-making and politics slow things down and make change very difficult. Being used to stability and doing things perfectly, the Japanese need to get hold of every bit of information from A to Z before making a decision. Once they have got hold of the Z, the situation has changed and before they can act, they have to get hold of the new information from A to Z again. After getting hold of the information, you have to seek consensus so that you don't offend anyone. In a culture where being direct is abrupt and rude, people would rather say "maybe" if you ask them "yes or no". Gathering consensus as you can imagine is an intricate process. Most times, Japanese treasure relationships above everything else and those who fail to understand this would find business decisions illogical sometimes. If you understand the relationships between the players and your position in the game, half the battle is won. Politics is just as important as business in Japan. Very often, the decision-making process and politics are the biggest obstacles to innovation.

In the US, there are relatively few women in positions of leadership on the web. There are some for sure, but not as many as there are men. It appeared to me that this was even more true in Japan. Is that correct? What can you tell me about the gender related experiences you and other women have had in trying to innovate and take positions of leadership on the web in Japan?

In Japan, there used to be a glass ceiling at work because a woman's role as mother and wife was prized by society and a company would be less willing to groom an employee who would quit once she gets married. However, things are changing, especially for small and medium-sized companies there are no such barriers and it has become acceptable for women to work after marriage and child bearing. Unfortunately, this is still at an early stage so most people who make decisions in big companies are old men and men are more comfortable talking to men here. I was never conscious about myself being a woman or a foreigner or being very young but in Japan, these three makes the worst combination to succeed in business in terms of "reliability". Being Asian is also a double-edged sword; I blend in well because I look and speak Japanese but when I do or say something that is un-Japanese I don't really get the "Gaijin Privilege" or the privilege to be forgiven on the excuse of being a foreigner in Japan. Initially, especially when dealing with big companies, people may have been shocked to see me but later on as they got to know me better they could accept me. I think the barriers are sky high for foreigners if they don't know the culture and how the Japanese people think and work. Nevertheless, my understanding of the culture and language gave me a big advantage over other foreign entrepreneurs here. Being young, I can make friends more easily since people won't feel threatened or the need to be super formal as with an elder businessman. Being a woman, I stand out because many women are not interested in becoming an entrepreneur.

Most female entrepreneurs today are in their late thirties. Women of that generation are a little more aggressive for some reason. You need to have a lot of confidence in yourself to start up a business in Japan so most female entrepreneurs here that I know of come from rather elite backgrounds and they are brought up thinking that they are different from others so they are more willing to break the rules.

What directions would you like to take your business? What kinds of things would you like to do with it next? What are your goals?

The direction of my business is clear. I am having fun achieving the vision step by step. I would like to do more things involving other countries. I can speed things up with strategic alliances for Akibanana but I need to strengthen my base at the same time. My next challenge is to build a strong organization. I need to attract the right talents and then groom them to run the business together. I want a strong capable team that can think and operate on an international level.

We'd like to extend a big thanks to Jane for her time, her work and her interest in the types of innovation that many ReadWriteWeb readers are working for as well. We hope you'll visit and subscribe to her site Akibanana.

A | It is interesting to see that Facebook has almost no presence in the three markets we cover: China, South Korea and Japan. In China, QQ dominates by far with 300 million active accounts, Cyworld has close to 20 million in South Korea while Mixi has 14 million in Japan.

Q | Those are pretty big figures for subscribers. Even so, Facebook has a good portion of them globally and is losing money. Are the Asia social networks making money?

A | One thing to keep in mind is the addressable population: QQ only deals with China, Cyworld addresses seriously only Korea, Mixi is only in Japan. Corresponding penetration rate among Internet users are: 150% for QQ, 57% for Cyworld, 15% for Mixi. It becomes even more interesting when realizing all three are largely profitable. Notably, QQ had 523 million USD in revenues in 2007 and 224 million operating profit, with only 13% coming from advertising! This is more than Facebook's total revenues. Moreover, Facebook was still losing money last year (and likely this year).

Q | How do those services manage to turn such profit?

A | QQ and Cyworld make most of their money from digital goods - from background music to personalization, avatars or casual games. The introduction of an online currency supported by a variety of payment systems has helped lower the payment and monetization barriers dramatically.

Q | Are digital goods the next big thing?

A | It is certainly a great way to monetize a community. The West has been slow at catching up but digital goods are a proven monetization method on the Internet almost since Cyworld launched in Korea in 1999. Casual games are also a great money maker: imagine users were offered attractive high-quality Facebook applications for 10 cents. Many would pay, but today they have no way to.

Q | If it has been around for so long, why is it coming so late to US and Europe?

A | We see two main reasons: first, the West is not looking closely at Asia. When it does look, local successes are usually stereotyped, which prevents deeper understanding. Some great services like Naver's Q&A (which was Yahoo Answers' inspiration) were created there, mainly because the US do not have the lead anymore in Internet infrastructure, so local talent managed to come up with great new ideas. Second, most non-US markets have not developed a very rich online advertising market, and had no choice but to find alternative revenue models. In a way, the rich online ad market has been holding back innovation in the US, and forced most Internet companies to design their service around pageview as a main metric.

Q | Is that a problem?

A | It can be, as the focus becomes to generate more pageviews, not make the service better. Users are mere "eyeballs", while the real clients are advertisers. The revenue mix defines the service DNA. We even came up with a new metric: ARFU for "Average Revenue From Users" (rather than per user, for ARPU). With this in mind, ARFU for Facebook is almost zero, while ARFU for QQ is 87% Internet + mobile combined.

Q | What are the key lessons from those successful services?

A | First, that users are willing to pay for services - even in China! Second, several companies in Asia have already solved a number of headaches on how to make it work and can help save a lot of time by adapting their best practices. Third, that the main barrier is the persistent bias that all US stuff is great, while Asia just copies. I don't think QQ will make a bid on Facebook but there might be a need for a strong eye opener to realize that inspired by the West, Asia has made incredible advances that can now help us in return.

Q | Are those companies trying to enter foreign markets? Cyworld just pulled out of Europe and is not doing too well in the US either.

A | Cyworld tried China, US, Europe and Taiwan. Mixi is trying China. QQ has entered US via a content partnership with AOL on casual games. In most cases, they do not do too well as they send or hire managers and not entrepreneurs. Also, they often face tough competition from incumbent players while they dominate their home market. So they have less market acumen, less hunger and face a difficult timing. Those are the same reason why Facebook and MySpace are weak in those key Asian markets. That being said, the fact that they are not able to succeed themselves does not invalidate their concepts and business models. For instance, Xiaonei in China applied the early Facebook model (alumni) and is doing very well in terms of users. Who would say Facebook is not good even if they fail in Asia? The key is to focus on service concepts and business models, rather than on how well the companies execute them out of their home market. As for Cyworld, it is important to notice that the foreign versions are very dumbed-down compared to Korea's, where they enjoy a mature payment infrastructure and digital goods culture. If so many million people use the service, there must be something to learn.

Thanks Benjamin! Here now is his Media 08 presentation:

Note: +8* is offering free samples of their research on both QQ and Cyworld at www.plus8star.com. Also see ReadWriteWeb's review of QQ last year.