JIN-526 -- The Island Of Dr. Galapagos

[Japan Inc Newsletter]

J at pan Inc Newsletter
The 'JIN' J at pan Inc Newsletter
A weekly opinion piece on social, economic and political trends in Japan.
Issue No. 526 Wednesday, February 2, 2011, Tokyo

The Island Of Dr. Galapagos: Reframing Japan's isolation as a valuable
business laboratory



In recent months the term known as the "Galapagos Effect" has once again
been thrust into the spotlight in regards to describing Japan's separate and
often rarified manner of business, cultural and technological development.
With China being hailed as the new hot spot in Asia, as well as the new
number two economy, some Japanese interests have decided that a cultural
jujitsu approach may be in order. Sharp defiantly released a tablet computer
recently called the Galapagos, and in January the Asahi Shimbun's editorial
ranks optimistically coined the phrase "Cool Galapagos" (i.e. Japan's
differences born of isolation are what make Japan cool, and thus still
globally relevant).



In truth, the isolation-fed "only in Japan" gadgets, cultural quirks, and
wholly unique approaches to all manner of areas are often the very things
that attract so many Westerners to the shores of Japan either as wide-eyed
visitors, or intrepid transplants hoping to experience what life on "another
planet" might be like. But in practice, these differences in execution and
expression often make it difficult for Japan to connect to the rest of the
business community and consumers around the world.



But even in the face of such globalization crippling cultural perspectives,
for the local expat living in Japan, this Galapagos Effect actually serves
as an invaluable opportunity to witness a number of uncommon sociological
and business experiments that one would never have the chance to witness
anywhere else. One such Japan business experiment that recently drew my
attention was the Only Free Paper store (www.onlyfreepaper.com) based in
Shibuya, Tokyo.



Located on the edge of one of Tokyo's priciest shopping districts
(Omotesando) the shop lives up to its name by displaying a variety of print
publications—all available free of charge. You might expect that there is
some other aspect that frames this enterprise, such as a lucrative café
business (drink expensive cappuccino while reading your free publication),
or ancillary merchandise for sale (a selection of pricey book/magazine
enthusiast ephemera, for instance), but you would be wrong. Within the Only
Free Paper shop exists…only free papers (about 400 different publications,
according to the shop).



Created by former salaryman Kouta Ishizaki, the shop's website indicates
that there will be occasional events at the shop and guests can rent out a
section of the tiny store as a kind of gallery display space, but nothing
indicates that this will be the shop's primary source of revenue. Perhaps
the most amazing thing about the Only Free Paper shop is the fact that on
its website the owner states that the publications distributed at the shop
are meant to primarily service the teenager to 30-year-old demographic—a
group seen by many as having already passed print by for more tech-savvy
content delivery options like iPads and smartphones.



Fascinated by the prospect of such a counterintuitive move in these days of
"print is dead" nay-saying by many tech pundits in the West, I had to visit
the store in-person to try to get a sense of what Ishizaki was trying to do
with this shop. Upon arrival, I opened the door and received none of the
usual enthusiastic *"irashaimase!" *greetings I've come to expect when
entering a Japanese shop. Instead, a young woman sat behind a counter with
her head buried in a magazine, while a man near the counter silently
unpacked the shop's latest supply of free magazines. Due to the small size
of the shop, my tour was brief, but informative. As the website states, most
of the free magazines seemed geared toward a younger demographic, there were
no flyers or racy publications on display, and most of the magazines I saw
were in Japanese.



While I have no data to confirm what the shop's rent is, I know the area
quite well and even old, small retail spaces in that area typically run in
the neighborhood of 150,000 to 250,000 yen a month (on the low end of the
scale). Taking that into consideration, and assuming the shop's workers are
volunteers with at least a transportation stipend, Ishizaki's road to
profitability, much less sustainability, is unclear. Nevertheless, the shop
exists and, according to Ishizaki, has a healthy stream of visitors since
its opening about a month ago.



Despite the apparent lack of a revenue model, the shop has been largely
greeted with enthusiasm, which tells me two things that I had already
suspected: 1. In Japan, print is far from dead, and 2. Although it may not
be readily apparent, there is valuable business intel to glean from this
experiment that may be relevant to Japanese (and Western) publishers
attempting make sense of the new digitally disrupted publishing landscape.



In some ways the Only Free Paper store reminds me of the startups in Silicon
Valley, a place where many services are launched with no revenue model in
place, as the founders bet their time and money that their unique offering
will somehow reveal its inherent value as it comes into heavy public use.
Immediate examples that come to mind are Twitter (currently valued at $4
billion) and Facebook (currently valued at $50 billion), services that
seemed to most pundits, at least initially, to be interesting curio
businesses with no real future in the way of profitability.



The difference with Only Free Paper is that the experiment involves a medium
that is so universally tagged as obsolete, one could be excused for using
the "only in Japan" trope to describe why this shop even exists. But therein
lies the value for the observant non-Japanese business person. Although
Japanese business may still suffer from the Galapagos Effect, as they watch
their Korean and Chinese neighbors more rapidly and effectively embrace
Asia's new status as a global business leader, the unique business offerings
and experiments present in Japan offer the local, open-minded non-Japanese
business person priceless data on new business models and approaches that
might not be available outside of the country. "Cool Japan" and "Cool
Galapagos" may be a hard sell for infrequent visitors attempting to pierce
the business culture of Japan, but for the experienced Japan observer, the
isolated business experiments buttressed by the country's so-called
Galapagos Effect are probably one of the most attractive aspects of doing
business in Japan.


-Adario Strange




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Entrepreneur's Handbook Seminar 19th of February, 2011

If you have been considering setting up your own company,
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