Terrie's Take 439 -- Metropolis changes hands, ebiz news from Japan
terrie at mailman.japaninc.com
terrie at mailman.japaninc.com
Sun Sep 30 23:28:29 JST 2007
* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, September 30, 2007 Issue No. 439
- What's new
- Candidate roundup/Vacancies
- Upcoming events
- News credits
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+++ WHAT'S NEW
In early 1996, we first met a young Scottish couple who had
the audacious idea of launching a free newspaper in Japan.
Back then, no one really knew what a proper free paper was
and there was a lot of doubt about whether one would work.
The couple were Mary and Mark Devlin, and their resulting
effort, Tokyo Classifieds, created quite a stir. They were
particularly noted for their guerrilla marketing tactics.
We'll never forget being surprised as emerging from a Hiroo
subway station we were confronted by a number of Crisscross
staff gathered around garbed in red jackets and handing out
The formula not only worked for Tokyo Classifieds,
long-since renamed Metropolis, it was borrowed lock, stock,
and barrel for Recruit's amazingly successful Hot Pepper
free paper several years ago -- even down to the red
colored jackets. For proof the Devlins were first, see
We met the Devlins to discuss additional funding for them
to increase the number of pages, from a broadsheet of just
4 pages to 16 or more. We remember discussing at the time,
isn't this a bit ambitious? Is there even that much
advertising money in Tokyo for a free paper for foreigners?
As it turns out, not only was there enough for 16 pages,
the "Classifieds" just kept on growing and today as
Metropolis it averages around 60 pages or more. The Devlins
did indeed raise their funds, built their vision, and
turned Metropolis into Japan's largest periodical both in
terms of distribution volume and advertising revenue.
However, on Friday, after 13 years of raising the bar for
English-language publishing, the Devlins, representing
their major shareholders, sold Metropolis to a local buyer
for an undisclosed sum.
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Who was the buyer? Actually, none other than Japan Inc.
Holdings (JIH), the owner of this publication and the Japan
So why is JIH, a B2B publishing and consulting group,
moving into the consumer (B2C) market? We thought we'd take
this opportunity to lay out the case for the acquisition,
and why in this day and age of the Internet, we think that
paper and the Metropolis brand makes excellent business
1. Metropolis is at the top of its game
Some firms specialize in buying distressed assets, but JIH
is not one of them. We know from hard experience that
success in Japan usually comes to the first movers in a
market, so long as they execute properly. Mary and Mark
Devlin were definitely first with their classifieds-supported
free paper, and the current size and gloss of the
publication confirms its success commercially.
JIH became interested in Metropolis because it is the real
deal as a publishing business, with a consumer-friendly
editorial team, trendy yet efficient design and production
team, and highly effective sales team -- and of course it's a
Right now we estimate that there are about 20 weeklies and
monthlies and 5-6 daily newspapers all vying for an
English-language market of just 80,000 foreigners and
perhaps another 100,000 or so Japanese wanting to read in
English. With an audience that limited, even despite the
high median income of the readers, most advertisers are not
motivated to support any but the largest publications.
Distribution volume is important and accordingly,
Metropolis soaks up much of the ad spend in its segment.
2. Metropolis is Internet tolerant
In making the decision to buy Metropolis, people asked us,
"Shouldn't you be investing in the Internet instead of
paper?" It is true that there is a massive shift from
physical to online media, and as a result many magazines --
including those in the English-language sector -- are
suffering. However, Metropolis has a unique aspect which
makes it likely to survive the Internet challenge.
Essentially, as a weekly city guide, its function is to
help people be entertained, whether by food, music, film,
events, or even each other! As such, it is consumed by
people on the move or about to be on the move. It is
foldable, curlable, writable, and doesn't need a server,
network connection, or batteries when it goes out with a
reader. Thus it is an ideal information medium for the very
physical environment of life, be it beer, snacks,
groceries, bus seats, sweaty jackets, noisy friends, or
noisy kids. While other magazines can be curled and written
on, most require some serious concentration in a quiet
place, and thus don't compete as well for the short
attention span of today's wired generation.
3. Metropolis is a great brand
Years of high-quality, entertaining content have meant that
people do not need to flick through a Metropolis copy to
know whether they want to pick one up or not. The short,
catchy stories and items are addictive, as a visit to any
foreigner-frequented grocery store or entertainment venue
will prove. Further, retailers know that Metropolis is
popular with their patrons and trust the brand well enough
to give up valuable display space to place a few copies.
Indeed, if there is a complaint we've heard in relationship
to the distribution, it is that Metropolis copies run out very
4. Metropolis is a keeper
Despite the pressures and trends, Metropolis has defied a
number of economic downturns both in the Japanese economy
and also in the local foreign one. Even during the dotcom
bust of 2001-2003, when many expats were being returned
home and there was blood on the streets, Metropolis
continued to be successful. There is an interesting
cyclical nature in the foreign consumer segment. Readers
celebrate the good times at bars and restaurants, and fill
the Sayonara sale pages with unshippable personal effects
during the bad.
5. Metropolis has lots more potential
Perhaps the greatest appeal of Metropolis to us as business
people is its potential for future growth. Yes, the
magazine is at the top of its game in a crowded market, and
increasing the print run substantially is unlikely to provide
much more than an incremental amount of new business.
However, the content is still very unique and has not yet been
served to the much larger Japanese audience. If we can figure
out how to do this without hurting the special flavor of
Metropolis, it will create allow us to create a whole new genre
in the mainstream free paper market.
So does this mean that JIH will be changing Metropolis to
Japanese? Not at all. Rather, with the judicious use of new
media (web, mobile, and events) we hope to create some
interesting extensions of the brand and content into the
Japanese youth market. And if for no other reason, we
believe that we'll be noticed for the Personals, which are
always entertaining. :-)
Fans of Metropolis fear not, we don't plan to mess with a
Lastly, we've had to learn some new acronyms to be part of
the Metropolis business and now know what "SWF" and "SJF"
in the personals mean. But finding out what "GFE" stands for
took a lot more work!
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- Hitachi's hard drives doing hard time
- Toyota fuel cell goes further
- Japan Post privatization starts Monday
- Transparent frog to escape dissection
- Divorce loans
-> Hitachi's hard drives doing hard time
Hitachi has said that its US hard-disk company, Hitachi
Global Storage Technologies, will suffer an operating loss
of JPY33bn (US$286m) by the end of its fiscal year in
December. This brings the company's aggregate losses since
Hitachi took over the IBM hard drive business back in 2003
to a massive JPY120bn (US$1.04bn). ***Ed: While we
understand the commitment that Hitachi is making after it
bought and integrated the IBM business, the on-going costs
of maintaining leadership, including mind boggling recent
investments in new factories here in Japan, makes one
wonder just how much of a financial beating this part of
the Hitachi group can take.** (Source: TT commentary from
nikkei.co.jp, Sep 28, 2007)
-> Toyota fuel cell goes further
Toyota has just demonstrated a hydrogen-powered fuel cell
in its Highlander (in Japan the "Kluger") SUV vehicle, that
can travel about 880km on a full tank. The demonstration
involved driving the car from Tokyo to Osaka without
stopping and arriving with the tank still 25% full. This is
an improvement of about 150% over previous models. ***Ed:
While fuel cells are interesting, we prefer electric. Why?
Because electricity utilities already have an established
price range which if adapted to rechargeable cars brings
"fuel" costs down around 75%. With fuel cells, we would not
be surprised if makers try to price the ethanol at the same
price as gasoline -- thus doing nothing to reduce costs,
and of course distorting the world's food prices in the
process.** (Source: TT commentary from nikkei.co.jp,
Sep 28, 2007)
-> Japan Post privatization starts Monday
The Japan Post privitization process starts tomorrow,
beginning with the banking unit, to be called Japan Post
Bank, or Yucho Bank. It will be the world's largest savings
bank, with around with about JPY231.6trn (US$2trn) in
assets and JPY186trn (US$1.617trn) in postal savings
deposits. The overall privatization schedule is due to be
completed by 2017. ***Ed: Around 80% of the savings
deposits are invested by Japan Post in government bonds,
and account for about 21% of all such outstanding bonds.
This is why the battle for divestiture of the Post
Office has been so important. The temptation in previous
years has been to use the Post Office savings silo as a
means of financing government pork barrel projects.**
(Source: TT commentary from reuters.com, Sep 28, 2007)
-> Transparent frog to escape dissection
The Professor for Amphibian Biology at Hiroshima University
has "invented" a frog whose skin is transparent and thus
allows science students to view the internal organs, blood
vessels, and eggs without having to dissect the animal. The
Prof says he bred the frog to allow biology classes to be
more humane. ***Ed: What a great idea!** (Source: TT
commentary from nationalgeographic.com, Sep 28, 2007)
-> Divorce loans
The Ogaki Kyoritsu Bank in Gifu has announced that it is
providing loans to divorcees so that they can cover their
divorce debts. Covered are expenses such as legal fees,
settlements, property distribution costs, etc. The bank
says that the divorce rate in its prefecture is rising, and
that people usually have to turn to credit cards and
consumer finance loans to make ends meet. Lenders will pay
3.45% for the loans, which run up to 7 years. (Source: TT
commentary from allheadlinenews.com, Sep 28, 2007)
NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.
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+++ CANDIDATE ROUND UP/VACANCIES
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Available Oct-early Nov. Target salary is 12+M annually.
Interested hirers and Japanese/foreign candidates, email:
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+++ UPCOMING EVENTS/ANNOUNCEMENTS
---------------- EA Tokyo, October 2nd --------------------
Speaker: Kei Shibata - Co-Founder, President and CEO of
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Title: 'Last Mover Advantage - Look, Listen and Learn Your
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Venture Republic Inc., owns several popular online
comparison shopping websites such as coneco.net and
Travel.co.jp with a combined volume of 5.9m monthly unique
users. Prior to establishing Venture Republic in 2001, Kei
worked at the Mitsubishi Corporation for 11 years. During
his time with the company, amongst other things, he played
a key role Mitsubishi's largest M&A deal ever when it
acquired Lawson Inc., a convenience store chain.
Kei received a B.A. in Law from Keio University in 1988 and
an M.B.A. from the Harvard Business School in 1998.
Date/Time: Tuesday, October 2nd - 7:00 pm
Location: Foreign Correspondents' Club of Japan
Email: info at ea-tokyo.com
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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