Whereas Apple dominates the market for music downloads in America, its iTunes online music store only has a 5% share in Japan, where youth prefer to download songs onto their mobiles, avoiding online credit card purchases. Apple must be aware that iTunes must realize that it does not hold the same cachet in the Japanese youth market as in the Western markets. Nevertheless, the electronics giant is bravely trying to entice Japanese youth away from their mobile music downloads and online to the iTunes music store by offering free downloads, among other incentives. Japanese youth appreciate the convenience and reasonable cost of their mobile music downloads a market which is far more mature and accessible to the average mobile subscriber than its European equivalent. In fact, the vast majority (80%) of the world mobile music download market is in Japan.

KDDI Corp., Japan’s second biggest service provider, has since 2004 offered a service that downloads songs directly onto mobile phones in about 30 seconds without connecting to a computer or punching in credit card numbers. “I heard about iTunes for the first time when I bought my iPod mini last year,” said Misaki Masai, 20, a university student in Tokyo who doesn’t own a credit card. “But I’ve never bought songs from iTunes. I don’t like paying online.” Apple has tried to address common youth concerns by offering iTunes prepaid cards at convenience stores and other retailers. Japan’s mobile phone download market of $320 million is up for grabs and much of it could shift to online downloads.

Apple does have many advantages in the Japanese market, however. With iPod models such as the “Shuffle,” sold at about 7,500 yen ($64.01), Apple’s products are becoming more accessible to young people who can’t afford other gadgets. iTunes’ song line-up has been increased to 2 million in the past year, and the songs are generally one third cheaper and of better quality than mobile downloads.

The results? Sales of Internet song downloads, including iTunes, surged 457 percent to 2.5 billion yen ($21.34 million) in the first half of this year from a year earlier, the Recording Industry Association of Japan said. Mobile phone downloads grew by some 160 percent in the same period. Some analysts predict a large-scale shift to online of the Japanese music market, but mobile downloads will remain very popular for the foreseeable future.