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I'm not sure if this is the reason but a Japanese magazine called Bubka published an article revealing how the network which holds the awards, TBS, had already arranged for an enka singer to win. But because he didn't have a popular song this year, and other artists such as Ken Hirai and SMAP did not want to participate, they decided to give the award to Ayu, possibly also as a gratulations to Max Matsuura for becoming head of Avex.
so I think Ayu dropped out to avoid controversy. People would probably say things if she won. But then again, I don't think winning the award really means that much because all these bigger artists have dropped out. Ayu doesn't have a chance if Ken Hirai was still in it.
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