Rampant piracy and a lack of transparency have long complicated efforts by record labels to do business in China. Still, for those willing to be flexible and patient, the Middle Kingdom could still prove to be a useful laboratory for new business models.

Relative to it’s potential, China’s music market remains microscopic. Recorded music sales totalled just $82 million in 2008, up 8% from a year earlier, according to IFPI data. But digital sales, which accounted for 62% of total music sales, provide a glimmer of hope, having surged 45% last year to $50.4 million.

Ed Peto, founder of the music business consultancy Outdustry in Beijing, believes artists must adopt a 360 degree approach to China. The man on the ground for the Beggars Group of labels, Peto works to tap a network of promoters, critics, DJs and Web entrepreneurs to position acts aiming to connect with Chinese music fans. Asked to identify the best means to promote music in China, Peto cautions that no single platform would suffice, given the China market’s fast pace: “The menu could change at any minute,” he says.

1. Land a billing at Beijing’s premiere live music event, the Modern Sky Music Festival

Founded in 2007 by Modern Sky record label boss Shen Lihui, past festival headliners included U.S. rockers Yeah Yeah Yeahs and local heroes Carsick Cars. This year’s event will be held Oct 4-7 at Beijing’s Chaoyang Park and will feature a roster including British Sea Power, the Buzzcocks, the Futureheads and Shonen Knife. Peto says Modern Sky is better organized than previous Chinese rock festivals, boasting sponsorship support, a wider range of bands and a more professional staff. “It’s not perfect, but it’s a really significant step up,” he says. Peto also suggests licensing a record to a local label first then using the fest to promote it. And don’t go shouting about politics like Bjork did about Tibet in 2008. “That incident did a disservice to everyone working hard for incremental change in music in China,” he says. “It is getting better, but she set things back five years.”

(Update: It is worth noting that Modern Sky Festival ran into some….’trouble’ this year, after the article was published. The week before the event, the organisers were told that none of the international bands would be allowed to play)

2. Hire an intern to start a discussion thread about a single or album on Douban.com

Douban.com is the most transparent, frank, witty and active collection of critical writing about music, books and films in the Chinese blogosphere. Knowledgeable music editor Xu Bo is also the guitarist for one of the capital’s top bands, the post-folk punk quartet P.K.14.

Peto says 80% of the traffic to Outdustry’s online community/record label site MicroMu comes from Douban. “It is the light at the end of the tunnel,” he says. “It’s what Myspace China wishes it could be.”

3. Make friends with Kelly ‘ZhaZha’ Cha

Cha is an influential TV/radio host educated partly in the United States whose shows on Hunan Satellite Television (”Midnight Mindtwist”), China Radio International’s Easy FM and the video channel of popular Web portal Sina.com (”The ZhaZhaClub Show”) expose fans to imported music by playing songs and discussing lyrics in English and Chinese. “She’s like a champion for Western music across a number of platforms in China,” Peto says.

4. License music to R2G

R2G is a Beijing-based online music distribution platform whose custom-built software detects illegal electronic listings of songs, then uses documentation of those posts (and the courts, if necessary) to negotiate legitimate royalty payments for future downloads from Web sites. Privately owned R2G takes a cut of the payments and thus far appears to have survived China’s Wild West environment by focusing on songs downloaded and used as ringtones and ringback tones by the nation’s 430 million cell phone subscribers. Peto calls R2G “the most transparent and Western-friendly of the music distribution sites in China”.

5. Upload a video to Youku

Youku is China’s largest online video portal. As with YouTube, a channel can be set up for free, pages customized and videos uploaded. “It is definitely worth adding Chinese and English subtitles,” Peto says. “Lyrics are very important to Chinese people, and having the translation there really adds value as the video also becomes an educational tool.” By posting a video, Chinese music fans can better appreciate a band’s over-all presentation, he says, noting that “where your music might not be particularly culturally applicable, your video might pique interest, be plucked from obscurity by the editorial team or community and hit a a feature page.”

Billboard article used with permission of Nielsen Business Media, Inc.

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I was at the “Techno Papa” Juan Atkins’ show the other night, talking with top Hip-Hop critic Badbrain about this year’s live music market. We both felt that there’s nothing to say but “sigh”.

Back in 2007, however, this market was full of hope.

Crowds at Beijing Pop Festival ‘07

In 2005, I started to work for a magazine that covers western pop music. I had a lot of regret for leaving there in the end of 2007 because, as I predicted, that was the year live western pop music “took off” in China. Everything that happened before was just laying the groundwork, and pathetic jokes like the Suede in Beijing show happened too, but since that year I started to feel that there’s something going on in this market.

Suede’s Brett Anderson plays Beijing Pop Festival ‘07

The strongest evidence is the blooming of music festivals. 2007’s Beijing Pop Festival staged the best international lineup ever in China: Nine Inch Nails, New York Dolls, Brett Anderson, Public Enemy, and the drummer of Ramones. In the same year, Yeah Yeah Yeahs headlined Modern Sky Festival and Faithless appeared in Yue Festival.

Though there was still a sizeable gap between this lineup and what the fans dreamed of, the reaction in the market is pretty positive. There were rumours that two promotion companies backed by foreign funds were preparing for an even bigger festival, and one of them had already sent staff to Korea to take lessons from the promoters there. At that time, it seemed that they are going to do something never has been done in China.

At the same time, the organizers of Beijing Pop Festival, which had scored three successes in a row, were looking forward to 2008 too. Someone working for them told me that they were going to get a bigger lineup than 2007’s.

Nine Inch Nails’ Trent Reznor plays Beijing Pop Festival ‘07

Other than those festivals, the who’s-who of acts performing here in 2007 included Roger Waters, Eric Clapton, Avril Lavigne, Sonic Youth, and Christina Aguilera. These things meant the market appeared to be flourishing. Unlike the fake flourishing which The Rolling Stones brought in 2006 – where 70% of the audience were foreign – the main consuming force in 2007 were Chinese people.

Mick Jagger + Cui Jian play Shanghai

October 4th, 2007 10pm, when I was standing in the muddy water under the pouring rain with thousands of audience of the Modern Sky Festival, and shouting for Yeah Yeah Yeahs together, I cannot help but felt a change is gonna come.

Yeah Yeah Yeahs at Modern Sky Festival ‘07

Then all of a sudden the market is almost totally ruined by the incident in Shanghai on March 2nd 2008.

Before the incident, the market was still going on well. Dream Theater and Nightwish made a good start of the year. Even shortly after the incident, the Maroon5 show in Shanghai (March 24th) was a huge success. My only regret is that Smashing Pumpkins cancelled their show that was almost confirmed.

As the aftermath of the incident surfaced, and the bumpy political situations at home and abroad, it has finally become the turning point of the market. The promoters and officials of relative departments got punished, and the procedures for examination and approval were getting harder.

The one direct responsible for the March 2nd incident is a company (Emma) backed by considerable foreign funds, and then had done the Rolling Stones, Avril Lavigne, Eric Clapton and Xtina before. Because of this “accident”, many gigs and festivals rumored to be organized by them vanished.

Many other shows were impacted too. As the Olympic issue became obvious and political risk and cost soar, Modern Sky Festival, which was said to have foreign star acts headlined, announced that they won’t invite them in, and Beijing Pop Festival cancelled as a whole, to name but a few.

Some minor shows went ahead: the British pop phenomenon James Blunt, renowned French singer Keren Ann and long-established electronic duo Air became the only ripples in the stagnant water. Even Air’s second show was almost cut in half.

Everyone was looking forward to the post-Olympic era, especially Linkin Park’s China tour. As the best selling band in 2007, Linkin Park would become the biggest contemporary band ever in the history of western popular music show in China. After the huge success of the film Transformers, in which they performed the theme song, Linkin Park’s popularity in China was brought up to a whole new level. Their tour in China could become a shot in the arm in the much-suffered market of 2008.

You have to expect the unexpected. The singer of Linkin Park broke his back and cancelled their whole Asian tour including the stops in China, another heavy blow in the performance market in the Mainland.

Maybe it was not that bad, at least Live Nation came in. As the biggest promoter in the world, Live Nation not only serves the top bands like Coldplay, they also signed the 360 degree contract with superstars like Madonna, U2, Jay-Z and Shakira. The Ge Hua Lai En promotion company that Ge Hua co-found with Live Nation, made a Chinese market – that had been longing for superstars like Coldplay, Madonna and U2 – finally see a light of hope. And the Kanye West and Kylie Minogue show, which Ge Hua Lai En organized, made the light even brighter.

This year the light keeps on shining. Shortly before the Spring Festival, the news that Oasis was coming over made the fans shocked and are telling one another about it. Brit-pop is the one of most accepted genre among Chinese rocks fans, and Oasis’ reputation here is only second to the Beatles. If this gig was carried out, it’s meaning could not be over-estimated. Of all the bands who have come over before, including Linkin Park, none of them has influenced this generaion of Chinese youth as much as Oasis. Their value was made clear when the promoters claimed one million RMB worth of tickets were sold in 8 days.

And then…

The impact of the”Oasis incident” might be even serious than the Bjork one. Because the almost forgotten Free Tibet gig has now been blown up, along with the bands involved with it, they might no longer be able to slip through as Sonic Youth did. The blacklist of bands is now considerably longer, including long expected bands like Radiohead, U2 and Blur. This put the promoters in a very awkward situation. The acts accepted by this market are mainly well-established ones, and because of the western culture and political environment, most of those bands are involved with “that” issue. (Oasis is famously not political).

Mainland Chinese fans after Oasis’ show at Hong Kong’s Asia Expo Centre, April 7th. Photo found here

As for the new bands, even Kings of Leon or Fall Out Boys would struggle to fulfill a 3000 seats venue, and their cost cannot be covered by the ticket sales of that kind of venue alone.

Of course we cannot come to the conclusion that the international acts’ live market in China has already crashed. Small indie or novelty groups still have enough room to breath. But for those fans who want big time parties, they might have to be patient. All the same, the market that was going to be a big cake, has been zhetenged into something like this, is not too far away from “crashed”. You see, the promoter (China West) that brought James Brown and Black Eyed Peas disappeared without a trace, they wanted to do music festival too. And there’s no sign of the Beijing Pop Festival will come back to life.

Pilos Chan

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Midi claim that they would be free to go ahead but that the venue would have to remain open to joe public, obligating Midi to pay 700,000RMB a day for the mandatory use of strict Olympic security barriers. Obviously a crippling financial burden.

Festival organisers are in discussion with Haidian park, the site of recent Midi festivals, for the re-scheduled event. They are waiting to hear back from local government on this. The issue with this new venue – which also relegated everything but the main stage of the Modern Sky Festival to an indoor site next door at Haidian Exhibition Hall – is that the park is currently being used by a battery of anti-aircraft guns which were in place as, once again, part of the Olympic security measures.

What this set-back means for Air’s performance at Midi remains to be seen, although I suspect this might kill any hopes a lot of the international bands have to play the festival.

© Ed Peto 2008

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The sad thing is that they have been forced to go head to head, time-wise, in most cases asking the limited pool of acts for exclusivity. They are also both largely taking place indoors – Modern Sky in Haidian Exhibition Hall and Midi in The Olympic Centre – making for an all the more surreal and stilted affair.

Modern Sky have already announced a full line up which is conspicuously free of foreign acts, as has been rumoured for some time now, namely :

While Midi, who have actually yet to officially receive a license (they said in a statement on Sept 12th that the government had ‘approved’ and that they would be getting their license on Sept 16th ie. Yesterday), have erred on the side of caution and gone for the more austere promotional flyer, without line-up, below:

This cautious, patient approach may have paid off as it looks like Midi have secured a license for their international bands this year. The obvious excitement here being the inclusion of downtempo-maestros Air in the line-up. The French duo already have two Yugong Yishan shows here in Beijing with the oft asked question being ‘why don’t they just stay on and play Midi’. Well, it looks like they are:

Here’s looking forward to what should be a really entertaining month of live music. Good luck to both festivals. Real lessons in persistence.

© Ed Peto 2008

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