Search results for 'China'

China Digital Music Market Profile (Music Ally)

The following China digital music market profile - featuring a cameo from Outdustry’s Ed Peto - appeared in last week’s fortnightly Music Ally Report (highly recommended reading) and is republished here with permission.

New premium digital services bring hope in one of the world’s toughest music markets.

According to IFPI, recorded music sales in China totalled $92.4m (CNY 583.3m) in trade value in 2012 – a 35% increase from the $68.2m reported the year before, positioning the country at number 20 in the global rankings.

Digital saw a 49.8% increase to $75.5m, offsetting a 5.1% decline in physical sales to $16.9m and the market is split 82%/18% in favour of digital. Ads constitute the most significant revenue stream, accounting for 27% of overall recorded music sales, followed by mobile formats with 21%.

The fact that China still brings in under $100m in annual recorded music trade revenues remains a harsh reality, particularly given all the potential that has been attributed for years to the world’s most populated country, which grew its population to 1.35bn in 2012, and at the same time expanded its GDP by 7.8% to $8.26tr, as per CIA World Factbook data.

It is worth bearing in mind, however, that Chinese consumers’ annual expenditure on mobile music, dominated by ringback tones, is actually estimated at $2bn. The problem is that mobile operators are known for taking the vast majority of revenues, sharing only 2-4% of retail value with rightsholders. With over 730m subscribers, China Mobile is the leading operator in the country, followed by China Unicom (239m) and China Telecom (170m).

China is infamous for its rampant levels of piracy, which the IIPA estimates at 95% in the case of physical formats and 99% for digital ones. Indeed, one of the biggest problems for the local industry is that Chinese consumers widely expect music to be free or extremely cheap. This is particularly so in the online sector where companies such as Baidu and Tencent have grown to be the titans they are today thanks in no small part to the provision of deep-linked downloads to unlicensed MP3s.

It was welcome news when, last April, composer, producer and TV talent judge Gao Xiaosong said that, as of 1st July this year, “the Chinese online music market will step into an era of legal copies”. Yan Xiaohong, deputy director of the national Copyright Administration of China, described the launch of paid services as “inevitable”.

Details on how this will be approached are rather limited, but services including Baidu Music, Kugou and Duomi have been testing “VIP” tiers, focused on the provision of higher quality audio and increased mobility, with pricing expected to be set in the range of $1-3 per month. Of particular interest is the fact that companies seem to be exploring the possibility of adding a live element, such as bundling priority access to gigs and festivals.

The final proposition/pricing for the new services remains unclear – and so are the implications for the industry. Ed Peto, MD of Outdustry (a company which specialises in helping Western companies to enter the Chinese music market) told Music Ally, “Most services are fairly cautious about the take-up projections for these premium tiers as there is very little precedent for people paying for music in this way.”

Perhaps more importantly, Chinese online companies have a long history of periodically introducing features or cutting minor deals with a few rightsholders in order to claim legitimacy while still conducting the vast majority of their music business on a basis of unlicensed content. “Whether they will do the bare minimum to satisfy contracts with content providers or really put all their efforts into converting users into paying subscribers remains to be seen,” stressed Peto.

Also of note is the acquisition of streaming music service Xiami by e-commerce giant Alibaba, which will see the former integrated with the hugely-popular online shopping site Taobao. In a country where monetising recorded music remains as challenging as ever for rightsholders, it is interesting to see a different approach to bundling – somewhat echoing the apparent intention of the likes of Baidu for attaching a live element to their new premium services.

6China, China Digital Music, China Music Industry, Guest Post, Statistics, China Physical, China Mobile Market, Medium,

Intrigue In The Chinese Digital Music Industry : What Exactly Is Happening on July 1st?

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Image credit: Sohu

Something is afoot in the Chinese digital music space. At the end of last year we saw a number of major music services including QQ Music, Baidu Music, Kugou and Duomi - having apparently reached a private agreement - publicly announce [UPDATE 9th June 2013: They did not make a public announcement] start moving towards charging for their music services in the very near future (a Dec 31st 2012 deadline was mentioned but evidently not adhered to).

Fast forward to March 19th and an announcement from famous music composer, producer and TV talent judge, Gao Xiaosong, that July 1st was now the big date for the change and that “various record labels, music websites and the government are all doing the tail-end of the work. The Chinese online music market will step into an era of legal copies.”

The SPs initially took a “this is news to us” (Chinese article) approach, which then developed slowly into some kind of recognition of the situation. The assumption is that, as the new boss of a well funded music label, Gao Xiaosong tried to force the hands of the SPs by announcing early and putting pressure on people to actually deliver. He is also not shy of publicity either, it is worth noting.

Since then, rumours have been flying around the Chinese internet. Long time observers of the Chinese digital music landscape will be a little wary of any silver bullet solutions and supposed “deadlines”, having seen countless such announcements before, but there seems to be more convergence at play this time round. July 1st may not be the world changing event some have suggested, but broadly implemented paid-for music services now seem to be an inevitability in China.

With that in mind, we will be keeping a close eye on this story. As a primer for new-comers to the situation we have translated this recent round-up article from China Economic Weekly (via Sohu) for your reading pleasure:

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6China, China Digital Music, China Music Industry, Medium, Translation, News Link,

Social Media Panel At Bookworm Literary Festival

L to R: Ed Peto (Outdustry), Hu Yong (ChinaFile), Duncan Hewitt (BBC/Newsweek). Photo Courtesy of the Bookworm Literary Festival

Last week I was asked to moderate a panel at the Bookworm Literary Festival here in Beijing. The panel was called “Future Perfect : Social Media” and was described thusly by the organisers:

"Due to governmental and technological restraints, social media is different in China - in both form and function - than in other countries. Join us as Duncan Hewitt (Get Rich First) and Hu Yong, the MediaFile Editor at the newly launched ChinaFile and Professor of Media Studies at Peking University discusses the possible social, economic and political implications of social media in China; the way the government is both using and regulating social media and what the future for this powerful media is.”

Due to the sensitive nature of the subject material we opted for an “off the record” approach - i.e. the speakers are not to be quoted - which led to a fascinating, free-ranging chat from two bona fide China social media experts. To get the ball rolling, though, I offered up the following introduction to the subject:

"It has been said that there two internets on the planet: The internet, and the Chinese internet. Of the 2.4 billion internet users in the world, currently around 24% (570 million) of these reside within China, inside one of the most tightly controlled internet environments in the world.

Social media is perhaps the defining technological advance of our age, allowing the individual to publish globally at the touch of a button, completely revolutionising media, personal expression and, as a result, society itself in the process. 

When it comes to China, however, from a western viewpoint the Chinese internet is often characterised by what it lacks: Facebook, Youtube, Twitter, true freedom of speech. From this outside perspective censorship is the defining element of the Chinese internet experience.

What of the inside perspective though? Perhaps surprisingly, China has the most active social media population in the world, with a 2012 McKinsey study showing 91% of Chinese internet users visiting a social media site in the last 6 months, vs 70% in super connected South Korea, 67% in US and, astonishingly, only 30% in Japan.

Should this really surprise us? It is a question of degree. Coming from a recent history of tightly controlled media, the Chinese internet user has that much more to gain from social media vs their western contemporaries and are therefore expressing themselves with a fervour not seen elsewhere in the developed world.

Social media has catalysed revolutions and been the scourge of political misdoings across the globe. This sense of threat is writ large through the Chinese governments handling of what is perhaps the greatest ever challenge to it’s control. It knows it must engage with social media, but how has it managed to allow social media’s development, provide enough functionality to satisfy the people and yet still “keep a lid on it”? Or is the lid slowly, inexorably coming off?

Today we will try to cover some of these complexities.”

Many thanks to Hu Yong and Duncan for taking this subject and really running with it and many thanks as well to all at The Bookworm Literary Festival for another great event.

6China, China Social Media, Medium, Staff Blog, Ed Peto,

News Link : QQ Music Activate Hardware Strategy With Sonos Partnership

"Chinese Internet giant Tencent is trying out a new hardware strategy for its QQ Music service, starting with a collaboration with wireless music system Sonos.

Sina Tech has noticed a new teaser page at Faxian.51buy.com for a QQ Music-compatible Sonos setup. Late last year, Tencent’s digital music team announced its vision to expand its music service to dedicated music hardware through its QPlay standard. The company has reportedly partnered with ten audio equipment and TV manufacturers, including DENONMarantz and TCL.

QQ music boasts an impressive 250 million active PC users and 50 million mobile users. By comparison, Spotify recently announced it has 24 million active users.”

- NextWeb

6China Music Industry, China Digital Music, China, News Link, China Hardware,

News Link : China Hopes To Duplicate World’s Music Profits

"According to the 2012 Report on Chinese Pop Music Market released by the China Record Working Committee, "the physical market has practically disappeared, while the new digital music market has not given record companies their due shares The traditional recording industry is in great depression."

The report says that the revenue of physical format sales in China has declined 95 percent,from 1.22 billion yuan ($196 million) in 2003 to 60 million yuan in 2010, the latest available statistics.

"The problem with the Chinese recording industry is that the cost of piracy is too low while thatof protecting copyright is too high," says Zang Yanbin, president of China Record Working Committee. "That’s why capital is reluctant to enter the industry and no good works are coming out."

The Chinese digital music market amounted to 1.26 billion yuan in 2011, with 280 billion units downloaded and streamed. The China Record Working Committee contends that music copyright owners should get royalty of 632 million yuan, but the actual income was only 99 million yuan due to piracy, lack of a fair system of profit distribution, and inefficiency of the collecting agencies.”

- China Daily

6China, News Link, China Music Industry, China Digital Music, China Physical,

News Link : Samsung Tops China Smartphone Market

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Samsung’s rise in China was at the expense of rival phone maker Nokia. The Finnish phone maker, which was No. 1 in 2011 with 29.9 percent market share, plunged to 3.7 percent last year to take seventh place, according to the research.

The No. 2 smartphone brand in China for 2012 was PC maker Lenovo, with 13.2 percent market share, which represented a 4 percent growth from the year before. Apple was third with 11 percent, followed by Chinese telecom equipment manufacturer Huawei with 9.9 percent, the report said.

- ZDNet

6China, China Smartphones, News Link, China Mobile Market,

Majors Settle With Sogou MP3 Search

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As search engine for Chinese mega portal Sohu, Sogou presents a familiar sight for Chinese internet music searchers: Instant, well ordered lists of direct “deep links” to MP3 search results, purportedly hosted on third party sites, available for free download.

Rights owners have typically been excluded from any revenue from ads sold around these search results, meaning that MP3 search represents the single greatest villain in the Chinese internet music space.

As populariser of this format - and with roughly 80% of the Chinese search market - Baidu.com played the role of public enemy number one until it’s 2011 deal with the majors saw the (then) big four’s catalogues made available legally through Baidu’s Ting streaming service (now rolled into “Baidu Music”). The deal also saw the majors drop any existing actions against the search giant.

Yesterday saw a similar - if not much smaller - result coming out of Beijing’s High People’s Court

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6China Music Industry, China Digital Music, Staff Blog, Ed Peto, Medium, China,

China Set To Become World’s Largest Smartphone Market This Month According To Flurry

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"Based on data from more than 275k mobile apps using its tools, Flurry estimates that in January, there were 222m active iOS and Android smartphones and tablets in the US, and 221m in China – but that by the end of this month, there’ll be 246m in China and 230m in the US.” Music Ally

6China Mobile Market, News Link, China, China Smartphones,

China Indie Music Report : Publishing

NOTE: This is an extract from ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground

Publishing is a tricky concept in China. The typical Chinese approach to intellectual property is that ‘ideas belong to everyone’, so while it is difficult to make money out of something tangible like a record or a download, it is VERY difficult to make anything from the intellectual property contained within it. The Copyright Act was only passed in China in 1991, so it is still early days.

The Mechanical Copyright Society of China (MCSC) was set up in 1992 as the sole administrator for composition but it’s effectiveness is often brought into question by the publishers. In the last few years, the majors have taken it upon themselves to either do their own collection or find independents to take it on for them.

While the MCSC claims that they maintain a good flow of revenue back to the western rights owners, there is no mechanical collection agreement in place between MCSC and, say, the MCPS in the UK.

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6Published, Staff Blog, Ed Peto, Access China Report, UKTI, Project Blog, British Underground, China Digital Music, China Publishing, Large, China, Client Work,

Don’t Begin The Hype…Yet

There’s nothing worse than hyping things up too early. While Billboard magazine saw fit to call Beijing one of the top 5 cities to watch for music in 2007, regular gig-goers here are slightly less sanguine on the subject. This place has a long, long way to go before it can be compared to even the second tier cities in most other developed countries in terms of originality and depth of talent. As a rule, most bands are highly derivative as well as technically suspect, making the three chord mock-anger and incompetence-drowning feedback of punk music the weapons of choice.

That’s not to say that there isn’t a certain buzz in the air though. While there has never been a shortage of fan favourites like Brain Failure, New Pants and the now defunct Hang On The Box, there seems to be a certain knowing assurance in the current rising stars where there was only amateurish exuberance before. Bands like Rebuilding The Rights Of Statues (Re-TROS) and Lonely China Day, both of whom toured the States recently to glowing reviews, are just…well…believable, and that is a very rare quality in this town. Here are the Re-TROS playing ‘If The Monkey Becomes (To Be) The King’ at Beijing’s 2 Kolegas club last night:

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6Staff Blog, China Music Scene, Ed Peto, China Live Music, Large, China,

China Indie Music Report : Live Music

NOTE: This is an extract from ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground

The live industry in China has real potential. The annual Midi Festival in Beijing shows that there is a sizeable live audience for western derived independent music, with a crowd of 20,000 moshing, flag-waving, ironic t-shirt wearing, squiffy-hairstyled rockers per day over four days. The international bands playing were unanimous in saying they “didn’t think this was possible in China”. Those same international bands also had to find their own money to make the trip as performance fees and flights were not provided, so ‘one step at a time’.

The big question is where do those 20,000 indie music fans (and people like them) go for the rest of the year?

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6Published, Ed Peto, Staff Blog, Large, Access China Report, UKTI, British Underground, Project Blog, China Live Music, Midi, Split Works, China Market Entry, China, Client Work, China Festivals,

China Indie Music Report : Digital & Mobile

NOTE: This is an extract from ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground.

Digital is the hot topic in China. Due to the under-developed, pirate-dominated physical market and burgeoning mobile environment, China is on track to becoming the world’s testing ground for the digital age. The statistics are pretty staggering, with some suggesting a digital market of US$1.5billion by 2010 - With the second largest broadband network in the world, the advent of 3G later in 2007, 460 million mobile users and five million new mobile subscribers a month, who, on face value, would doubt them?

The view from the ground, however, is that all of these statistics need to be taken with a bucket of salt. All attempts by the Chinese government to combat online MP3 piracy, including all public ‘victories’ against pirates, should be seen as totally superficial - a lip service to the lobbying western majors. Internet MP3 piracy remains endemic, with less than 10% (a very generous estimate) of downloaders actually paying 14 pence/download for the privilege.

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6Published, Staff Blog, Project Blog, Ed Peto, Large, Access China Report, UKTI, British Underground, China Market Entry, China Digital Music, China MVAS, China, Client Work,

China Indie Music Report : Retail

NOTE: This is an extract from ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground.

The 90% physical piracy rate obviously puts the kibosh on your average high street retailer. FAB, the only significant legal high street chain is really out there on its own. One large distributor lists only 86 other stand-alone legitimate stores stocking independent content, servicing the whole of China - A worrying figure in a country where you literally can’t move for audio-visual outlets and CD/DVD street hawkers. None of your HMVs, or your Virgin Megastores have dared set foot over here yet.

The arrival of western product in the early 90s came courtesy of ‘saw-gashed’ CDs: Excess stock and deleted titles from western majors attempting to avoid taxation and disposal costs. These CDs had their cases cut to mark them as defective and were then shipped in to China through free-market economic ports like Guangzhou, only to end up on the black market. An end result that can be seen as a partial ‘shooting-in-the-foot’ for the western majors who then had to come in and fight against the pirate networks they inadvertently helped set up.

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6Published, Staff Blog, Project Blog, Ed Peto, Large, Access China Report, China Market Entry, Retail, Physical Distribution, China, UKTI, British Underground, Client Work, China Physical,

China Indie Music Report : Record Labels

NOTE: This is an extract from the ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground.

Due to piracy and negligible airplay royalties, the western record label model simply does not work in China. In most cases, domestic companies take over an artist’s entire life - Records, management, publishing etc. There is so little money to be made from simply exploiting a master that a label has to ensure it doesn’t miss any area of income in order to survive. This obviously poses a problem to western rights owners/managers looking to make money out of their narrower areas of interest.

The majors are all here doing their stuff, struggling away, but like all foreign companies they have had to enter into joint ventures to operate in China, slashing their already slender profits. They own the lion’s share of domestic pop music but with regards to international repertoire, they stick very much to frontline releases and global priorities with the occasional catalogue title.

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6Published, Staff Blog, Project Blog, Large, China Music Industry, China Market Entry, Record Labels, Modern Sky, Universal Music, Physical Licensing, Access China Report, Ed Peto, UKTI, British Underground, China, Client Work,

China Indie Music Report : Introduction

NOTE: This is an extract from the ‘Access China’ report, written by Ed Peto, commissioned by UK Trade and Industry Department and British Underground.

Every man and his dog is looking to China as the ‘next big thing’, but should the western music industry executive also be packing Fido into air freight and de-camping to the Middle Kingdom? Before anyone considers investing energy in China, it is important to be aware of just how different the industry is over here. There are some genuine areas of opportunity but let’s start with the grim facts:

  • Physical piracy runs at around 90%.
  • The average gig ticket is £3 and charging anything over £7 for a concert will alienate the young Chinese music crowd.
  • Publishing is a foreign idea to the Chinese and is therefore a tiny, unpredictable source of income.
  • All media is government owned or heavily government monitored and, in most cases, requires ‘financial incentives’ in return for coverage.
  • Despite a population of 1.3 billion people, the legitimate physical music market was only worth US$86million in 2006, making it the 20th biggest in world.
  • All foreign companies must enter a joint venture in order to set up shop in China, handing over at least 51% of their company in the process.
  • All music has to go through lengthy and seemingly arbitrary government censorship procedures.
  • China is a black hole of statistics, quite often by design, making market research and due diligence incredibly difficult.

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6Staff Blog, Published, Project Blog, China Music Industry, Large, Access China Report, China Market Entry, UKTI, British Underground, China, Client Work,

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