Search results for 'China Digital Music'

China Music Business

We have just launched our own China music industry analysis site under the brilliant name of ‘China Music Business’. We aim to publish an article every month or so from a range of China music industry experts and insiders. This month sees a contribution from Outdustry boss, Ed Peto, covering the state of play in the Chinese digital music market. Please sign up, bookmark, RSS, follow, tweet etc.

China Music Business will also be our platform for general China market intelligence, reports, introductions, market visits. More info here.

6China Digital Music, Project Blog, Medium,

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,

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,

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,

Google China Music Search Closes

google.cn/music as of this morning: “Google music search service has been turned off. Please log in and download saved playlists before October 19th”

Google China have just announced (Chinese) the closing down of their pioneering music search service in China. Opening it’s doors in early 2009, the service partnered with Top100 to offer a free and legal music search service for full track downloading and streaming, complete with licenses from the four majors and dozens of domestic labels - a move totally unprecedented elsewhere in the world.

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6News Links, China Music Industry, China Digital Music, Medium, China,

Google China MP3 Search…..Finally

So, it seems that Google China has finally decided to make some noise (translated story) about their free MP3 search service. When this went into beta almost a year ago we were predicting that it would be game-changing news, but somehow it has remained under the radar. At their press conference today, however, Google China announced that all four major labels are on board, as well as all the major publishers and some 140+ indie labels, through their partner in the project, Top100. This amounts to some 1.1 million songs being given away for free. Surely this equals headlines?

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6China, China Digital Music, Staff Blog, Ed Peto, Large,

The Chinese iTunes Gift Voucher Trick

While there are some legitimate digital music download sites in China - including 9Sky, Top100 and the recently launched Wawawa - digital music is proving to be a tough sell in the P.R.C, partly because of the market dominance of Baidu’s free mp3 search. There are, however, people making decent profit in this as yet unmeasurable market: the hackers of Apple’s iTunes store gift vouchers and their local agents.

In China’s biggest C2C online shopping site Taobao, $200USD iTunes gift cards are for sale at 17.9 RMB, roughly $2.6 USD.

There are thousands of cards for sale at the same time. Choose one seller whose Taobao IM is online, talk to him a little bit, purchase his product and pay money to Taobao’s online payment system, Alipay, which supports most banks in China.

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6China, Staff Blog, Ulysses Shi, China Digital Music, Large,

The Next Generation Of Music Consumers

This article originally appeared in Issue 191 (1st May 2008) of the MusicAlly Report.

China never fully adopted the “traditional” tools of music discovery and consumption: TV, radio and the print press are all heavily monitored by the government and relatively anodyne as a result; CDs never really gained any meaningful traction; live music events are circuses of permits and arbitrary cancellations.

The bleak circumstances of China’s music business have resulted in the Chinese consumer inadvertently leapfrogging into the next generation of music consumption, even before their western counterparts.

In February this year, after a 53% growth rate in 2007, the Chinese Internet Network Information Centre (CNNIC) finally declared the Chinese internet base to be the largest in the world with 221 million users. At 16% penetration, this still leaves huge room for growth.

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6Published, Staff Blog, China Music Industry, Ed Peto, China MVAS, Music Ally, China Digital Music, China, Client Work, Large,

So You Want To Sell Music In China?

Ahead of his MidemNet panel appearance, Mathew Daniel, VP of R2G (digital distribution company) in Beijing has a few observations and words of advice for labels seeking digital licensing opportunities in China:

As Olympic hosts and country-of-honor at MIDEM, China’s music industry is an increasingly common feature on the western agenda. There is, however, almost a whiff of the ‘Wild East’ in the way companies are approaching licensing in the Middle Kingdom.

It has to be realized that the vast majority of labels at MIDEM are probably currently unscathed by piracy in China and that’s likely because their music is so obscure in the Chinese consciousness that they have not even had the dubious honor of gracing the servers of China’s notorious MP3 search engine, Baidu.

Piracy in China often gets a lot of attention but many forget the other Ps of marketing and these are the basics that labels intending to come into China should first focus on. For dramatic effect, let me first quote Tim O’Reilly when he said that Obscurity is a far greater threat to authors and creative artists than piracy.

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6Digital, China Music Industry, Guest Post, Mathew Daniel, China Digital Music, China MVAS, Large, China,

Enter The Dragon : Introduction To The Music Business In China

NOTE : This article originally appeared as ‘Music In China : The Inside Story’ on The Register

How To Do Business In China, China CEO, The New Chinese Consumer… my shelves here in Beijing are stacked full of such books, all trying to throw some light on a country and market of seemingly endless allure to the west. A population of 1.3 billion people has marketeers around the world girding up their loins to do business here, each with a How To Do Business In China book tucked under their arm.

Unfortunately for the western music entrepreneur or artist, these books are helpful in only the most general terms. While there is a slew of practical, detailed advice on how to deal with rubber-ball factories and sales chains, the fledgling music industry here is such a bewildering state of affairs that fully-rounded advice simply isn’t available yet.

As in most other Asian markets, pop music has a real stranglehold over the mainstream - Mando-Pop, Canto-Pop, J-Pop, K-Pop - glossy, inoffensive music that satisfies the censors as well as the ‘bland criteria’ necessary for across-the-board media coverage. Despite the diverse musical heritage of China, mainstream pop is almost entirely informed by western music, from the basic pop song format through to instrumentation and lyrical content, although general production quality is still fairly poor. The Chinese audience, therefore, are already well familiar with all of the stock traits of western music: Guitar solos, crap raps in the middle-eight of pop songs, warbly diva vocals, key changes at the end of ballads, pseudo-rock bands, pseudo-hip-hop bands etc.

Your average western band, therefore, does not sound totally alien, it’s just that no one is willing to spend money promoting an international (and therefore niche) act when 90 per cent of CDs are counterfeit and an even higher percent of online music is pinched. It’s all about hitting the mass market straight out of the box and selling big, if you want a chance of making money.

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6Published, Ed Peto, China Music Industry, China Digital Music, Large, China MVAS, China Record Labels, China, China Live Music, Client Work, China Physical, The Register,

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,

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,

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