Search results for 'China Music Industry'

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,

Billboard Interview : China Top 5

A few months ago, as part of their Maximum Exposure edition (Sept 26th 2009), Billboard magazine sat down with Outdustry’s Ed Peto to find out 5 good ways to build a bit of presence for your artist in China. Here, printed in full, is the resulting piece by Jonathan Landreth.

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.

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6Ed Peto, Interview, Staff Blog, China Music Industry, China Market Entry, Large, Outdustry Media, China,

Free Love

Chris Anderson has just published his latest book “Free : The Future Of A Radical Price”. In it the Wired Magazine Editor and bestselling author of The Long Tail discusses the economic peculiarities of a world in which goods, services and media are increasingly being made available for what feels like free: How has this happened, and what does it mean going forwards for us both as consumers and producers?

Free : The Future Of A Radical Price

As a market where digital content has largely been free from the get-go, China is an obvious case study along with other developing nations such as Brazil. Chris has therefore devoted a chapter to these markets, looking at how people are dealing with such realities.

I met Chris for breakfast during one of his research visits to China towards the end of 2007 and, amongst other things, outlined the basic concept of MicroMu (不插店) to him a good 8 months before we actually got round to trying the idea out. A year and a half later (and a year into the MicroMu project) and our copy of Free arrives through the post, complete with a whole page devoted to MicroMu as an example of an experimental free music model:

"The moment you put a fee on accessing music in China is the moment you cut off 90% of your audience," says Peto. "[Paying for*] Music is a luxury for the middle class in China, a flippant expenditure. This model works against that. We simply use free music and media as a way of saying that ‘everyone is welcome’, building a dialogue, building a community, becoming the trusted brand of the grassroots music movement in China. To do this though, we have to become all things to all men: record label, online community, live events producers, merchandise sellers, tv production company."

*Just to clarify: It is the idea of paying for music and not the idea of music itself that is a luxury for the middle class. The words “paying for” were not included in the original text.

The pressure is on to deliver! Many thanks for the mention Chris and good luck with the book launch.

6MicroMu (Buchadian), Project Blog, China, Outdustry Media, Ed Peto, Large, China Music Industry,

SPOT Festival 2009

Last weekend I attended SPOT Festival 2009 in rainy/sunny Aarhus, Denmark. The organisers kindly flew me in, along with a number of other international music industry types, to soak up some outstanding up-and-coming Danish artists as well as generally spew forth about our respective markets.

As far as Danish bands go, I particularly enjoyed Oh Land's orchestral experimentation on the opening evening, as well as Kiss Kiss Kiss' danceable indie-pop on the P3 stage, with the Danish crown (in my ill-informed opinion) going to one of the best live acts I have seen in a while, Who Made Who, who rocked a packed out mega-barn of revellers on the Saturday night.

I also have to make an honourable mention of Norwegian artist Rockettothesky who’s esoteric take on song-writing - including a track about ‘horny ghosts’ - stayed with me for some time after the show, to the point where I bought her album Medea off eMusic as soon as I got home. Good stuff.

As far as me ‘spewing forth’:



Video made by (and courtesy of) SPOT Festival

Thanks very much to everyone at SPOT, particularly Martin Røen Hansen and Henrik Friis, for a fantastic weekend.

6Staff Blog, China, China Music Industry, Ed Peto, Medium, Outdustry Media,

Network Songs : Life Inside China’s Pop Echo-Chamber

A shorter, edited version of this piece appeared in The Guardian under the title ‘Online Pop Explosion’. Please treat this longer, draft version as a separate article.

When unknown Chinese singer Yang Chengang wrote and recorded the song Mice Love Rice in Wuhan, Southern China in 2000, he would have had no way to predict it’s eventual impact. While the pop ballad languished in relative anonymity on CD format for four years, it’s eventual arrival on the recently booming internet in 2004 sparked off a word-of-mouth phenomenon that would ultimately peak with 6 million legitimate ringtone sales on China Mobile in one week as well as a rumoured 200 million illegal MP3 downloads within a year.

Once exposed to the powerful Chinese internet, Mice Love Rice and it’s exemplary use of instantly recognisable melody as well as inoffensive, syrupy lyrics - in this case a chorus that includes ‘I love you, loving you, just like mice love rice’ - came to define what is now known as a ‘wang luo ge qu' or 'network song', a literal reference to the exponential spread of a song through internet networks. This process of musical ‘crowd sourcing' has proven to be the paradigm of the modern Chinese musical landscape.

Song Ke, founding CEO of one of mainland China’s leading record labels, Taihe Rye, employs a team who use software to monitor the various chart systems and music networks around the internet, looking for songs that are ‘making noise’ and stepping in and signing them up once they have proven to be a crowd pleaser. The practice has paid off: a few songs by unknown artist Dao Lang were "making a lot of noise on the internet," says Song "We got in touch with him, signed all his digital rights, put our new media marketing team behind it and sold 30-40 million ringtones in 2005 alone."

Unlike in the west, however, this ‘democratisation’ of music success - where the web organically decides which songs reach the top of the pile, or at least the attention of the likes of Taihe Rye - has not led to a vast broadening of musical tastes. In fact, the chat boards, blogs, instant messaging systems and peer to peer networks that organically built Dao Lang and Mice Love Rice into hits have shown the opposite to be true. Instead of a range of defined sub-genres, the network effect has crystallized music into one much larger homogenous category, based on the commercial pop song style and format exemplified by Yang Chengang’s hit. The much-feted ‘long tail’ of alternative music and niche genres has, to date, failed to emerge.

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6Published, Staff Blog, China Music Scene, China Music Industry, Ed Peto, The Guardian, Client Work, Large, China,

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,

China Indie Music Report : TV & Radio

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

The Chinese government is acutely aware that TV is the most effective medium for delivering key cultural and political messages. China Central Television (CCTV), the state-run national station, operates a range of channels, which, in the main part, are barefaced propaganda and state trumpet blowing. Their large scale, televised music galas showcase traditional and government approved music forms and are regularly watched by audiences in the hundreds of millions. These are the kind of viewing figures that excite people about China but in reality the shows are impregnable fortresses of glittery, spandex-clad state guff.

When Pop Idol imitator ‘SuperGirl’ hit China in 2004, the final was watched by 400 million people. The rush of mobile votes sent the government into a panic and severe restrictions were implemented, preventing the show ever happening in the same format again - The idea of a democratically decided pop show proving too much for a one-party state.

Channel V

Further down the pecking order, regional TV is a bit more conversational about the idea of coverage but the act really has to be sizeable due to the broad audience - mass appeal rules. You have to go to the foreign owned stations to find recognisable music programming.

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6Published, Ed Peto, Large, China Music Industry, China Media, Access China Report, UKTI, British Underground, China, Project Blog, Client Work,

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 : 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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