Here's a real challenge to Chinese music lovers: When it comes
to buying pirated CDs and music, take the same approach former US
First Lady Nancy Reagan promoted regarding drugs in the 1980s just
say no.
That's exactly the theme of a 100-day campaign the General
Administration of Press and Publication launched last Saturday. It
urges people to resist buying counterfeit discs and
publications.
And that idea is music to the ears of China's music
industry.
There aren't many areas these days in which China lags behind
the rest of the world, and in many sectors it is starting to
dominate.
But when it comes to the most lucrative music markets globally,
the country ranks only 27th.
Piracy is rated as the No 1 factor behind the lowly standing.
The volume of legitimate music sales in China last year was US$86
million, compared with US$7 billion in the United States, which
ranks first.
However, the belief that China could eventually top the global
charts for music sales and revenue is growing. John Kennedy,
chairman of the International Federation of the Phonographic
Industry (IFPI), said: "There is huge potential in China. There's
no reason why it shouldn't be the biggest music market in the world
one day.
"It has become the most influential country in so many sectors
over the last few years, so there's no reason to think music should
be any different."
The IFPI values illegal sales of music in China at about US$400
million annually, and despite the problems with piracy, many of the
leading international record companies have built up their presence
in China in the past few years.
EMI set up a joint venture with Shanghai-based Push Sound, BMG
Sony established a partnership with the Shanghai Media Group, and
Warner Music Group launched a subsidiary, Warner Music China.
Ironically, the very thing that has hampered the growth of the
market in China could actually be the catalyst for its eventual
emergence as a world leader.
"China has a market promise unseen elsewhere in the world," said
Kennedy, who has spent nearly three decades in the industry.
"Because of the exceptional combination of an underdeveloped
piracy-dominated physical market and a rapidly developing wireless
environment, China is now uniquely placed to become the world's
showcase digital music market."
Even efforts to lower the price of CDs in the past few years to
make them proportionate to the spending power of Chinese consumers
have failed to reduce piracy significantly. So, companies in China
are experimenting with business models untried in other
markets.
Last month Warner clinched a distribution deal with China
Unicom, the country's second-largest mobile phone operator, to sell
its music over the wireless network.
Kennedy said that although Internet music piracy was a growing
problem in China and the rest of the world, mobile music channels
seemed less affected, largely because of support and assistance
from telecommunications operators.
The initiative by Warner and likely similar schemes by other
companies in the future give China a chance to race ahead of music
markets in other countries, Kennedy said.
"Mobile music is already far advanced," he said. "For the
international record companies operating in China, sales of music
via mobile phones already account for about 15 per cent of industry
revenue."
China has nearly half of all the broadband lines in Asia and the
world's second-largest mobile phone market, with more than 400
million users. Only the United States has more.
The IFPI is tackling Internet piracy in China head-on. Last
week, it announced it was preparing to sue Yahoo China over
complaints that the search engine violated copyrights by linking to
websites that offered pirated music.
Yahoo China contends the search engine was acting "within the
law."
Kennedy said the IFPI, which represents more than 1,400
recording companies in 73 countries, was looking for Internet
service providers to take the lead in fighting Internet piracy.
"We are particularly concerned that the online market gets off
on the right foot and that piracy could threaten the fledgling
market before it has properly evolved," he said.
The IFPI has welcomed moves by the Chinese Government to crack
down on music piracy, such as closing down illegal CD
manufacturers.
Kennedy said there seemed a growing awareness in recent times of
the need to tackle the problem. During an eight-month crackdown
from the start of last year, about 2,600 people were arrested
across China on charges of product piracy.
In addition, around 63 million compact discs and other
counterfeit goods estimated to be worth 860 million yuan (US$107.5
million) were destroyed.
Officials recently revealed that 223 production lines for
pirated CDs and DVDs have been shut down since 1996.
"But it needs even more investment by the Chinese Government in
intellectual property protection to create the right environment
for the music industry to grow," Kennedy said.
"I wouldn't expect any government in the world to do something
just because the IFPI is saying so or I'm saying so, but I do
believe the Chinese Government will do so as it is in their own
self-interest.
"China has already secured worldwide dominance in manufacturing
and is laying the foundation for an economy that could dominate the
world. Now they are approaching the next stage of developing their
economy, and protecting property rights is a part of that
process.
"Protection helps encourage investment and innovation. But where
there is none, there's no investment and no creativity as there is
no incentive."
Holding shows
As general restrictions in China are lifted and the country
engages more and more with the rest of the world, an increasing
number of Western bands are holding shows in China in a bid to
boost record sales.
The Rolling Stones performed for the first time in China at a
concert in Shanghai in April, and US hip-hop quartet the Black Eyed
Peas began a three-date tour on Sunday.
For the Stones' gig, however, foreigners made up 90 per cent of
the audience, according to Chinese media reports, partly because of
the high cost of tickets.
"More and more bands are coming to China as it becomes easier
for them to do so," Kennedy said. "It's becoming a big market.
Taihe Rye Music Co Ltd, one of China's biggest record companies,
has been instrumental in arranging for artists to perform in China.
Last year, the company co-presented shows in Beijing and Shanghai
by best-selling jazz singer and multi-Grammy Award winner Norah
Jones.
Managing director Song Ke said it signaled a new trend in
China.
"There were others before her, but mostly old and out-of-date
stars," he said. "The issue with cost is not that the stars are so
overtly expensive, but that the Chinese sound and lighting, as well
as technical crews, are not up to par, so the bands have to bring
in their own people, and that is where the cost goes up," said
Song.
Among the acts on the Taihe Rye label is last year's
"Supergirls" winner, Li Yuchun. Her rise to fame makes her the
perfect figurehead for new forms of music distribution, Song
said.
"We know the problems with the Chinese traditional music sales
outlets, so we are trying to find new ways to target the market in
China such as through mobile phones and the Internet," he said.
Another TV contest that has pushed talent to the fore in China
is the "Wo Xing Wo Xiu." now in its third series. Harry Hui,
president of Universal Music Southeast Asia, which produces the
program, has appeared as a regular judge.
"The Chinese music market represents an enormous opportunity for
new music creators and the new media industry," he said. "I believe
there's an enormous appetite among young people to create and
define a new generation. The TV show has allowed me to see this
first-hand.
"The music they are producing and the songs they are writing are
just phenomenal. We've seen 150,000 people across 22 cities, and my
company has been investing an enormous amount of money to find the
next big stars.
"However, at the moment, we have an industry in China that does
not have an eco-system that nurtures performers, songwriters,
producers and video directors, and that brings us back to the
enormous piracy problem," he said.
(China Daily July 18, 2006)
