Digital-Music-Report-2014

21world rankingmusic market618Mactive internet users in 2013500Mmobile web usersFan Fan courtesy of Linfair Recordsalongside its free streaming service isKuwo. CEO Lei Ming, says: “In China themajority of people now use legal music— that’s a very good environment to bein, but the big question is how can wetransfer consumers from free to paid, andhow to do that without pushing users toillegal sites?” Another leading service isTencent, which has amassed three millionpaying subscribers for its subscriptionservice Green Diamond. Pursuing adifferent strategy is Baidu, China’s largestsearch engine. Baidu offers a free musicstreaming service and, in addition, a paidfortier offering expanded cloud storagespace and high quality larger files. As withKuwo, the vast majority of Baidu’s userschoose the free-to-consumer option.Kaiser Kuo, director of internationalcommunications, says: “Baidu has anad-funded model and our core strategyis based on online advertising anddominating at consumers’ main points ofentry to the internet.”The largest digital service is ChinaMobile, with 700 million users in totaland 50 million active paying ringbacktone customers. In addition, there are20 million paying subscribers to theoperator’s subscription and limiteddownloadmusic service, Migu Music.Liu Yu Xing, assistant of the generalmanager of China Mobile Music Base, says:“It is not just recording companies andmusicians in China who want to get to thispaid-for model — it is the objective of theoperators too.”Record companies also want to stepup artist development in mainland China.In the short term this is a challengingtask due both to undeveloped productionfacilities and to regulations limiting non-Chinese investment both in productionand in distribution of music.In the absence of a developed marketfor sales of recordings or performancerights, labels working in China rely heavilyon management and live performanceincome. Most big-selling artists aredeveloped out of Taiwan, dubbed the‘Hollywood’ of the region. One of theleading indies active in China is TaiwanbasedLinfair Records. The label’s topartists include Fan Fan, a judge on China’sgrowing and influential TV talent shows,and Yu Chen Ching (Harlem), a Taiwanesesinger who is the label’s top male artist.Linfair Records chairman DenverChang says that CD sales andmanagement income cannot be the longterm future for record companies inChina: “The paid model is the foundationto run a record company. The good newsis that we know that the platforms wantto have paid services, and the governmentrecognises that too. The interests ofthe music industry and the internetcompanies are aligned.”Tackling piracyRecord companies and digital servicesagree on the critical continued roleof copyright enforcement in turningaround the Chinese market. Followingthe licensing deals that some repertoireowners have struck with the major digitalplatforms, the government now has avital part to play in tackling the thousandsof remaining small and medium sizedinfringing sites.NCAC Vice Minister Yan Xiaohongsays the government has steppedup actions both in enforcement andpromoting consumer awareness ofintellectual property rights. “Nine yearsago when I started in this role, we weretalking about copyright theoreticallybut since then dramatic changes havehappened. Criminal penalties for copyrightinfringement have been strengthenedand enforcement against illegal sitesintensified.”37