China Music Industry's Move toward Paid Service Model
    2013-07-09 14:33:34         Web Editor: Mao Yaqing

Music insiders have been murmuring for some time about massive changes heading towards China's music industry.

So far, no new policies have been officially implemented, but the industry is bracing itself for what many consider inevitable shift towards a paid service model.

CRI's Jordan Lee reports.


Combating music piracy in China has been at the bottom of the government's barrel of intellectual property reforms for some time.

But Chinese producer Goa Xiaosong's announcement that a July 1 deadline had been set to end illegal downloading was a warning that the industry was about to undergo radical restructuring.

A collaboration between government, content providers, and record companies will attempt to move China's online music market into a new era of copyright protection and fair compensation for artists.

But will the millions of Chinese netizens who are accustomed to free music resist the change?

Thomas Reemer, Founder and CEO of web-based content provider 88tc88, says that piracy will not become obsolete until people have a better alternative:

"To combat illegal downloading you have to offer a legal alternative.

Otherwise people will stick to what they know. People are not mean by stealing content, they just do it because they don't find it anywhere else."

Reemer launched Paishouba in Beijing, a mobile download platform that provides Western music, games, aps, and ebooks to Chinese consumers.

Paishouba is drawing a diverse group of western artists to the Chinese market by providing them with a safe sales platform:

We support the artists with us content providers, artists get paid, and we enable a better ecosystem. Now more and more companies are following suit, that has to do with government initiative as well as people understanding that they are losing, not getting, a lot of revenue if they don't enable this market to earn money.

Statistics published by China Audio & Video Association showed that China's 2012 copyright market was valued at 40 billion yuan, but only generated 800 million yuan in actual revenues.

Although it is difficult to accurately quantify the impact of music piracy on revenues, it is possible to predict the negative affect piracy has on an industry's development.

Piracy eats away at artists incentive to create. Over time, this will limit the market and result in a shallow content pool.

A survey by Beijing-based research group Music 2.0 found that one third of Chinese music consumers are actually willing to pay for downloads if it gives them access to better content.

Associate Professor Jin Haijun, a specialist in intellectual property at Renmin University Law School, says China's music industry is ripe for reform.
Jin compares the current state of the music industry to that of the film industry in the early 2000's when illegal downloading was rife:

"Several years ago, that's also the same problem, illegal downloading for movies or television episodes. //What the lessons can be learned is that the government and the industry put together, joined together, to make things better. They cracked down on the illegal ones. At the same time paid the royalties to the movie producers. The internet users had to pay something like 5 yuan for the latest movie"

After the government cracked down on illegal movie downloads, the domestic film industry experienced a renaissance, boasting over 30% annual growth rates between 2004 and 2009.

Many factors contributed to that growth, but the motions to fight piracy certainly played a role.

The July 1 deadline has passed, and many attribute this delay to the failure of the various parties to come to an agreement regarding the new changes.

For CRI, I'm Jordan Lee.


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