IFPI Digital Music Report on China

IFPI Digital Music report front cover, featuring the names of artists who received their streaming royalties.

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This piece was a little delayed but our last post motivated us to get it out the works as it fits in nicely with the theme of IP. Here, we let you into our vision of what the future of digital music services in China could look like.

Each year the IFPI publishes a report (English version and Chinese version) wherein they basically flap on about how we’re all going to have to endure a fate worse than death if we don’t get the global IP economy in order and abolish piracy once and for all.

In the 2014 report there is a short case study on China that includes some interesting quotes and tidbits we’ll reproduce here without permission, thereby infringing copyright. Darn.

Salient points from the report:

  • The government is (in theory) being supportive and encouraging the development of legitimate digital music services.
  • The major challenge is to (a) get people using legitimate services, and (b) incentivize them to pay.
  • Piracy is still bad, for those who didn’t read the 2013, 2012, 2011, 2010, 200n report.
IFPI Digital Music report front cover, featuring the names of artists who received their streaming royalties.
IFPI Digital Music report front cover, featuring the names of artists who received their streaming royalties.

China’s digital music industry is valued at an estimated US$82.6 million, ranking the territory at 21st place on the global podium. Following this, the case study argues that we have entered into a time where unlicensed digital services are under pressure to get legitimate or face [insert vague threat]. Baidu of course set the precedent with their landmark deal in 2011 with ‘the 3’ international record labels.  It was probably more of an acquiescence than a brokerage; a heaving of oneself into the shade where the 蚊子 won’t bite.

The long and short of it is that with an Internet population of 618 million and increasing adoption of legitimate (paid-for) services such as Kuwo, Tencent (Green Diamond service), Baidu Music and Migu Music, the IFPI concludes that things are moving in the right direction. Some (Linfair Records’ chairman Denver Chang) even go so far as to say that the future wellbeing of domestic labels depends on it, as income from management services and live shows isn’t enough to guarantee future profitability.

We would argue that the major incentive will be in cloud storage solutions, rather than music or media content itself. The Chinese market is primed for a non-ownership music consumption model, and the argument for subscribing for storage that supports multiple formats makes sense when you consider the amount of content people go through on their limited-capacity phones.

You can’t compete with free, and you can’t convince people who have grown up with free that paid is better without adding value. Baidu is going in the right direction. Slap together a nicely branded cloud storage solution – one tailored to individuals’ needs, pre-loaded with their favourite content. Charge a monthly fee, and distribute a percentage to rights holders (who will no doubt argue they are not getting enough).

Sorted.

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