Music Industry's Future Foretold in China? 398
sapphire writes "An article today in the International Herald Tribune provides a look at music piracy from the point-of-view of pop stars in China. China is a country forced to deal with the reality of unchecked piracy of digital media products. Will their experience lead to new business models for the world-wide recording industry?"
Much more readable... (Score:5, Informative)
The article. (Score:5, Informative)
Copyright © 2003 The International Herald Tribune | www.iht.com
Pop stars learn to live with pirates
Thomas Crampton/IHT International Herald Tribune
Friday, February 21, 2003
SHANGHAI Dimpled good looks and saccharin-sweet love songs may have made him an idol to millions of teenagers in China, but dark passions emerged at an album-promotion party recently when Wang Lee Hom brandished a sword to slash an oversized compact disk marked with the Chinese character for "theft."
In case anyone missed the point, the normally demure Wang announced that his favorite track on the new album was "Why," a pop-music diatribe against piracy.
"Pirates have already killed China's music industry dead," Wang said. "It frustrates my life and destroys China's creative future."
That may be an overstatement. Record companies say that what piracy has really done in China is to cause fundamental shifts in the way the country's music industry operates. It has simply forced Wang and his fellow stars to change the way they live, work and play. ''There is no income from the royalties, so artists in China record single songs for radio play instead of albums for consumers,'' said Lachie Rutherford, the president of Warner Music Asia-Pacific. ''Stars need to look elsewhere to finance the rock-star lifestyle.'' Industry executives say this reality also is beginning to draw attention in Europe and the United States, where music companies face falling revenue from compact disk sales as Internet piracy increases. ''The financial effect is the same for record companies whether people get illegal compact disks for $1 on the street in China or download a song for free from the Internet in Europe,'' said Jay Berman, chairman and chief executive of the International Federation of the Phonographic Industry, a London-based group representing 1,500 record companies worldwide. ''Record companies everywhere find that they not only need to fight piracy, but also develop alternate revenue streams.'' Piracy -- which accounts for 95 percent of music sales in China, according to Berman's organization -- has forced multinational record companies serving the world's most populous country to abandon classic-style album contracts, drop development of formal distribution channels and eliminate any possibility of a top-40 list based on sales. ''China is the ultimate example of industrial-scale piracy and its impact,'' Berman said. ''The business model for the record industry worldwide is moving toward resembling what we see in China today.'' Alternative sources of income tapped by top Chinese stars include paid appearances, sponsorship deals and extended concert tours through the nation's vast hinterland. ''In the United States and Europe, stars have it easy if they make a hit record,'' said Han Hong, named best female artist this year at Channel V's China Music Awards, and whose renditions of Tibetan songs have become nationally popular. ''In China, we have to give so many concerts that we do not have time to rest our voices.'' To add to the concert revenue and combat piracy, Hong slashed the price of compact disks sold at her concerts to 15 yuan ($1.80), compared with 5 yuan for pirated disks and the 70 yuan that she formerly charged. ''You cannot fight piracy, so there is no point in even getting angry,'' Hong said. ''We must adapt to the environment.'' For Wang Lee Hom, that involved advertising campaigns and an intensive series of personal appearances. ''Until they pirate my body, I can rely on personal appearances,'' Wang said. ''I am forced to view albums only as a promotional tool.'' Concerts themselves have also become pure promotions, with corporate sponsors underwriting the entire cost and passing out tickets for free. Several singers usually take to the stage to maximize the revenue from sponsors. In China's mixed-up musical world, Wang considers his big break to be the day a national bottled water company, Hangzhou Wahaha Group, put his face on its products. ''They sent my face to every corner of China,'' Wang said, adding that other sponsorship deals soon followed for sneakers, sunglasses, shampoo and clothing. ''These deals support my fame, but they do not pay for my music.'' Fame may finance Wang's designer clothes, but the lack of revenue from music sales cripples record companies. ''Our survival strategy required switching to a talent-management business model,'' said Zorro Xu, managing director in China for Warner Music. ''As piracy increases in other countries, this is what record companies elsewhere may have to try.'' While classic record-company contracts are built around albums, record companies in China now sign up to manage all aspects of an artist's career. In exchange for a percentage of the earnings, the record companies arrange promotional events and negotiate product endorsements. Berman of the phonographic industry federation cited a groundbreaking deal made late last year between the British singer Robbie Williams and EMI Group PLC as an example of China-style recording contracts moving westward. The record company signed up to take a share of all profits linked to Williams's next six albums, including merchandising, touring and music sales. In China, the scramble for sponsorship often results in the pre-selling of songs to finance production costs. The hard-edged Beijing-based singer Pu Shu, for example, wrote a theme song for the launch of Windows XP. Payment for the song, ''Out of Your Window,'' covered the cost of album production, and each time he performed at Microsoft Corp.-sponsored events, Pu and Warner collected a fee. Epson Corp. selected a song by Zhou Xun, a singer and actress, to promote color printers in a deal that financed the song's music video. ''Sponsored videos and songs must not be too obviously commercial,'' said Xu said. ''They need to fit a concept and set a mood.'' Warner Music soon plans to begin a talent search for members of a five-girl band to be called Mei Mei, with the winners signed up for a two-year contract to promote M&M candy. Reliance on advertising and the inability to measure consumer response through sales figures makes it difficult for artists and record companies to determine hits. ''China's music industry is driven by institutional sponsorship instead of consumer preference,'' said Andrew Wu, head of Sony Music China. ''Piracy prevents record companies from properly reaching new consumers through in-store promotions.'' Although pirates offer an efficient means of distributing hit albums, the thousands of pirate stalls across China discourage record companies from promoting new artists. ''These stalls are poorly lit, difficult to find and mostly run by old ladies totally out of touch with modern China's music scene,'' Wu said. ''There is no way for record companies to connect with consumers in order to promote new artists.'' As a result, Wu said, there are fewer than 20 professional-quality albums produced per year in China. This lack of large-scale music production inhibits the entry of talented newcomers. ''I know I have the talent and ability,'' said Wang Jue, the son of one of China's first pop stars who studied music at the prestigious Berklee College of Music in Boston. ''Since the record companies just don't have any money to invest, I had to put up the money myself.'' Relying on investors rounded up by his mother, Wang spent 100,000 yuan promoting his album by plastering posters along a fashionable Beijing street and paying to have his song played as the hourly jingle on radio stations. Wang's rhythm-and-blues-style album, largely self-financed but released under the Warner Records label, became a radio hit thanks to the song ''Tomorrow'' and won him the award for best hit and best new artist at the Channel V China Music Awards last month. ''Not everyone can be so lucky as to have the support of a famous mother,'' Wang said. ''I just hope this album will bring enough sponsorship deals to pay for the investment from her friend.''
Copyright © 2003 The International Herald Tribune
Re:i'm sure the pirates know who's popular (Score:3, Informative)
But yes, the factories churning out CD's most definitely do know what's popular, and the agents who keep the stands with the old ladies stocked have a pretty good idea about it too. That part of the article is a mischaracterization, anyway; a lot of the sellers now are young men from the countryside who may not have a spectacularly strong grasp of popular music but who do at least pay attention to what sells and what doesn't. (half the time they'll be competing with seven other guys for the customer's attention, and they don't want to be plugging something that she's not interested in)
Re:Examination of piracy in general (Score:3, Informative)
Bullsh*t. Of course they will. If it is inexpensive, convinient and provides incentives to purchase. I know this example has been beaten to death, but what about bottled water industry? They are doing fine, though water is availble... *gasp*... in every house for free. Actually, strike "inexpensive" from my previous list. I am paying anywhere from $1 to $2 for a regular small bottle of water. People will buy a product if it is convinient and provides incentives to purchase it.
Faye Wong (Score:2, Informative)
Re:Information Devaluation (Score:3, Informative)
Very good point. Public awareness of the artist would be a definite driver of sales, pirate or otherwise. For the current market in software/music, etc. in the US, I would attribute the marketing blitz that aims to sell product to everyone, regardless of need or income, for driving non-commercial piracy. The analysis for a commercial pirate, on the other hand, would be affected not only by the amount of demand, but by potential profit as well. That's why there are counterfeit copies of Microsoft Word/Windows sold in bulk with retail packaging - high profit margin.
However, if you look at the kinds of street vendors hawking CDs in China (the China model again), they'll sell you collections of everything, and anything - including stuff repackaged to look like the flavor of the week (ie, a generic Pocahantas film by a no-name studio being sold in Disney Pocahantas packaging.) Thus, it isn't inconceivable that someone may bootleg a performance that I might do at a local jazz n blues house, it might get uploaded to Kaaza, and then downloaded by a commercial pirate. From there, my performance would end up a generic track on a generic 1001 blues/jazz MP3 tracks CD, much as freeware and shareware font designers were ripped off during the early to mid nineties by so-called "shovelware" CD producers.
When your overhead and marginal cost are next to nothing, you can afford to sell CDs at such a low cost that any kind of filler helps to increase marginal value. In that case, I'd be surprised if some enterprising soul didn't take to making compilation CDs of MP3s of whatever he could get his hands on (popular acts or unknowns), especially for bandwidth challenged folks.
Basically it boils down to the fact that any public exposure creates the possiblity of recording and distribution that you have no control over. In that situation, if I'm an artist trying to promote my band, I'd make sure I uploaded my MP3s first (ie, official MP3s), with ID3 tags to make sure that when some music/film producer picks up a 1000 track MP3 cd (or DVD as the case may be), my contact info is there. I might not get compensated for the use (I know the piracy is going to happen), but I might be able to get a gig out of it at least.
it isn't just music.... (Score:4, Informative)
Western record producers can gripe about piracy all they want, but it is simply a fact of life in China, and not just in music. A friend recently gave me a VCD of "Hero" - the new Zhang Yimou / Jet Li film. It is clearly a pirated copy, but is so visually stunning I plan to see it in theaters when I hit Beijing in two weeks (I don't know when it is scheduled to be released here....).
Realistically though, until someone explains to me why Chinese popular music is BETTER in quality and inventiveness than the stuff being played on MTV, I'll remain suspicious of arguments that tight copyright controls provide for better end-products.
p.s. Anyone hunting for good Chinese music should definitely check out Cui Jian. There was a really good documentary on China on PBS about a week ago that can be viewed here [pbs.org]. It has a pretty decent soundtrack as well.