THERE'S a lot of interest in indie music and live houses are the place to groove, yet there aren't many in Shanghai, and the industry in China is far from mature.

The live house music business isn't exactly booming, since such venues in China rely largely on drink sales for revenue, not ticket sales, as do most live houses in Japan, the United States and Europe.

High costs have put several live houses out of business, such as 021 Bar and Live Bar. Many others have changed their business focus. For example, Ark Livehouse, the very first live house in Shanghai, opened in 2001 in Xintiandi, but was forced to move when rent became too pricey; it moved to Nanjing Road W. and redefined itself as a restaurant and lounge bar.

The major live houses in Shanghai are Mao Livehouse, which just moved to a larger venue and has fairly deep pockets; Yuyintang, an old favorite with shallow pockets (tickets are just 30-50 yuan/US$40.60-7.65); and Brown Sugar in upscale Xintiandi that caters to an expat crowd.

Yuyintang

Founded in 2004, Yuyintang is one of Shanghai's oldest and favorite live houses because of its new faces, original music and low prices.

With a small stage, standing-room-only dance floor and video projectors, Yuyintang in Changning District puts on live shows almost nightly.

"I enjoy relaxing with a bottle of beer and watching a performance," says John Carter, a 28-year-old American who has lived in the city for three years. "It's very popular and I have to book tickets for weekends."

"Live houses are gaining popularity among young people in China," says Zhang Haisheng, owner of Yuyintang. "Chinese people are starting to understand the true value of original music.

In a healthy music market, live houses of various sizes should form a pyramid for bands and singers to climb upward, and they pick the most talented, says Zhang.

Live houses have been the basic link of the music industrial chain in Japan, Europe and the US. A new band usually makes debut in a small live house, moves to bigger ones as it becomes more popular and if it succeeds, it goes professional. The Beatles built its reputation in live houses in Liverpool, England.

"Live houses provide chances for bands like us to improve our musical skills, stage experience and understanding of music," says vocalist Zhao Qintao with local band Little Nature. But he says most new Chinese stars today are "picked" by TV reality shows. "Their popularity is based on hype, rather than talent."

Overhead costs of Yuyintang are more than 30,000 yuan a month, including rent, utilities and salaries, says Zhang. Annual profit is only around 100,000 yuan, mostly from selling drinks.

"Earnings from tickets go to the bands and we don't charge any fees," says Zhang. "That's why Yuyintang attracts indie musicians."

He's a bit worried about the future of live houses in the city. "Rising rents are eating up most of the profits and live shows are still not recognized as mainstream music," he says.

Mao Livehouse

One of the most influential venues for indie bands is Mao Livehouse, which started in September 2009, and considers its prospects bright.

On March 25, Mao opened its new, bigger venue on Chongqing Road S. It can accommodate more than 600 people.

But the opening bash was so loud that residents complained to police. Mao had to cancel several performances, do some renovation and install more sound proofing. The show goes on in April.

Owner Li Dalong is brimming with optimism.

"A true music lover always wants to build his own band and a live house offers the place and audience," he says. The live house market in Japan, the US and many European countries is very mature; many students have their own bands and music is a lifelong passion.

"In a sense, a live house represents a new lifestyle and I think it will come into fashion in China too," Li says. Mao charges 40 to 100 yuan for tickets to local band shows and 100 to 200 yuan for foreign bands.

Unlike Yuyintang, Mao Livehouse takes 20-30 percent of the ticket sales. It also partners with MSI Japan, Bad News Music Publishing Co and SOMA Cultural Promotion Co. Its deep pockets enable it to become more ambitious.

"Live house, by its nature, is not a lucrative industry," says Li. "So we will expand our musical business to other areas."

He says Mao plans to select and sponsor around eight new Chinese bands to perform in the annual Summer Sonic Music Festival in Japan this year. It has also been authorized by iTunes to establish an official website for Apple in China where Chinese musicians can upload their original music and share it with people all over the world.

"We want to introduce excellent Chinese indie bands and their original music to the world," he says.

Shanghai has become a very important stop for touring bands from both China and abroad, and Li sees "a huge market for cultural consumption here."

"The market is the soil that can nurture Shanghai into a worldwide cultural center and live houses like us are the fertilizer," says Li.

Though Mao is relatively well off, Li, like other owners, worries about rising rents and fees for foreign bands.

Brown Sugar

Brown Sugar, one of the most profitable live houses in Shanghai, is owned by Taiwan Entertainment Group. Its clientele are largely expats.

The bar in Xintiandi selects and trains its own bands but doesn't charge customer fees for live performances.

"Our high-quality live shows are a great attraction to regular customers, but our main earnings are expected to come from our collection of wine," says Neil Zhu, marketing and project manager.

Yuyintang and Mao Livehouse, however, plan to keep their business models.

"In my opinion, people come to live houses to enjoy the performance instead of the drinks," says Li of Mao Livehouse. "So everyone can come as long as he/she buys a ticket."

"But we do hope for more support from the local government," he adds.

Yuyintang owner Zhang concurs. "Live houses in China are still at nascent stage, we hope to see some preferential policies in rents, financing and subsidies," he says. "Besides, stronger intellectual property protection of original music is of great importance to our development."