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May 30, 2014

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Music industry embraces the Internet

WHILE most fans of Hong Kong actress Maggie Cheung were shocked she took to the stage at the recent Strawberry Music Festival in Shanghai and Beijing as a rock singer, Roger He had been listening to her music for a while — online.

Cheung’s recording company, Modern Sky, says there is no plan to release an album — all the songs will be published online and performed in concerts and music festivals.

“I don’t really care about albums,” says He, a IT professional. “I think online music is more up to date. Just one click, it’s right there in your phone.”

Technology is transforming China’s music industry — big time. Tapes, vinyl and CDs, even pirated versions, are quickly disappearing from the market. Various websites and apps bring millions of songs to PCs, tablets and smartphones.

And even though users definitely show no qualms about breaking piracy laws to download music for free, enough people have shown a willingness to pay for song downloads.

Shen Lihui, founder of Modern Sky, the country’s biggest music festival promoter and organizer of the Strawberry event, says the industry’s transformation will continue without looking back.

“The popularity of smartphones and new technology makes listening to music online easy and popular,” he says. “There is no record company in China that has earned a profit purely by selling albums since 1997.”

Shen’s comment came at a seminar organized by Sino-Swedish Sounds in mid-May 17 in Shanghai. Industry experts gathered to discuss distribution and consumption models. They also wanted to brainstorm about building communities around music — both online and offline.

Yue Ting, deputy editor-in-chief of Himalaya, one of China’s most popular apps for radio programs and the largest online music-sharing community in the country, says smartphones have changed everything because people are now more willing to listen to music on their handsets while at work.

Himalaya started up one year ago and has been tagged as “redefining radio” and the “Taobao of sound” — is the country’s dominant online retail website. Himalaya goes beyond allowing users to listen to songs. Users can also comment on music and artists, as well as recompose and share their tunes with others.

It now has 50 million users and this increases by an average of 200,000 daily. The app has posted 2.6 million radio programs by over 5,000 individuals and institutes, or an average of 10,000 pieces posted per day. The app is always in the top 50 in China’s app store with it reaching as high as No. 11.

Himalaya users can not download any audio files, but Yue says this will eventually change.

“We have received numerous messages from users who say they are willing to pay to download songs and other audio programs of high quality,” he says.

But people can download music from websites like, a Chinese portal providing high-quality service based on social networking.

Founded in 2008, Xiami now has 30 million registered users and 5 million daily unique visitors. More than 6 million songs are in its database and more than 4 million can be downloaded.

Wang Hao, CEO of Xiami, says the website has a built-in search engine program that records the music a user has downloaded. It logs every track ever played by every user. It now has over 1 billion user records. When users log in, the search engine recommends a list of songs.

Xiami has found during a survey of some of its users that only 24 percent listen to music on their smartphone with the original earbuds provided by the manufacturer. Xiami says 28 percent of respondents have spent 200 yuan (US$32.78) to 600 yuan on new earphones while 4 percent spent at least 2,000 yuan on new earphones.

“This is an interesting discovery,” Wang says. “People are spending more on equipment to ensure quality online listening.”

But copyright issues still plague the industry. Many Chinese people still don’t see the point in paying for music when it’s available for free on another site or app.

“Almost everyone in China knows that pirated music is illegal, but nobody feels ashamed when they listen to pirated music,” Wang says.

Shen with Modern Sky says it will take a long time to change habits but he still believes “the future is definitely the Internet.”

Xiami usually charges 0.8 yuan per song although indie musicians set the price of their own work, ranging from free to as high as 50 yuan.

“We don’t charge for low-quality files, but it’s 10-15 yuan per month for 100 songs,” Wang says. Xiami provides high-quality mp3 files and full metadata CD quality for any song a customer pays for.

Xiami and record companies split all song purchases 50-50 while independent musicians receive 100 percent of the amount charged for downloads.

Still, Xiami is losing money. Wang says the cost of running a music website is more than several billion yuan, compared with several million yuan several years ago. The main reason for the surging cost is legal copyrights.

Yue with Himalaya says “price chaos” is the best way to describe the copyright situation at the moment.

“We are in the midst of the transformation age of copyright law,” Shen says. “It will take at least two to three years before a better legal framework will be worked out to stablize the industry.”

Overseas, companies such as Napster and Limewire have been shut down after being sued by either record labels or the Recording Industry Association of America. Both were peer-to-peer file trading services.

Spotify is a current music-streaming service that has both free and subscription accounts. It has signed deals with various record labels including EMI, Universal, Sony and Warner Music Group. Earlier this month, Spotify said it has more than 40 million active users with over 10 million paid subscribers. Despite this some still say Spotify doesn’t fairly compensate them.

Musicians and their songs remain at the heart of the industry. Independent acts have somewhat of an advantage in this chaos as they can reach their audience directly through the Internet. If their music is affordable and good enough, they may just find a bigger audience then they would signed to a record label.

Meanwhile, Shen says record companies will shift their business model to make more money off of their acts through concerts, guest appearances, music festivals and commercial events.

Industry insiders say another shift is taking place since listeners now have so much choice. People’s music interests are diversifying.

Xiami says about 50 percent of its songs are by Chinese acts while 40 percent are by either European or American artists.

“More of our users are starting to listen to jazz, blues and R&B,” Wang says.

He says this is good for both musicians and music businessmen as it opens up more possibilities for everyone.

Ellen Zheng, a 30-year-old who went to the Strawberry Music Festival in Shanghai, says the power of the Internet is irreversible.

“Maggie Cheung has proved the Internet is better for music,” she says. “The communication between fans and the musicians is better. We can feel closer to each other.”


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