According to Digital Music Report from International Federation of Association (IFPI), the growing trend of global digital music illustrates a deep transformation of global music industry. Consumers prefer to streaming music and subscription, thus, making subscription business the core of music industry business. Meanwhile, with increased awareness of copyright protection, listeners are more sensitive about whether the music services they choose are licensed or not. Therefore, iTunes, Spotify and YouTube are more popular with fans.
At present, the global music market has following characteristics: First, with the rise of streaming music services, streaming music listeners are increasing obviously. At the meantime, paid service is potential yet needs to be developed. Based on Ipsos researches, in the surveyed market, 35% customers chose free streaming music service in the past six months. On the contrary, 16% users paid for subscription. Second, bundled music services are popular. Now, almost all leading telecommunication companies put billing and digital music service library into their packages. Such products are playing an important role in the open and new market. Examples include MTV Trax and Deezer Elite. Third, music market is transiting from physical sales to digital sales. However, there is no significant change in artist royalties. Statistics show that in the past five year, labels paid $1.5 bn for artists in 18 markets other than Japan and USA.
As for the Chinese market, at the beginning of July, National Copyright Administration (NCA) had issued Notification of Internet Music Service Providers to Stop Dissemination of Unlicensed Music. Sixteen online music providers took down more than 2.2 million unlicensed songs. On October 31st,at the end of the transitional period, the “free lunch” era of online music in Chinese digital music industry officially came to an end, largely changing flooding piracy music and weak form of copyright consciousness in China in the past.
Recently, 4A —- Andrew Chan (SVP, Digital & Strategic Planning of The Greater China at Universal Music Group), Andy Ma (SVP, Business Expansion in Asian Region at Warner Music), Ariel Fung (Managing Director, Sony Music Greater China, and Executive VP Marketing, Asia) and Andy NG (General Manager, Tencent Digital Music) —- gathered in Beijing and shared their ideas on Chinese digital music development, and future cooperation and development with QQ Music.
The followings are part of the discussion:
Host: Now guests will share ideas in terms of domestic, international music copyrights and cooperation modes with music platforms, including domestic digital music developmental trend.
First of all, we are interested in the difference between copyright cooperation modes in and out of China. President of Sony Music will share us his opinions.
Ariel Fung: I think, as for domestic and global licensing, we should not divide it with certain regions. In general, what we are discussing is the time, content and condition of licensing. There’s no specific detail, nor do we separate according to regions. We mainly engage in different discussions in terms of partners. I think licensing in mainland China is the same with that of other countries. We also see a mature digital music market in China.
Host: Warner is the first label to sign exclusive partnership with QQ Music. Why do you choose QQ Music?
Andy Ma: China has a large market. It’s impossible for a single company to handle such a big market. We need to find a good partner. And our business needs promotion wherever we goes. Then, we find that QQ Music is a very good choice in China.
Host: Universal, Warner and Song are giants in global music industry with wide business rage. What do you think of the Chinese market in the global arena? And what’s your judgement on Chinese market?
Ariel Fung: I attach great importance to domestic music market. In IFPI list, mainland music ranked 19th. After 2020, with such development and government support, we think it might climb to the fifth in Asia or globally. There are must be a position for China.
Andrew Chan: Chinese market is our focus in five years. We are confident that China could reach the top five in the globe in the future.
Host: In the future, the share of Chinese market might rank fifth. Since last year, China has been encouraging music copyright protection. We could see active movements relate to music copyrights last year. What do you think of such movements and what’s the influence on your business? Let’s welcome vice president of Warner and Sony.
Ariel Fung: We are very happy to see that the government strongly supports music copyright protection. It’s great. It has positive effect on labels, publishers, musicians and music industry. I also believe that our cooperation mode with various partners is similar to other international platforms’. So, I think it has a bright future.
Andy Ma: If musicians cannot receive reasonable rewards, it would have negative effect on producing good music. In terms of music copyrights and royalty, we think musicians should have more spaces and channels. They are deserved reasonable or better rewards. We are glad to see this trend, especially in consumer channel. Actually, piracy is a global issue. We realize that China educating Consumers have strong copyright awareness. We are happy to see that!
Host: Is piracy still an issue in mainland China?
Andy Ma: Consumers are the most important part. If there’s no demand, there’s no supply. So customer education is the essence. We are happy to see that mainland customers’ awareness has improved. They think they shouldn’t listen to piracy music, since licensed music has higher quality. We are very happy to see this!
Host: We realize QQ Music has started promotion of legitimate music earlier. Let’s welcome Andy NG to share us with QQ Music’s experience in digital cooperation.
Andy NG: Since five years ago, Tencent has noticed that culture industry chain is very significant part, including game, movie and video. In terms of music, we started to sort our entire music library system. We hope that the system or the music library as a whole could be more normalized and legitimate. Therefore in 2015, I could say, we have signed more than 200 labels and nearly 25 music companies with deeper strategic cooperation. Now, there are 15 million legitimate songs in our music library. Thus, I think it’s a great breakthrough.
Host: QQ Music has signed exclusive partnership with Warner and Sony. In the anti-piracy action, do you have any experience to share?
Andyng: As we said before, three companies also think that the future Chinese market will be potential and plays an important role in the global ecological chain. Therefore, two or three years ago, we started to communicate and negotiate with different labels and achieved strategic cooperation. And we became their general agent in mainland China. Moreover, our technical team creates a special 24-hour system to monitor all the music streaming and download, helping labels to find out unlicensed songs and ask providers to take down. We also help companies with legal issues and protect their rights, requiring other platforms to abide by the rules. Over the years, Tencent has been contacted to National Copyright Administration (NCA) to assist them in the whole music market development, and to build a healthier commercial music industry. You know, in July, it was very grateful that NCA required all companies to pay attention to music copyrights and take down all unlicensed songs. A good eco-system is building!
Ariel Fung: I think, as for the strategic cooperation, Sony has some direct authorized partners, but we even have deeper cooperation with Tencent. Under such cooperation, we are more convenient to protect music copyrights. Also, we received help from our good partner — Tencent in the battle against piracy.
Andy NG: Since last June, we have sublicensed our contents to four platforms. We have the same idea with labels, hoping to have an ordered market. If the whole mainland market is ordered, the complete industry chain would be healthier! Thus, it can bring better business modes. Why do emphasize mainland market? To be honest, the whole Chinese music market has grown much healthier over the years. Therefore, we confidently believe that Chinese music market will have an important
position in the global in the future.
Host: I have some questions to ask Wu. We were talking about business modes. A healthy business mode should include the healthy development of recorded industry and music industry. I want to know what is the business mode of QQ Music?
Andy Ng: It is known that QQ Music started ten years ago in 2005. By 2008, we had two business modes. One was revenue from ads. Now, many platforms earn their major income through ads. However, Tencent has its own member modes. We have some monthly paid service to provide users with higher quality music. Additionally, we have been discussing with labels about new business modes, because we love creativity. You would notice that we want to have something new in each year, including business mode. This year, we also create a brand new business mode called digital music album. We packaged digital music albums to make something of deep interaction, and then produce it for sale, making users feel that digital music package is very special. We’ve been doing this since the end of 2014. Now we have great achievements. We’ve sold 7 million albums. It’s very successful in such area.
Next year, we will discuss with labels for O2O ecological modes, and online or offline interactions. We will have more O2O methods when holding contents with artists. Other Internet users can watch concerts and interact with artists. As for this, we will negotiate with different labels for better methods, to create new O2O mode. Thus, we hope to achieve it next year.
Host: When talk about healthy business mode, personally, I think it requires a genuine environment. I’m curious about your opinions on mainland music market in. And how’s domestic digital music copyright protection now? Is it better?
Ariel Fung: In my opinion, we have a very healthy development. NCA has offered us much support, which is very healthy. It’s a huge opportunity. I think we have a good chance now. We can do our own mainland music! Additionally, mainland music also helps many domestic labels or musicians to cooperate with us or produce their own music. We have a good chance now. People are paying more and more attention on copyright and respect copyright. We have deep consideration for market situation. I won’t draw a line between the so called international company and mainland company. I think all those who are innovative and creative in this industry are helpful. With such strong platforms and market, I also believe that mainland artists would have a bigger stage in the international arena.
Host: Copyright is beneficial towards mainland music eco-system. Not only overseas copyright owners to come into China, but labels also push the development of mainland music industry.
Andy Ma: I think senior signers have their spaces. And we even attach more importance to new music. If modern musicians cannot get reasonable rewards, how could they develop? It takes three to five years for them to gain enthusiasm. If there is no a good copyright environment, three to five years music industry development might be far away. Musicians might quit within a year. It’s not only a copyright problem. Instead, we should respect each other. From national to international, education have healthy environment.
Andrew Chan: In addition, I agree with Andy Ma’s idea. If we respect copyright more, it’s not only good for mainland musicians, but also for labels. Suitable environment enables us to enjoy more good music. Not only singers but also fans can be benefited.
Host: Finally, let’s share ome examples when working with QQ Music and innovation in business modes.
Andrew Chan: At the beginning of this year, we sell Jacky Cheung’s Chinese album (physical) through QQ Music and its branches. In this process, we have digital media cooperation with QQ. Those two aspects are satisfying. I believe Jacky is a famous artist in Asia. He has never tried to sell physical albums on a platform or promote on several platforms.
Andy Ma: The cooperation with Tencent gives us many new ideas. There’s a new plan. In our online interactive cooperation, we have two programs. One is a competition, allowing audience to vote for the best singer. It won’t work out according to the old mode. Through technology, nowadays, we can see the reactions of audience immediately and whether it is good or not. We’ve been doing this for a month. There’s a new program on each Friday. Our artists and online users have different feelings. When we watch the old ones, no matter in old plan or new plan, users have different experience.
Ariel Fung: We are very happy to work with Cui Jian. Cui hasn’t issued albums for a long time. We will have more cooperation with Tencent in the future. Through QQ Music, we promote classic music to the world. Because cooperation with Tencent gives us more confidence to support, invest on mainland music. We would also try to sign more new artists. With a healthy platform and healthy ideas, it has been great influence on developing and promoting mainland music.
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