In September, PricewaterhouseCoopers (PwC) published its China Entertainment & Media Outlook report. Based on statistics from Ovum, Informa Telecoms & Media, and PwC platform, PwC concluded the current situation of China music biz and forecast its future.
CMBN collected some information and data for comparison and reference.
Based on the exchange rate that 1 dollar = 6.3650 RMB, $1.05 billion equals to 6.71 billion RMB in 2019. And the $790 million market value in 2014 equals to 5 billion RMB, which is far below the new published number of 285.15 billion RMB in music industry total market value. Non-core music industry reached to 220.089 billion RMB, and the rest core industry value is only 65.061 billion RMB.
PwC has a much smaller scale of statistics, its data about 2014 music industry only reflected some key segments of music industry: live performance + physical sales.
The following is the data in PwC report Overall
“China’s music market was worth US$790 million in 2014, up 9.0% compare with previous year and well advanced from the US$619 million revenue reported in 2010. Total music revenue is forecast to grow by a CAGR of 5.9% to US$1.05 billion in 2019.”
“China’s music market is slowly waking.”
“Total Physical sales revenue grew to US$586 million in 2014, up 9.6% on 2013 and US$123 million more than in 2010. By 2019, it is forecast to reach US$759 million, with a CAGR of 5.3%. However, for a country with around 1.4 billion inhabitants, the figures are not overwhelming; Australia, with a population of just 24 million, is expected to continue outpacing the Chinese music market for years to come.”
“Warner Music Group (WMG), one of the three major music companies, made a pair of significant expansion moves into China in 2014. It completed its acquisition of Gold Typhoon Group, a China-based entertainment company and record label with a song catalog of more than 600,000. It also formed a new partnership in which Internet company Tencent Holdings will distribute WMG’s repertoire and manage all new releases to all Chinese audio services, except for mobile carriers. This new tie-up promises to exploit WMG’s music across Tencent’s platforms, which include QQ Music, a streaming service established in 2005 which currently boasts more than 100 million active monthly users.”
“Sony Music Entertainment (SME), has also struck an agreement which allows Tencent to distribute online the music from SME’s roster of artists in China.”
“During a press conference in early 2014, Thomas Rabe, chief executive of Germany media company Bertelsmann, parent company of the BMG music business, said: ‘There is a new awareness regarding to music copyright issues in China and there are new and emerging models (for generating revenue). In short, you can make profit in China through music.”
“If there are profits to be made from music, it is likely to come from digital music. Physical sales is fast becoming irrelevant in China. By 2014, total digital music revenue was US$567 million, a 10.5% rise from 2013. Meanwhile, physical sales revenue was just US$19 million in 2014, down from US$32 million in 2010 and 13% down from 2013. By 2019, total digital music revenue will dwarf physical sales, at US$751 million compared with just US$9 million for physical sales revenue. ”
“The mobile device is the big driver of digital music revenue, and China Mobile is by far the biggest mobile operator in terms of subscribers. Analysts say the smartphone sector cooled off in 2015 after years of growth. However, China has a mobile penetration rate of 93%, which equates to 1.3 billion mobile users.”
“Mobile digital music revenue has the largest share by far of total digital music revenue, at US$482 million in 2014, a share of 85%, and this is forecast to rise at a CAGR of 4.4% to US$598 million in 2019, when it will account for 80% of total digital recorded music”
“Digital music streaming revenue is growing, but the market is not enjoying the sharp spikes in revenue reported elsewhere. Digital music streaming revenue has improved from US$22 million in 2010 to US$71 million in 2014. Shifting market conditions should open up the streaming business, and in the years ahead this revenue figure could increase rapidly. By 2019, streaming is expected to generate US$138 million, a CAGR of 14.2% over the forecast period.”
“Streaming services are proving a substantial alternative to piracy in markets, but so far China’s streaming music market has not lifted off. This can be attributed to China’s complicated market conditions and music licensing issues. Global streaming brands such as Spotify and Deezer do not operate there yet. Currently, the streaming services in China are controlled by the country’s biggest Internet firms, including Tencent, Alibaba and China Mobile.”
“Digital music downloading revenue is also expected to grow, although it will remain a marginal format. In 2010, digital music downloading revenue was US$8 million, a figure which grew to US$14 million in 2014, but this rate of growth is not expected to continue and is only forecast to reach US$15 million in 2019, a CAGR of 0.9%.”
“The IFPI anticipates positive change on the horizon. “Record companies are actively licensing music to the country’s largest online services and encouraging the rollout of new consumer offerings,” notes the international trade association. ‘Combined with the industry’s continued pressure for copyright enforcement, the strategy aims to create the first sustainable paid-for music services in China in the next few years.’”
“Piracy is still the big issue. A report from the Office of the US Trade Representative in 2012 noted that 99% of music downloads in China were infringing copyright.”
“Domestic repertoire in China accounts for at least 80% of its revenue, according to the IFPI. There is a desire for home-grown music-download services rather than those offered by the likes of US-owned Apple Computer, which surprisingly does not operate its iTunes Music Store in China”
“China is considering introducing into copyright law a public performance and broadcast rights for producers which, if adopted, would activate the first payments of public performance and broadcast royalties to producers in China. NCAC recently also reported the relevant situation about the special measures to Internet music copyright and the arrangement on strengthening the protection of Internet music copyright. Furthermore, NCAC would strengthen the Internet music copyright protection from 5 aspects: first, taking a strong stance against all kinds of infringement and piracy acts of Internet music; second, enhancing the copyright supervision over Internet music service providers; third, supporting Internet music service providers to intensify copyright self-regulation; fourth, pushing forward the broad authorisation and ordered propagation of the music; fifth, promoting copyright cooperation among stakeholders of Internet music.”
Live Performance in China
“China’s total live music revenue was US$204 million in 2014, and should reach US$290 million by 2019, a CAGR of 7.3%.”
“The state-owned China News Service has reported that a 2 billion RMB (US$323 million) production center for musicals is expected to be completed in 2017. The million square feet compound will reportedly include theatres, classrooms and related facilities and is to be built in Langfang, just 30 miles outside Beijing.”
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