Music Industry Revenue Trend
Music Matters – a window into the music market in Asia
I've been a regular at several music conferences in the world in recent years, from MIDEM (Cannes) and Popkomm (Berlin) for Canadian Music Week (Toronto). These have not only been a great opportunity to meet and do business with companies in major Western markets, but also to get a true perspective of the challenges and opportunities specific to the markets. Therefore, it was with considerable emotion that I went to Hong Kong for my first trip to Asia, and the 4th edition of Music in the Grand Hyatt on June 2-4 (http://www.musicmatters.asia).
From the outset it was clear that Music Matters has a distinctly different feel from most other conferences, most of what I call a "matter of family. "Unlike other conferences that offer a lot of simultaneous, often lightly attended, Music Matters provides a unified program followed by all delegates. The message is clear: If you want to understand the Asian market, here's the information you need. And while other conferences participants to facilitate the scheduling of meetings in advance, Music Matters takes a completely opposite approach. "We want a networking event where all free-flowing the world has access to all the others in an open format, "said Ruza Commercial Director Stan.
While I was skeptical that this would work, ended up being a pleasant and productive change, especially for someone looking to build a broad base of contacts in Asia. I went to as many contacts as I do of other conferences, although it was much smaller – mainly composed of policymakers from all major markets of Asia, from Tokyo to Mumbai, Sydney to Kuala Lumpur.
Japan Nirvana
Although I learned a lot about the market in Asia within two days, the most surprising "revelation" was actually one question: When the Japanese music market beyond the U.S. for position # 1? More striking were the estimates ranging from 5-10 years only.
So what is going to justify this doomsday scenario (at least from the U.S. perspective)? Simple: the Japanese music love and still are more than willing to pay for it, whether young or old. Kei Ishizaka, CEO and President of Universal Music Japan and RIAJ LLC (Recording Industry Association of Japan) Chairman presented some data in his opening lecture "New Strategies and Opportunities in Japan" that can make the red west with envy
* Digital Sales in Japan have increased from 7.5% in 2005 to 20% in 2008
* Mobile is the driver, who represent 89% of digital sales in 2008
* Please note that this is a slight decrease of 94% in 2005, attributed to iTunes Japan, which represents 50% of online sales
* Japan is the market music digital sales only when they have made for losses in physical sales – that is, until 2008, when losses appear to be overcoming physical growth in digital sales
* Music Japanese consumers seem to be relatively price inelastic, with a willingness to pay higher prices any country music: up to $ 4/ringtone and $ 30 + / CD album
* The Japanese music industry is still a hit-driven
Perhaps most importantly, the Japanese music industry has not abandoned its most profitable customers: those over 40. The dirty little secret in the U.S. is that according to SoundScan, CD sales have fallen faster among those aged 40 years, largely abandoned by the label focused on the market youth. Japanese music companies have instead consciously developed products for over 40 demographic, which (i) does not download music and (ii) are willing to pay big bucks ($ 30 +) for high-quality CD (music, ie, containers …).
This does not mean that Japan is a complete musical nirvana: more music was purchased through illegal means (407 million songs) to legal (329 million songs) on mobile platforms. In 2006, the RIAJ sent over 220,000 takedown notices, and have since filed criminal charges against mobile BBS (Bulletin Board System), the site operators. But despite of these challenges, the Japanese market has been growing steadily, with the exception of 2008, when it registered a paltry 3% drop in sales, which is generally not seen as a trend for the coming years.
Get Me A piece of that pie!
At this point, you are probably trying to devise ways grab a piece of cake Asia. Think again! You are still more likely to do in the U.S. or Europe to gain any yen or yuan. Like the Great Wall of China the Asian market presents almost insurmountable problems for even the most knowledgeable Western artists.
First, the Asian market is fully dominated by the local repertoire. Japan is actually one of the most accessible markets, with international repertoire accounts for a little over 20%, however, this has been declining in recent years. Look outside of Japan and the numbers are downright depressing. Take the fastest growing markets such as Malaysia, Indonesia, India and China, and local repertoire accounts for nearly 99% of the total.
Put simply, the Asians want music that are culturally or linguistically comfortable and can relate too. Of course that is Hip Hop, Pop and Rock throughout Asia, but it's all sung in their native language, with their cultural nuances. This is in stark contrast to the West where English is, for all intents and purposes, a need to become an international star, whether it is called Shakira, Bjork or Scorpions.
In addition, Asia has no long tail effect. It is still a hit-driven market, which tends to play against foreign acts. Consensus general between the speakers and attendees that it seems that Asian consumers are too busy working to go hunting for new music to listen to podcasts, or browse sites incessantly social media.
As these consumers in Asia are much more "captive" of the recommendations and leads editorial, for example the U.S., where we have a proud tradition of bin-diving for rare LP – it was the old Napster and MySpace today just the way this form of digital art? The fact that the mobile music consumption units instead of the network, has a role to play in this too. For the same reason, all you can eat subscription services that compete with iTunes is not likely to get a sufficient subscriber base despite the size of the markets.
But let's say, for the sake of argument, which develop some recognition in an Asian market. How do you expect to make money with it? You have all heard of the scourge of Piracy in Asia, so I do not want to rehash this topic. Let me leave you with this fact of Google China Bin, Lin services 7,000 + music in China, only 0.1% of its offerings are legal downloads.
License is not much help either. Unlike North America and Europe, where Stage Rights Organizations (PROs) have a long history, collection agencies are relatively young in Asia and have yet to get a grip on the digital market. As a result this, there is great distrust between publishers and PROs, which significantly limits the opportunities for licensing. If you take the market in India, for example, where 70% of the music composed soundtracks (Courtesy of Bollywood), record labels have been collecting all relevant rights until recently.
Even mature Japanese market has its eccentricities, like the songs are available free of synchronization licenses for commercial purposes until one year after launch. As a result, success in the Japanese market and may depend on the willingness to waive the rights of commercial use synchronization, ie an important way to break a song, said Kimitaka Kato, Managing Director Universal International.
Are you depressed yet?
Frankly, I'm not! My recommendation is to also look at the Far East and the Wild West, full of opportunities for people with patience and hard liver it was. The first lesson is that you are nothing if not here. So I made the trip to the musical material and then to Beijing, where I met a music pioneer successful, Kenny Bloom.
Bloom, which was kindly sent by (NARIP National Association of Record Industry Professionals), Tess Taylor, came to China For over 20 years for the release of Warner Music. Currently running Mogo (www.mogo.com.cn), one of the coolest video sites in China to service the hip youth (undeserved) Chinese urban youth. So that is still in China, with everything mentioned above?
(I) China has the largest population of Internet (about $ 300 million, ie, the entire U.S. population)
(Ii) 80% of Chinese Internet users are music consumers (240 million)
(Iii) The music was the # 2 search term for the last 3 years
(Iv) At $ 50 billion year, China is now the second largest advertising market (only recently surpassed Japan to the # 2)
It also has a different view on the Chinese consumer. According to Bloom, is not that the Chinese are busier or harder work, but are in a market underdeveloped media. The media in China (TV, radio and Internet to some extent) directly or indirectly controlled by the communist government.
As The Economist recently noted that "the proliferation of media channels of communication, information and entertainment offers unlimited potential that the [Chinese Communist] party to convey its message, the complicity of the traders. "One consequence of this is the disinfection of the media to attract a national audience including farmers and city dwellers. It is a process not unlike our radio through conglomeratized-or television broadcasting markets, which are suffering from competition, the more original and niche cable programming, satellite and Internet.
The advantage is that it presents a unique opportunity to serve the growing class of urban chic, the market of centralized media is unable to meet, a segment Bloom An estimated 40 million and growing. To serve this market of high value with high quality original video programming, Mogo is able to attract big name brands such as Converse having a special on this demographic. To some extent, Mogo is trying to make the China of today what MTV did for the U.S. in the 80's.
Another company with headquarters in Beijing to see is Yobo Music (www.yobo.com), an online music recommendation and discovery. Its founder Allen Guo was perhaps the most eloquent in music on the need to offer Chinese consumers a variety of models and services that enhance your music experience. Only by meeting the diverse needs of different consumer segments – like Japanese music market has been successful – are sustainable alternatives to piracy.
future revenues will be driven by the music services of value added instead of easily pirated downloads ringtones. And while advertising can Apparently the panacea for many in the U.S. and China (did I mention that the two largest advertising markets), Allen noted some success in musical Yobo other models income, such as micro-payments and musical gifts.
The Silver Lining
In the end, the Wild West was tamed and I think will do the same with China. America in its first 50 years was home to pirates (ie pirates) and some of the worst violators of copyright or patent of the time. This is part of what lead to growth of the young republic, rudimentary. But as they mature, and became more of a creative or innovative, America began to provide increasing value in protecting of copyright and patents.
The same applies to China. As Bloom said, "What do you want a people who had no concept of private property 10 years ago to understand that the only value something like copyright? "In other words, not only the copyright has been a concept strange, it would have been counterproductive for the country development. But as it begins to export more cultural and develop new patents, this trend invest as surely as it did in the U.S.. The only question is whether it can put the genie in the bottle when the time comes.
I step towards Beijing on the 20 anniversary of the Tiananmen Square incident. Indeed, I could not access Twitter or YouTube, and the coverage of any foreign television channels, such as BBC were blocked by a blank screen. Once the Communist Party is determined that copyright is something that is worth putting the effort in the protection, do not give me the 7000 + music called much of the timeliness of services.
About the Author
Milow – Ayo Technology (Live @ MIA’s 2009)