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Music Industry's Future Foretold in China?
sapphire writes "An article today in the International Herald Tribune provides a look at music piracy from the point-of-view of pop stars in China. China is a country forced to deal with the reality of unchecked piracy of digital media products. Will their experience lead to new business models for the world-wide recording industry?"
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Copyright © 2003 The International Herald Tribune | www.iht.com
Pop stars learn to live with pirates
Thomas Crampton/IHT International Herald Tribune
Friday, February 21, 2003
SHANGHAI Dimpled good looks and saccharin-sweet love songs may have made him an idol to millions of teenagers in China, but dark passions emerged at an album-promotion party recently when Wang Lee Hom brandished a sword to slash an oversized compact disk marked with the Chinese character for "theft."
In case anyone missed the point, the normally demure Wang announced that his favorite track on the new album was "Why," a pop-music diatribe against piracy.
"Pirates have already killed China's music industry dead," Wang said. "It frustrates my life and destroys China's creative future."
That may be an overstatement. Record companies say that what piracy has really done in China is to cause fundamental shifts in the way the country's music industry operates. It has simply forced Wang and his fellow stars to change the way they live, work and play. ''There is no income from the royalties, so artists in China record single songs for radio play instead of albums for consumers,'' said Lachie Rutherford, the president of Warner Music Asia-Pacific. ''Stars need to look elsewhere to finance the rock-star lifestyle.'' Industry executives say this reality also is beginning to draw attention in Europe and the United States, where music companies face falling revenue from compact disk sales as Internet piracy increases. ''The financial effect is the same for record companies whether people get illegal compact disks for $1 on the street in China or download a song for free from the Internet in Europe,'' said Jay Berman, chairman and chief executive of the International Federation of the Phonographic Industry, a London-based group representing 1,500 record companies worldwide. ''Record companies everywhere find that they not only need to fight piracy, but also develop alternate revenue streams.'' Piracy -- which accounts for 95 percent of music sales in China, according to Berman's organization -- has forced multinational record companies serving the world's most populous country to abandon classic-style album contracts, drop development of formal distribution channels and eliminate any possibility of a top-40 list based on sales. ''China is the ultimate example of industrial-scale piracy and its impact,'' Berman said. ''The business model for the record industry worldwide is moving toward resembling what we see in China today.'' Alternative sources of income tapped by top Chinese stars include paid appearances, sponsorship deals and extended concert tours through the nation's vast hinterland. ''In the United States and Europe, stars have it easy if they make a hit record,'' said Han Hong, named best female artist this year at Channel V's China Music Awards, and whose renditions of Tibetan songs have become nationally popular. ''In China, we have to give so many concerts that we do not have time to rest our voices.'' To add to the concert revenue and combat piracy, Hong slashed the price of compact disks sold at her concerts to 15 yuan ($1.80), compared with 5 yuan for pirated disks and the 70 yuan that she formerly charged. ''You cannot fight piracy, so there is no point in even getting angry,'' Hong said. ''We must adapt to the environment.'' For Wang Lee Hom, that involved advertising campaigns and an intensive series of personal appearances. ''Until they pirate my body, I can rely on personal appearances,'' Wang said. ''I am forced to view albums only as a promotional tool.'' Concerts themselves have also become pure promotions, with corporate sponsors underwriting the entire cost and passing out tickets for free. Several singers usually take to the stage to maximize the revenue from sponsors. In China's mixed-up musical world, Wang considers his big break to be the day a national bottled water company, Hangzhou Wahaha Group, put his face on its products. ''They sent my face to every corner of China,'' Wang said, adding that other sponsorship deals soon followed for sneakers, sunglasses, shampoo and clothing. ''These deals support my fame, but they do not pay for my music.'' Fame may finance Wang's designer clothes, but the lack of revenue from music sales cripples record companies. ''Our survival strategy required switching to a talent-management business model,'' said Zorro Xu, managing director in China for Warner Music. ''As piracy increases in other countries, this is what record companies elsewhere may have to try.'' While classic record-company contracts are built around albums, record companies in China now sign up to manage all aspects of an artist's career. In exchange for a percentage of the earnings, the record companies arrange promotional events and negotiate product endorsements. Berman of the phonographic industry federation cited a groundbreaking deal made late last year between the British singer Robbie Williams and EMI Group PLC as an example of China-style recording contracts moving westward. The record company signed up to take a share of all profits linked to Williams's next six albums, including merchandising, touring and music sales. In China, the scramble for sponsorship often results in the pre-selling of songs to finance production costs. The hard-edged Beijing-based singer Pu Shu, for example, wrote a theme song for the launch of Windows XP. Payment for the song, ''Out of Your Window,'' covered the cost of album production, and each time he performed at Microsoft Corp.-sponsored events, Pu and Warner collected a fee. Epson Corp. selected a song by Zhou Xun, a singer and actress, to promote color printers in a deal that financed the song's music video. ''Sponsored videos and songs must not be too obviously commercial,'' said Xu said. ''They need to fit a concept and set a mood.'' Warner Music soon plans to begin a talent search for members of a five-girl band to be called Mei Mei, with the winners signed up for a two-year contract to promote M&M candy. Reliance on advertising and the inability to measure consumer response through sales figures makes it difficult for artists and record companies to determine hits. ''China's music industry is driven by institutional sponsorship instead of consumer preference,'' said Andrew Wu, head of Sony Music China. ''Piracy prevents record companies from properly reaching new consumers through in-store promotions.'' Although pirates offer an efficient means of distributing hit albums, the thousands of pirate stalls across China discourage record companies from promoting new artists. ''These stalls are poorly lit, difficult to find and mostly run by old ladies totally out of touch with modern China's music scene,'' Wu said. ''There is no way for record companies to connect with consumers in order to promote new artists.'' As a result, Wu said, there are fewer than 20 professional-quality albums produced per year in China. This lack of large-scale music production inhibits the entry of talented newcomers. ''I know I have the talent and ability,'' said Wang Jue, the son of one of China's first pop stars who studied music at the prestigious Berklee College of Music in Boston. ''Since the record companies just don't have any money to invest, I had to put up the money myself.'' Relying on investors rounded up by his mother, Wang spent 100,000 yuan promoting his album by plastering posters along a fashionable Beijing street and paying to have his song played as the hourly jingle on radio stations. Wang's rhythm-and-blues-style album, largely self-financed but released under the Warner Records label, became a radio hit thanks to the song ''Tomorrow'' and won him the award for best hit and best new artist at the Channel V China Music Awards last month. ''Not everyone can be so lucky as to have the support of a famous mother,'' Wang said. ''I just hope this album will bring enough sponsorship deals to pay for the investment from her friend.''
Copyright © 2003 The International Herald Tribune
So people can't get rich playing music anymore. I guess they'll have to find another reason to play.
You pirate music!
Which means that
In Capitalist America
Music pirates you!
Calling Hillary Rosen and the RIAA, we've cracked your code...
I think that quote sums it up best. They must "look elsewhere to fund the rockstar lifestyle".
I don't fucking pay artists to fund their 'rockstar lifestyle'. I pay them to make music. If they get the intense rich/famous shit going on because they sell loads, well, that's a bonus. If they make enough to live on and keep producing, then they're with the rest of the population.
To me, that keeps what they say in their lyrics all the more relevant to me.
Pop stars learn to live with pirates
The sooner we can get some of our 'pop stars' off shore onto pirate ships the better. May I reccomend the vicinity around Bermuda as a suitable anchorage.
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
Sorry, but it really gets to me when a "band" only does their stuff for the money.
I know plenty of bands that just thrive to hear a live audience, no, they're not big and they don't have a flash Porsche but they enjoy what they do and get to pay the bills.
All pirating means is that people that expect that when they get into music that their life is sorted and they can go round smashing up hotel rooms and stuff.
Bah! They don't even usually write their own songs.
Talent-management? You mean, for an artist in China to actually be successful, they have to have some form of TALENT?! Yes, I DO hope other record companies elsewhere try this, yes indeed!
This article deals mainly with music theft, but in reality, all manner of digital information is finding ways to slip through industry fingers as media becomes cheaper and the internet becomes popular.
I once spoke to a Russian programmer on Odigo who claimed that he had never met anyone in Russia who had paid for windows; according to him, all copies he had ever seen were pirated.
Though I don't have anyone to bear testimony, a similar trend seems to be occuring in China as well. Not too long ago I remember an article posted right here on /. about Microsoft offering the Chinese government large sums of money to use Microsoft products (primarily in eduction, I believe) as well as attempt to crack down on high levels of piracy. Did China ever accept that money; was the deal even real? Though I never heard the end of that tale, the "Chinese government officially adopts linux" announcement came, ironically, shortly thereafter.
The bottom line is that people just won't pay for something if they can get it for free, be it software, music, or what have you. While piracy is not as blatant in America (ie you can't just walk into your local supermarket and buy pirated Windows CDs), the problem continues to escalate.
However, there is economic light being shed on the subject. As the article points out, it isn't destroying musicians, but just changing the way they operate. As record sales decline, artists need new sources for revenue (god forbid anyone should have to go out and actually play their music).
In software, there have always been little tricks to combat piracy, but they don't always work as well as intended. I believe that the software industry will be hurt by, and therefore change more drastically as a result of, piracy more so than the music industry.
The real question is, what changes are going to come about as a result of this fact? To me, only time will reveal the answer.
- keep all of the money and give none to the artist
- have an efficient distribution system, but one that does not promote enough new talent
- make it so that the musicians have to make most of their money by concerts and commercial sponsorships.
This is clearly not fair. In the United States, artists are protected by the member companies of the RIAA, whoyo.
I think your point is excellent! It's the very same thing that leads to the bancrupty of NHL teams (too high salaries, tickets too expensive, etc.): the league is getting out of touch with the market. Who can afford 4*$100 tickets + parking and burgers to bring the family to a hockey-game? This might seem off-topic, but my point is this: a "rock-star lifestyle" is ridiculous any way you look at it. Also, why on EARTH do the Friends "actors" make ~$1M per episode?? This is what I'm talking about: overpay. Get real and be happy with a couple of hundred thousand dollars a year. That's many times more than what most of us make.
And the music just gets worse. There hasn't been much original music released since Nirvana and the Smashing Pumpkins broke in the early 1990s. It's not because the artists suck. It's because the record companies only invest in sugar-pop acts that are too watered down to be interesting. Is there a band that has artistic ingenuity or a political point? They won't get a contract, because the record company won't take a risk.
I'd pay about a dollar per song for a CD today. If I could find one I was interested in.
The whole music thing is overrated anyway. It's all just entertainment. In the end, you can get too much entertainment.
The big record companies have dug themselves into a deep hole. They're too big to release innovative or strongly artistic acts. They're too large and bulky to move nimbly. The giants are going to fall. Both music and art in general will be better for it.
I'm not quite sure it's worth comparing China's music industry situation with the possible future of the industry here in the US. Arguably, the piracy in China has far different causes than piracy here has.
From the CIA World Factbook 2002 - China:
GDP - per capita: purchasing power parity - $4,300 (2001 est.)
To me, that says that piracy is probably as prevalent as it is because people simply cannot afford music at the prices they'd be with a legitimate album sales market in place. Perhaps I'm wrong - it could very well just be a social issue, stemming form differing cultures.
Here in the US, though, there are probably a number of factors for music piracy.
Price may be an issue for some. As a college student, I can't really afford to spend $20 a pop on CDs when my school is sucking me dry.
For others, downloading music may simply be a way to preview music. The radio stations play nothing but top 40 crap unless an artist pays the station to get their stuff on air. Sometimes the only way to expose yourself to new music is find it online and download it.
Still others pirate music because of a philosophical disagreement with the industry's treatment of artists - money from albums goes almost entirely to the labels. If we want to support our favorite bands, we would be better off going to concerts.
On top of this, typical record contracts state that the label owns the music. To me, this is a travesty, and totally contradictory of the whole point of intellectual property and copyright. Who was the most successful band in history? The Beatles. Who owns the rights to all the music produced by The Beatles? The Beatles? No. Why not? Their contract gave the rights to their label, and when the copyright came up for renewal, someone else (Michael Jackson) renewed it. Personally, this part bothers me the most.
Many artists get stuck in contracts that give ownership of their music to their label, and if they wish to perform their music after their contract expires, they have to pay their old label to do it(assuming the label even allows them to play it). However, this isn't limited to the music industry, and the rant is best saved for a "why copyright law needs to be gutted and rewritten" topic.
Other people dislike how the record labels treat music consumers. Price fixing, filler music, bogus copy protection schemes, DMCA, DRM, and to top it all off, big, rich executives telling me how, when, and where I can listen to music I bought... doesn't make me think fondly upon the prospect of supporting the music industry. It seems that with every RIAA-related press release, I find myself more determined never to buy CDs again.
In spite of all this, though... I genuinely want to pay for the music I have, so long as I could guarantee that the artists get a decent share of the money. I like the feel of owning things, and I like the feel of giving money to people who make things I like to use. I would imagine many people feel like I do. As a result, I can't really see the Chinese model happening here. There's a certain pride embedded in the idea of owning something in our particular culture. Instead of seeing pirate booths lining the streets, I can forsee labels finally getting the clue and changing how they sell their music or the artists breaking free of labels and finding a better way to distribute music...
...that, or the RIAA/MPAA will successfully lobby Congress to enact further legislation that effectively limits our consumption of intellectual property to what the RIAA and MPAA want us to consume. If (when) that happens, I'll start practicing my "eh?" and move north.
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
If you sell your records at $20 a copy, you will not sell a million of them. Anymore. But if you sell your records at $10 a copy, you might. And if you sell them at $5 a copy, it's that much more likely.
So, yes, you can get paid. But in the current economic environment, the substitute goods (Economics 101 terminology) mean that you can't charge monopoly rent for it anymore. That is to say, music downloaders would rather have the convenience of an audio CD than the poor audio quality of MP3, as long as the audio CD isn't priced too high. The current price of 15 to 20 dollars is too high.
As an alternative, put out a mega-album with 2-3 CDs, a big booklet filled with lyrics, photos, art, and interesting notes. Put it all in a quality sleeve/jacket/jewel case. If the music is decent, you could probably charge 35, 40, maybe 50 dollars for it.
The days of easy money for musicians, groupies, executives, and the rest are over. Period. No more cutting a record for five weeks that makes millions. From now on, if you want to be a musician, you're going to have to work for your money.
As for the musicians who still want unlimited money, furs, diamonds, private airplanes, giant mansions, and all the illegal drugs they can inject in their ears, from now on they're going to have to work a lot harder to get all that dough.
The real winner in this will be that art form known as music.