What challenges and opportunities does China present to music brands from the West? That’s one of the central questions posed in an All That Matters 2017 panel chaired by Billboard Magazine’s Asia Bureau Chief, Rob Schwartz. After all, there is a markedly different internet, social and app landscape. As Schwartz himself puts it: “The Chinese music market is a whole different universe.”
“We’re looking at China as potentially the world’s biggest recorded music market,” says Jonathan Dworkin, SVP of Digital Strategy & Business Development at Universal Music Group. “There is an incredible investment and incredible focus [in China], and an externality which has transformed it almost overnight.”
Gavin Parry, EVP of Digital Business Development (Asia & ANZ) at Sony Music, recalls how it feels like a lot longer than five years ago that they were trying to convince consumers to adopt paid music models, instead of relying on the usual free piracy. “Now we’ve now got a paid model, a clear direction, and we’ve got everybody playing by the rules,” he says. “[Sony’s] China team has doubled, focusing on digital marketing and account management… the other really interesting thing is meaningful reporting. We’re now getting monthly regular reporting from all services, which is taken for granted a lot in other parts of the world… We’re at the beginning, that’s how I’d describe it.”
One thing which Western music labels need to be cognisant of is the disparity in income across China, says Andy Ng, VP of Tencent Music Entertainment Group. “In Beijing you might earn $5,000 a month, but in a fourth tier city, you might only earn a few hundred dollars,” he says. “It might take a whole month’s salary to buy tickets to a concert that’s a ten hour train journey from their hometown.”
“One thing we can’t ignore is the rise and rise of live streaming,” says Parry. “The value of that market is estimated around $3 billion. This is all virtual gifting etc. So we’ve started incorporating live-streaming into our products as well.” He is optimistic that these virtual concert tickets and other live-streaming offerings will be integral in helping to bridge that income gap facing music lovers in more rural areas.
All of the panellists agree that it’s crucial to work with every platform out there to reach users. Simon Robson, President of Warner Music Asia, explains how Warner are working with Tencent to “get the right profile in the right places, looking at what you can do across different social and gaming platforms. There are so many consumers on those services.”
Something else acknowledged by the panel is China’s own rapidly evolving talent ecosystem. They theorise that the music being produced by domestic artists in the last two or three years is already of higher quality, because labels are protecting IP and actually receiving revenue so they can afford higher production values.
“If you go to Google for top Chinese artists, you’ll find a list of about 20 acts there; 80 per cent are probably over the age of 40,” says Parry. “It’s our responsibility here to rebuild that for the teen and twenty-something artists, because now the money is flowing to allow that to happen. There are a couple of genres which are super exciting at the moment; hip hop is rapidly growing.”
“Ten or fifteen years ago, China was an import country,” says Ng. “But right now, Mainland Chinese artists are becoming more influential in the market.”
“I think it’s about not just investment in artists, but investment in infrastructure,” says Dworkin. “China is microcosmic of what’s happening; there’s all this investment and interest in music, and what that means is it’s going to be very good for artists… but you also need great studios, producers, engineers, and collaborations. There’s a whole culture.”
“The opportunities are coming from every direction,” says Parry, “so it’s important [for labels] to remain agile. Don’t be too structured, and make sure you have the right competencies in your business to look at all of these opportunities.”
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