China’s music industry is rapidly establishing itself as a global power-player. Based on their economic, cultural and societal development in the past years, the world’s most populous country now has the potential to become the world’s most profitable and biggest music market. Yes, even though we might not have heard of Chinese bands creating such an uproar like K-Pop or J-Pop bands in the global charts yet, we might see that in the future, China will climb that competitive latter and get head to head with the current top artists. Here, we list the five strongest reasons why you as a musician should check into China’s new and powerful music empire.
1. China’s technology industry is one of the biggest in the world
China is becoming the rising superstar in the Tech Industry. Today’s Chinese technology sector is filled with a number of new and innovative companies that are not only competing globally but leaping ahead in the race to build better products and services such as Baidu, Alibaba and most importantly– technology giant Tencent. A large number of talented and skilled entrepreneurs are returning to China after studying abroad, starting their own companies and innovating in the space of entrepreneurship, technology and entertainment. Some of that is due to the large pool of VC money, and more so because of the huge opportunities in the tech industry that are currently in China, especially in Shenzhen, Beijing and Shanghai.
2. The massive user potential
Tencent’s music streaming platforms, QQ Music, Kugou, and Kuwo, has, as of 2017, over 400 million registered users (higher than Spotify’s 160 million) and 30 million songs in their catalogue. The user experience with these streaming applications is very different than the user experience of the western streaming companies. Tencent’s streaming companies use their platforms for music playback, but despite that being the primary feature of the app, they also use the streaming sites as a social media platform which allows artist to have a direct relationship with fans. This enables new experiences and live opportunities that include concerts meet-and-greets. The social media integration, value-added music experiences and catalogue exclusivity have all added up to an immense leverage.
gain in favor of these streaming companies, where the convenience is much greater than just downloading an MP3. This is also a reason as to why China is shifting their mindset towards piracy, which immensely helps the regulation and growth of the Chinese music industry. This is an important point to be discussed later in the article. Tencent has also made it easy for listeners to subscribe through smartphone apps that allow easy payment, like Alipay and WeChat Pay.
3. China is collaborating with new cultures and industries
As a prime example, Sony/ATV is making a step into China through its relationship with internet giant Tencent. Guy Henderson, President of international relations at Sony/ATV Music Publishing says that “The beneficiaries of streaming thus far have been new artists in predominantly Western markets… The biggest issue for the music industry is to expand this success across artists from all eras, genres and territories.” Sony/ATV is the largest music publishing administrator generating about $600 million of the $670 million in revenue generated by Sony Corp.’s overall music publishing operations. Furthermore, Tencent Music Entertainment Group recently announced a new partnership with Sony Music to launch Liquid State, its first original label, which will focus on promoting electronic music across Asia. The label will represent local talent from Asia and will also incorporate live touring and club events. Sony Music and Tencent have an existing strategic deal in place, originally signed in 2014. This deal gives Tencent the ability to distribute Sony Music’s repertoire via its QQ Music services and to manage the online distribution of Sony Music’s repertoire to local Chinese online music services in China.
4. China’s economic growth
Unlike any other music industry, the Chinese music market is growing at a rapid speed. According to the website pwccn.com, China’s Music Market was worth US $865 million in 2015, up 10.27% on the previous year and considerably ahead of the US $638 million revenue reported in 2011. The total music revenue is predicted to rise at a 9.6%CAGR to US$1.37 billion in 2020. By 2020, the recorded music revenue in China is forecast to reach US$1.06 billion increasing at a 10.3% CAGR.
In the ten-year span to 2020, China’s music market is forecast to increase more than double in value.
5. China is finally tackling its long battle with music piracy
Piracy is one of the biggest obstacles that hindered the late upraise of the Chinese music industry. Copyright owners have long struggled with media piracy in China. For many years, international film and music industry companies have estimated the piracy rate for optical disc media, which includes CDs, DVDs, and VCDs, to be at least 85% – 90%. According to the Digital Music Report of the International Federation of the Phonographic Industry (IFPI), As recent as 2011, virtually all music downloads in China were unauthorized. Of the 600 million Chinese people who listen to music online, only 20 million have a paid subscription, which costs between $1 and $2 a month. The rest are subscribed for free, but many do so on legal, advertising-supported services, comparable to the free option on Spotify. Offering free streaming services has been one of the first effective solutions for decreasing piracy on a larger scale. It has now become more convenient to stream music than to individually download songs illegally and then to load them on your phone or computer.
Understanding the current market of the creative industries and technology, is crucial for developing your business strategy, whether you are an artist or music executive. Every opportunity to enter into any music market is an opportunity to grow as an artist and brand. If you want to learn more about networking and developing your brand, sign up at Stereotheque to connect with other like-minded artist and industry professionals.