China's crackdown on piracy

[Len]

A crackdown on piracy is shaking up the digital music business and causing ripples throughout the online entertainment industry.
Copyright infringement in China costs tens of billions of yuan each year with illegal operators undermining the legitimate market, consultancy Analysys reported.

In a move to tackle the problem, the National Copyright Administration of China released a directive two years ago urging music and karaoke platforms to legalize their content.

Online providers immediately scrambled to take 2.2 million pirated tracks offline, while the major players struck multimillion-dollar deals with leading record labels.

But then the plague of copyright infringement is not unique to China.

Its tentacles extend across the world, the International Federation of the Phonographic Industry revealed in its Global Music Report 2017.

"Music's potential is limitless, but for this growth to become sustainable more must be done to safeguard the value of music and to reward creativity," said Frances Moore, CEO of IFPI.

In the report, the global trade group described China as "an undeveloped culture for paying for music (with) a history of piracy", but it said initiatives had been rolled out to change that.

The major internet players are already riding that wave of "change".

In September, Tencent Holdings Ltd and Alibaba Group Holding Ltd signed music licensing agreements with global record labels and recording artists for their streaming platforms Xiami, QQ Music, Kugou and Kuwo.

Analysts pointed out that this would jumpstart China's paid-for music segment.

"The development clearly gives the big company-backed karaoke apps a leg up because their parent companies have already licensed the music from copyright owners," said You Guangguo, head of Tosing, a company which creates a popular portable karaoke microphone in Shenzhen.

Last year, Quanmin edged out its main rivals in terms of user numbers and duration, according to research group Analysys, without releasing detailed figures.

Part of Tencent, the karaoke app can tap into the wealth of music from the group's streaming platforms.

"The sector will continue to be dominated by Quanmin, followed by Changba and Kuwo K Ge, leaving little space for other smaller players," said Liu Jiehao, a researcher at iiMedia Research.

Apart from building up critical mass through its ubiquitous messaging app WeChat, Tencent's music division owns Kugou, QQ Music and Kuwo.

They are the top three music streaming apps with more than 70 percent of the market, a report released in September by data service firm QuestMobile highlighted.

Naturally, Tencent's vast pool of tracks and artists is music to the ears of Quanmin fans.

"It is an ideal fit when they feel like singing the songs they have just heard," said Ji Zhongming, vice-general manager overseeing community products at Tencent Music.

Rock band Linkin Park and singer-songwriter Bruno Mars from the United States, as well as Mandopop idols such as Jolin Tsai and JJ Lin, top the charts on the Quanmin app.

Tencent had earlier signed deals with the artists' labels and the move has paid off.

"They produce popular hits people choose to sing along to," Ji said.

Quanmin is also looking to distribute albums for sought-after grassroot singers. This would enable the app's users to interact with the performers.

Of course, the platform will take a cut from the sales, which Ji identified as a new stream of revenue for Quanmin.

Indeed, this is all part of the "Tencent Musicians Plan", which aims to help composers and musicians receive the financial rewards they deserve.

"To be specific, we encourage content owners to upload their original music accompaniment to the karaoke platform and give them a cut each time a user sings his or her song," Ji said. "This provides richer choices for users and encourages musicians to write more songs."