With Piracy Crackdown, Legal Digital Music Industry in China Will Bloom

In.Stat: Although growth of the legal digital music market in China is now hampered by illegal music piracy, by 2008, China will be a major market for legal online music downloading with estimated annual revenue of US$222 million. Promising signs in 2005 include the launch of several third-party online music stores, and some unauthorized services, or those working in a gray area, legitimizing their services. The end of 2007 will be the turning point for China’s legitimate digital music market. By then, several mega online music stores will have opened; the user-base of portable music devices will have surpassed 100 million; a major crackdown on music piracy will have been in effect for several years; third-generation (3G) mobile communication system access will be rolled out; and consumers will be adequately educated about legitimate digital music.

• Music labels, in association with the International Federation of Phonographic Industry (IFPI) are filing and winning copyright lawsuits in China.

• An emerging individualism culture is creating a boom for network original-creation. Almost all digital music services are designed to adopt network original-creation, even to be original-creation oriented.

• Although worldwide conglomerates can successfully place their selling and pricing structures in other countries, China’s extremely low ASPs and lack of royalties require a totally different business model.

Digital Music in China Publ 20060117