Music industry dreaming of China streaming

China will become one of the world's biggest music markets by 2020, a forecast that prompted a recent consensus among three major international record companies - Universal Music, Sony Music and Warner Music - as well as QQ Music, a music-service platform under the Chinese Internet giant, Tencent.

The companies declared unanimity about the Chinese market's potential at a conference in Beijing, where the main discussion focused on music streaming and subscription, the fastest-growing areas in digital music in China, and new business models these generated.

According to the International Federation of the Phonographic Industry's 2015 World Ranking report, China ranked No 19 in global trade revenues.

"But we believe that China will rank in the top five or even top three in the world music market in the next five years or even sooner. It's one of the most important markets in our global strategy," says Ariel Fung, executive vice-president of marketing of Sony Music Entertainment Asia.

The year 2015 has been crucial for the development of China's digital-music market, especially with the notice from the National Copyright Administration that online music-delivery platforms had to remove all unauthorized songs by July 31, which has been seen as a major move to fight rampant piracy in the industry.

"The effort of the government is a great improvement. We're also happy to see that more people are aware of the legality of music. More consumers are willing to pay for high-quality music," says Andy Ma, senior vice-president of commercial and business development of Warner Music Asia Pacific.

In 2015, more than 7 million copies of digital albums have been sold on QQ Music, generating 40 million yuan ($6.35 million) in revenue, says Andy Ng, general manager of QQ Music.

Ng says that the company has more than 800 million users and more than 15 million songs with copyrights obtained from more than 200 record companies, among which about 25, including Warner Music and Sony Music, offer content exclusively to QQ Music.

"China has the largest number of Internet users in the world. The large population and increasing number of Internet users (represent) huge potential," says Ng.

He adds that to help the industry grow healthily, QQ Music also authorized another four online-music companies to offer legal music download services, including Kugou and Neteast Music.

On Dec 3, the company worked with Warner Music to exclusively release the latest single by JJ Lin, a Singaporean singer-songwriter. Titled Twilight, the love ballad costs 2 yuan (30 cents) for each download and sold 610,000 copies within a week.

Singer-songwriter Dou Jintong, daughter of rock star Dou Wei and pop diva Faye Wong, also released her latest single, River Run, via music platforms, including QQ Music and Kugou. In the three days following the Dec 11 release, 25,000 copies were purchased on QQ Music, each costing 2 yuan.

"The number represents a big turnaround for a country which used to have one of the highest rates in the world for illegal downloads," says Ma, of Warner Music.

He also mentions that stars like Adele and Taylor Swift have been withholding their latest album releases from streaming services like Spotify and Apple Music as a strategy to boost sales.

"The switch from physical music forms to buying and listening to music in the digital era heavily affected the music industry," Ma says.

According to Andrew Chan, a senior vice-president of Universal Music China, the fast development of music streaming has also accelerated the trend of record companies and artists working with Internet companies to release digital albums and netcasting shows live.

For example, Universal Music China cooperated with QQ Music to release a digital version of Hong Kong pop singer Jacky Cheung's Mandopop album, Wake Up Dreaming, in December last year, which sold more than 300,000 copies within four months. To celebrate the success, Cheung also held a concert in Beijing in May this year and the tickets were provided only to QQ Music's users.

"The music market in China is evolving rapidly, and through Internet companies' user bases, we can offer online and offline activity for our artists," says Chan.