The media is filled with articles on doing business in China, but nowhere is there a primer for understanding the music industry there. Ed Peto lives and works in Beijing as a promoter, music consultant and writer and he kindly shared these insights:
PIRACY & RETAIL -
No one is willing to spend money promoting an international act when 90% of CDs are counterfeit and an even higher percent of online music is pinched. It’s all about hitting the mass market straight out of the box and selling big, if you want a chance of making money.
A high piracy rate leaves you with a legitimate physical market of only $86m a year (2006 figures), making China - a country of 1.3 billion people - into only the 20th largest market in the world. Physical has never really had a good time in China...
The all-important distribution process never really found its feet, and labels find it a constant battle to get their product on the shelves before, or instead of, the pirate versions.
A standard pirate CD retails for about 60p ($1.20), whereas the legitimate product goes for around two to three times that. There is the occasional very public haul of counterfeit CDs, but realistically this is already a lost battle when you consider the impending end of the CD format.
As with most areas of business, the retail sector is a black hole of statistics. A visit to China will clear this up for as you only have to wander a few streets and speak to a few ‘legitimate’ retailers to see the impossibility of gathering any meaningful statistics. Even legitimate retailers like FAB stock some pirated goods and it takes a very keen eye to spot the difference in some cases, although most pirated CDs are laughably poor quality.
NEXT WEEK: Major & Independent Labels, Marketing Music in China, The Digital Revolution & More.