Does the music industry in China have a future?

Article  by  Olivier RICHARD  •  Published 02.05.2013  •  Updated 15.05.2013
The digital music market in China may be experiencing strong growth, but the sector still has to face up to two challenges: State censorship and large-scale piracy. Given such conditions, does the music industry have a future?


China looks like an Eldorado for those working in the music business: 1,354 billion inhabitants and potential consumers, 1,100 billion mobile telephones of which 22% have access to 3G, 564 millions web users (it is estimated that there will be around 700 to 800 million by 2015) and 420 million mobile Internet users.

Unfortunately to these astoundingly large figures must be added an astoundingly high level of piracy: 99%! The IFPI, the International Federation of the Phonographic Industry, estimates that almost all music consumed in China is pirated. Under such conditions, is there hope for music professionals in the Middle Kingdom?
Brain FailureBrain Failure, one of China’s most famous punk bands.

Il semblerait que oui. Ainsi, It would seem that the answer is yes. Edgar Berger, the president of Sony Music Entertainment states that “China is a major priority for the entire industry because we all see its enormous potential. We hope to release this in the very near future”. And, while the global music market grew for the first time in fourteen years in 2012 (+ 0.3 % to 16.5 billion dollars), China continues to fire the imagination of those in the music industry.
Of course, more than elsewhere, the road will be long. The already tiny Chinese physical music market literally collapsed in recent years going from 55.5 million dollars in 2006 to 19.9 million in 2011. The digital music market, however, – at last! – showed a sign of hope, for it has been progressing much more quickly than in Europe: almost 75% of music sales in 2011 were made digitally (compared with only 25% in France), which amounts to a market of $62.9 million. Bearing in mind that 77.3% of Chinese internet users - 436 million people - consume music on line, it is easier to understand the excitement of those working in the music business.
China is the world’s most populous country, but is only in 22nd position in the music market. There is enormous scope for progress. And never mind if, at the moment, the recorded music sector is only worth 82.8 million dollars there (compared with 762 million in France). The regular increase in the standard of living of the Chinese makes the prospects even more attractive…

Music Festival "Midi" at Zhenjiang (2009)

Short history of the phonographic industry in China

Like cinema, recorded music arrived very early in China. In 1902, the American company Victor Talking Machine Company sent the pioneer of the gramophone, Fred Gaisberg, to Asia. While there, he took 1,700 samples of local music and in 1903 in Shanghai, he made the first recording in the history of China, thereby issuing the official birth certificate of the Chinese recorded music industry. During his stay, Gaisberg immortalised several traditional operas. The master copies were then sent to Germany for records to be made, and these records were then sent to China to be sold there.
During the economic boom years of the Republic of China (1912–1949), several Western companies, in particular the Canadian firm Shanghai Eastern Pathé, and the American company Shanghai Victory, shared the recorded music market. Chinese companies such as Da Zhong Hua, Chang Cheng and New Moon followed closely behind. Although the market was dynamic, most records were sold in the areas where Western influence was the strongest (Shanghai mainly, but also Hong Kong and Macao, even Beijing). The records distributed by these companies showcased genres that were fashionable in the West (song, classical music and jazz) as well as in China (operas, popular music).

In 1949, the founding of the People’s Republic of China totally changed the situation. From then on, publishing records depended on the State which set up for the occasion (in 1949) the Zhongguo Changpian Zonggongsi (China Record Corporation). This state-owned company was mainly concerned with Chinese heritage (“we have a culture that is five thousand years old” the Chinese like to say) and produced folk music records, patriotic songs and operas as well as recordings of traditional music of the country’s 55 ethnic minorities (the catalogue of the China Record Corporation had no fewer than 60,000 titles!).
From 1978, China opened up to the outside world and implemented a series of reforms that enabled entrepreneurs once more to set up companies. From 1979, a large number of audiovisual companies were set up such as the Guangzhou Pacific Audio Visual Company (GPAVC) from Canton and the Shanghai Audio Visual Company. Like the China Record Corporation, these labels produced traditional music. It was not until the 1980s that the first Chinese popular music artists were signed up by the Guangzhou New Times Audio Visual Company. The commercial success was huge and other labels from Canton followed GPAVC, such as the Guangzhou Pacific Audio Visual Company and White Swan Audio Visual Press. The remarkable success enjoyed by Cantonese pop music at the end of the 1980s and the beginning of the 1990s echoed that of cantopop, popular music from Hong Kong, the British colony that was only a hundred kilometres away from Canton.
Live New Pants band
Private investors may have been able to produce music, but this in no way meant that the State had loosened up controls on content. Indeed, any officially distributed record within the People’s Republic of China had to receive the imprimatur of the Culture Ministry, which checked that the work did not contravene any of the following principles (criteria as of 2013):
- it must not violate the basic principles of the Constitution;
- the unity of the nation, its sovereignty and its territorial integrity must not be threatened;
- no state secrets must be divulged, national security must not be imperilled and no harm must be caused to the honour and the interests of the state;
- there must be no incitement to national hatred or discrimination, solidarity between nationalities must not be undermined and the country’s customs must not be infringed;
- there may be no promotion of a religion or a superstition;
- public order must not be disrupted and public stability must not be threatened;
- obscenity, gambling, violence and crime must not be promoted;
- the rights and interests of others must not be insulted, slandered or infringed;
- public ethics and popular cultural traditions must not be threatened;
- content forbidden by law, regulations or state provisions may not be circulated.
These controls also apply to foreign works within China. In 2011, the ministry published a list of around one hundred foreign songs (including Judas by Lady Gaga and Last Friday Night by Katy Perry) so that they would be deleted from download sites because they had not been approved.
Following the same line of thinking, any artists intending to perform in public in China must submit a list of the songs they intend to play, the original lyrics and translations of them in Chinese, so that the Culture Ministry can study them. Nobody is spared these checks: the Rolling Stones had to remove four songs from their repertoire (Brown Sugar, Beast of Burden, Honky Tonk Women and Let’s Spend the Night Together) when they did their first concerts in China in 2006.
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Rock takes on the bamboo curtain

Controls by the Culture Ministry have not stopped rock and other current types of music from entering China. At the start of the 1980s, only a handful of students knew about rock. They discovered it when they travelled or when their foreign counterparts based in China introduced them to audio cassettes they had brought with them. This is how in 1979, Wan Li Ma Wang, which is considered to be the first rock band in the history of China, came into being. These pioneers only play cover versions (Beatles, Bee Gees, Paul Simon) and put on shows in universities. 
But the Chinese youth became increasingly familiar with rock at the end of the 1980s with the surprising phenomenon of Dakou. At that time, tens of thousands of CDs that remained unsold in the West were sent to China to be recycled there. The discs were notched to make them unusable, but doing this only prevented a few tracks being read, while the remainder of the album could still be listened to without any problem. Nicknamed Dakou (“make a hole”), many of these CDs were then resold on the sly, mainly at universities. Thanks to them, thousands of young Chinese people were introduced to rock. Besides their very affordable price (a few dozen cents), the Dakou had the advantage – since they were sold secretly – of not being subject to the stringent checks of the Culture Ministry. Thanks to Dakou, Chinese students discovered the unabridged versions of the most radical Western bands, in particular punk.
Alongside this secret phenomenon, Zhang Youdai, a DJ from the highly official Beijing Music Radio (Beijing Yinyue Guangbo), scheduled rock, blues and jazz for the first time on the Chinese airwaves. This was in 1989 and this real pioneer started off many careers (Xiao Rong, the singer of the famous punk band Brain Failure said that he discovered rock thanks to him). Youdai didn’t stop while thing were going very well and, in 1993, he started broadcasting electronic music (house, techno).
« Beijing to Boston » Album  from Brain Failure band
It was, however, thanks to the Internet that “contemporary music” spread very rapidly among the Chinese youth. The Internet arrived in China in 1994, giving young “trendy” Chinese people the opportunity “to make up for lost time”. Once often hears it said that the Chinese have assimilated sixty years of popular Western music in just twenty years, but we shouldn’t forget that the overwhelming majority of the public listens first and foremost to formatted popular music and folk music, massively broadcast by television channels and radio stations, and that young people have also been seduced by K-Pop, pop music from South Korea.
Whatever the case may be, the Chinese phonographic industry continued to grow throughout the second half of the 1990s and the start of the 2000s. Its centre of gravity shifted from Guangzhou (Canton) to Shanghai where Shanghai Audio Visual Press and the Shanghai Company of China’s Record Corporation (among others) were set up, two of the country’s most important labels at the end of the 1990s.
The opening up of the market and its extravagant promises (the record crisis had not yet started) convinced the major companies to open up subsidiaries in China. Warner, Sony, EMI and Universal opened premises to work towards their grand objectives and to develop local artists, as they had everywhere else. But their artistic policy, which gave priority to mandopop (popular songs in Mandarin), did not include local rock artists. Furious at being rejected by all the labels, Shen Lihui, the guitarist of the band Sober, decided to create his own record company. So in 1997, his founded his own independent label, Modern Sky. Based in Beijing, Modern Sky signed up the main rock bands from the highly active Beijing rock scene of the time such as New Pants. The band enjoyed exceptional success, selling 150,000 copies of their third album, quite a feat for a Chinese band. The success of Modern Sky then rocketed, and it distributed in China prestigious bands such as Radiohead for which it released the famous album OK Computer.
The creation of independent labels such as Modern Sky was the logical next step once Chinese rock had got through the tough period between 1985 and 1995. Throughout the 1980s, rock developed thanks to artists like the famous Cui Jian, one of whose songs, “Yi Wu Suo You” (“Nothing to my Name”) was one of the anthems for the students of Tiananmen Square. The rock music of Cui Jian, that one may consider to be a kind of Chinese Renaud [a popular French singer, songwriter and actor], co-existed with the heavy metal of Tang Dynasty, the great forerunners of the metal genrewho formed in 1988. And, even though it remained marginal, rock started to attract an increasing number of young people in the 1990s, as the Internet increasingly brought it to those outside its usual audience in the large cities.
Cui Jian (崔健)
Yet, whether produced by independent labels or by major companies or by the China Record Corporation, the records have to be sold. One of the other special features of the Chinese market concerns its distribution circuit. Most physical cultural goods are sold in the 14,000 Xinhua Shudian (Xinhua Bookstores), the only chain in the country that sells cultural products in the People’s Republic of China, and which is run by the Communist Party. It goes without saying that the shelves in the Xinhua shops are mainly stocked with popular and folk music… Alternative records are distributed via a few tiny and rare independent records shops in the large cities.
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The challenges of the digital era

In China more than elsewhere, the development of digital technology has revolutionised the way in which people consume music. As stated above, piracy may be considered a national sport (99% according to the IFPI) and the rights holders try as hard as they can to put a stop to this massive drain. The IFPI has actually had to instigate 300 court cases for violation of the intellectual property code. All types of piracy are perpetrated on a vast scale in China: huge sales of counterfeit CDs, DVDs and Blu-ray discs; peer-to-peer sites that illegally distribute songs and make money from advertising without paying royalties; search engines that act in the same way … 
Le groupe post-punk PK14, un des fleurons du label indépendant Maybe Mars
The post-punk bank PK14, one of the flagships of the independent label Maybe Mars

Yet, things are changing, albeit slowly, and heading toward normality. In 2011, after years of disputes, Baidu, the largest Chinese search engine signed a deal with One-Stop China, a joint-venture between Warner, Universal and Sony BMG. This agreement entailed Baidu accepting to remove many links to pirate music websites. In exchange, the major companies made available to users of the website 500,000 titles (of which 10% were in Mandarin and Cantonese) that could be streamed or downloaded for free. Baidu pays royalties to the labels each time a song is listened to or downloaded as well as a percentage on advertising income, while providing publicity for the artists of these major companies. This agreement was inspired by that signed with Google for the launch, in 2009, of which made available 350,000 titles when it was launched. At the start of 2013, the legally available offering was not restricted to Baidu: the IFPI has records of eight other services (China Mobile, Douban, Tencent etc.), another reason for music professionals to have hope. It does, however, appear that the end of free online downloading is planned for 1st July 2013.
The value of the digital music market exceeded that of physical sales in 2005. But, just like piracy, the payment system and the ineffectiveness of the redistribution system heavily penalise the rights holders. In 2012, 280 billion titles were downloaded or listened to via streaming. According to the professional body, the China Record Working Committee, the rights holders should have received 102 million dollars, but in fact they only collected … 16 million!
In China, if a song generates 100 yuans (16 dollars) in royalties, the producer, on average, only receives 2 yuans! Bearing in mind that in the United States and in Japan, the royalties paid to the producers can reach 70% even 90% of the commercial value of the music, one can easily understand why Chinese music professionals are fighting to change the legal framework of their profession.
Shen Lihui, who runs Modern Sky, believes that it will take a few years for the market to be cleaned up. Then, he says, “it will make rapid progress”[+] NoteInterview, 2009.X [1]. While waiting for better times, Shen Lihui will only dedicate 25% of his budget to record production, and the remainder will be given to organising events and making music products (magazines, videos, etc.). Modern Sky is actually involved in all aspects of the music industry: in addition to record production, the label organises concerts and manages sponsorship for its artists for whom it also serves as tour manager.
In China as elsewhere, live shows have become the salvation of music professionals. There are an increasing number of festivals throughout the country, and the governments in many provinces, which often support them, are using them to promote their region. Rock is the dominant genre, with the two main festivals, Strawberry (organised by Modern Sky since 2009) and the Midi Festival (produced since 2000 by the Beijing Midi School of Music – the first contemporary music school in the country) taking place in Beijing and in Shanghai. In short, while waiting to find the keys to open up the door of their Eldorado to them, Chinese professionals are doing the same as their foreign equivalents: they are getting involved in all areas of the music industry.
                                                                                          Translated from French by Peter Moss
Photos Credits:
- Zhang Shouwang, the leader of Carsick Cars, one of the best Chinese rock bands © Charles Saliba. Courtesy of Maybe Mars
- Brain Failure © Brainwave Beijing. Courtesy of Brainwave Beijing
- Midi Festival - Zhenjiang, 2009 (Marcel Münch / Flickr)
- New Pants band (Gregory Perez / Flickr)
- « Beijing to Boston » Brain Failure Album
- Screen capture "Cui Jian - Nothing to my name"
- PK14 : © Shi Xiaofan. Courtesy of Maybe Mars
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China Daily
Official website of the China Record Corporation:
Official website of the label Modern Sky:
Website of the Midi Festival:
Website of the independent (rock) label, Maybe Mars:
Website of the techno label Acupuncture Records:
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  • 1. Interview, 2009.
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