TAYLOR SWIFT WHERE ARE YOU NOW? The Straight Dope On Why China Gets The Best Deals On Digital Music

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In China, music piracy has been the norm for ages, and as a result consumers have for a very long time seen little or no value in music—and as a result they continue expect it to be free. The various services have traded off that idea to gather as many people under one umbrella because the hope is to eventually monetize most of what they have to offer. But it’s an uphill battle, and all indications are that it will be that way for some time to come. The normally outspoken—in the U.S.—Swift, however, remains strangely mum. Our correspondent in Beijing investigates.

BY JONATHAN LEVITT

Recently I started to think about how the music industry has changed especially in relation to China. These days everything is so fragmented that people just cherrypick the songs they want, and disregard the rest. In America, iTunes’ success prompted attention from the music industry as it showed how a digital portal vending music, if done right, could be very lucrative. CD sales have been dying a slow death ever since, and now in some cases on Amazon, digital prices can exceed the physical price for a disc, which is sort of counter to the digital/eco idea of giving people a choice not to have to put out money for a plastic disc when they could have a digital version with accompanying digital booklet. This seems odd, given the obvious lower costs involved.

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Piracy in America exists, torrent sites come and go—and the RIAA, after losing the PR battle of taking individuals to court, had to try other methods to ensure labels and artists would get paid for their products.

HISTORY

China, Russia, and India are the powerhouses of piracy in the world, and yet they seem to be the ones to benefit from it the most. When I first came to China in 1991, cassette tapes were the norm.  By 1999 I could walk near Beijing University to a massive mall that sold books, music and musical instruments, and would have no less than a handful of migrants asking me if I wanted CDs software or porn. If I said yes (for the music, ahem!), they would ask me to follow them around the corner into an area known as hutongs (alleys) where low rise houses were laid out row after row—a poor area that would eventually see the wrecking ball during modernization. I would walk down these dirty alleys then be escorted into a house where from some back room a man would come out with a cardboard box, filled with the latest music from the West.

Classical, Pop, and other genres were there for the taking. The packaging was in a thin plastic bag with the front cover and tray card inside. The disc would even sometimes bear the ifpi (International Federation of the Phonographic Industry) symbol. In 2001 music pirates seemed to take an even bolder approach to selling their wares. Box sets started to appear, and not just shoddy replicas; the quality for many of these sets was flawless with liner notes, inserts, down to the ISBN number. The only way to tell these sets from the real ones besides the price was the occasional typo.

Today, top quality pirate CD box sets are being sold on Taobao.com, China’s Ebay-like portal, which is owned by Alibaba (stock symbol BABA). For a mere $8.00 the US 13-CD Mono Beatles box as well as the Japanese 12-SHCD Led Zeppelin Box can be yours. The officially released Beatles mono set sells for $171 on Amazon.

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http://www.amazon.com/Beatles-Mono-Complete-Recordings/dp/B002BSHXJA/ref=sr_1_1?ie=UTF8&qid=1454477337&sr=8-1&keywords=beatles+mono

beatles pirate box set

https://item.taobao.com/item.htm?spm=a230r.1.14.15.s1YImm&id=524796607020&ns=1&abbucket=14#detail

led zeppelin japanese pirate boxset

https://item.taobao.com/item.htm?spm=a230r.1.14.35.1wfVY6&id=44777357825&ns=1&abbucket=14detail

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In the ’90s in China, lack of copyright protection and few legitimate releases by western artists initially created a wide berth for pirates to operate. This, coupled with an archaic slot release system by the major labels, basically ensured that by the time a release did hit the shelves in China, the pirate edition was already changing hands down on the street.

Outdustry.com, a website dedicated to examining all aspects of the Chinese music industry, explains in an article on their site, “It is worth noting at the outset that despite the real and persistent challenges that piracy presents to copyright owners in China, there have been notable gains in recent years, and at least some observers feel that the general trajectory in China is toward an improved enforcement environment.”

The most intense crackdown on piracy happened when the Olympics were a mere six months away. It was at that point you could feel the atmosphere tensing up. Soon all of the DVD and music stores were closed down in Beijing. Time was, you could wolf down some shish kabobs on a side street for a few RMB, and then walk a few stores down, duck into a DVD shop, and purchase the out of print, Criterion Collection DVD of Dead Ringers for a dollar.

MUSIC SERVICES

In 2008 Nokia, who at the time was the top cellphone maker in the world, decided to try and compete with iTunes head to head in countries where Nokia was more popular than Apple. When Nokia opened the Comes With Music service, (eventually to be renamed Ovi Music Unlimited) initially in Europe, it was essentially DOA, first because the pricing was expensive compared to iTunes. In addition, the catalog selection was not as comprehensive, and DRM restrictions on top of the convoluted ways of getting the music from your computer to device made the Comes With Music experience synonymous with European bureaucracy. In fact, when the service came to Singapore, Comes With Music devices were being sold for a 25% premium over the same devices, minus the service. So consumers, who were used to getting their music for free, decided, why pay a premium for it—and decided to purchase the cell model without the added cost.

In 2008, the Chinese Comes With Music team negotiated a deal with the record and publishing companies, to not only offer the service, but to do so DRM free and without any computer restrictions whatsoever. Outdustry.com says, “As recently as 2011, virtually all music downloads in China were unauthorized. Subsequently, the international major record labels struck an accord with some of China’s major search engines — one of the most common sources of links to unauthorized music downloads — which resulted in the search engines receiving licenses for at least some music content.”

For Nokia, the payment was a small fixed dollar cut of the device cost that the majors divvied up. The service was as convenient as could be. One could use their cell phone, the OVI player (a standalone digital player), or their browser to download individual tracks or full albums if so desired. The beauty was that if one person had an account on the Comes With Music site, they were granted the rights to their hearts’ content. The promotional materials at the time played up the oceans’ worth of music of over a million tracks available to device owners. Some Ovi Stores in different territories like Russia and India contained up to 11 million tracks.

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I worked as the China Music Editor for the Nokia Comes with Music service, and was shocked by the amount of music being licensed. While most people simply snacked instead of feasting (as management liked to term it), the deep catalog offerings from labels such as EMI and Warner were a treasure trove for anyone with a bit of investigative musical curiosity. Where else could you hear a zither tune and then look up Greek music and find 20 or 30 releases from EMI Greece? How about the entire Serge Gainsbourg catalog, or everything ever released by Stax Records? It was an amazing service that had the misfortune of being provided by a cellphone maker that was taking on water fast and about to sink to the bottom of the cellular sea. The cost for the keys to the kingdom was a low end device that would set you back around $200. Imagine a million tracks all meta-tagged, with cover art and decent bitrate for the cost of what iTunes would charge you for 200 tracks!

In 2010 Boy Genius Reports published an article, “Nokia launched DRM-free Comes With Music in China.” In this article the writer Michael Bettiol asks, “When is this type of business model is coming to the Democratic world?” In China, when Comes With Music launched, according to a Wall Street Journal report titled “Nokia Offers Free Music in China”, the article stated, “The labels have been especially willing to experiment with digital music in China, which has the most Internet users of any nation but is also one of the most challenging markets for the music industry in fighting piracy,” and that, “China is a huge market for Nokia and it’s a huge music market from a consumption perspective.”

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Let’s be careful here, as the default logic that many western companies operate with is: If I could just get each Chinese person to buy my product I would be a billionaire!

How many have believed that mantra and have since gone back to their country, tail between their legs, because the Chinese didn’t want their product or could find a way to do it better? The same faulty logic is to constantly view Chinese as the underdog, the ultimate saver sleeping on a mattress of cash.

In an article by the China Daily, “E-shopping fuels domestic consumption”, it basically states that the Chinese year over year are buying more and more on the Internet, and that, “Chinese shoppers spent 511.9 billion Yuan online in the first six months of this year, up 46.6 percent year-on-year.” That’s 90 billion Yuan, and isn’t it safe to assume that, given the rise in consumption, the Chinese need to learn to shell out for services they take for granted such as music services?

The PR for Nokia’s music service stated when it was launched in China as being the first time labels actually got paid in this market. How did that trickle down to aggregators that rounded up indie content for the Nokia Service? Did these artists ever see a penny? Remember that cut of the device cost well a miniscule fraction of that went to indie musicians.

Nokia’s music service morphed into Mix Radio and has since been sold off to Line a Japanese messaging service and has continued on as a zombie service of sorts, only to announce recently in February of 2016 that the service was being shuttered.

THESE DAYS

in 2016 there’s an incredible music service available in China known as Netease Cloud Music. It’s free to download on all sorts of devices and doesn’t cost a penny to download millions of tracks.

Today I can get the complete discography of The Beatles, all of their bootlegs and singles, in about 10-minutes time—all at 320kbps quality. And even as I was writing this, The Beatles were slated to come to streaming services.

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Netease Cloud Music is easily the top music site in China, with other services like Xiami backed by Alibaba taking a distant second. The site is basically a free-for-all that operates under the concept that unless a rights holder comes forward to take music down, the music will stay up for all to download as many times as they want.

The site has started to also sell albums along with subscriptions that allow the user to download a couple hundred tracks a month. The deluxe service gives users a download ceiling of 500 lossless quality tracks a month for about $20 a year.

Let’s do the math. For iTunes, at an average cost of $1.29 a track, 500 tracks a month would be $645 a month or $7,740 a year.  A small fortune that hardly a soul in the USA could afford. The above pricing does not reflect the music that doesn’t fall under this agreement with the labels; that music is free to download at one’s will until it gets taken down or is shifted over to the for-a-fee concept. So is the pricing fair? Adele’s 25 fetches 15 RMB or $2.30 dollars for the entire album, whereas on the US iTunes page it sells for $10.99.

adele netease cloud music

Adele Itunes for sale

taylor swift single track price

Taylor Swift, who criticized Apple Music’s not paying royalties during the trial period, receives a paltry 32 cents a track for music off of her 1989 album. (see photo) Swift’s impassioned, widely circulated plea to Apple stated, “This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt.”

One wonders why she would accept so little for her music and yet not apply the same approach asking Netease to start actually paying the ocean of bands that appear on the service an actual rate?

WHY ARE PEOPLE STILL PAYING SO LITTLE IN CHINA FOR MP3S?

Back in early 2000, there was so much Microsoft piracy that the company eventually relented and lowered their prices. If there is a positive side to piracy, it brings sometimes more equitable pricing structures. If there is a democratization that supposedly ensues after rampant piracy (the so-called bringing the mountain to the man), why has that not found its way to places like the USA, where prices for MP3s have actually gone up in cost.

China is a country going through massive changes, and piracy is hard to stamp out. If the concept of services like Netease are to eventually put everyone on a paid subscription and wean people off of free music, then in theory, great. But the reality with a site like Netease is that it is basically left to users to police things, along with the occasional label that complains to take things down. If they really were open to scrutiny and an honest discussion on the music on their site, then they would have created the page for lodging a takedown request in English.

Instead, this is what a Western artist would see if they were so lucky to navigate to the page. The only thing they’d see is an email address way at the bottom and nary a hope that anyone would actually respond to their inquiry, since they don’t write Chinese.

If bands have any hope of getting paid, then artists will have to start understanding the entire global music monetization picture instead of just focusing on Apple, Spotify and the like. I just don’t see how labels, though, can justify cutting such deals overseas. It’s unfair for those who legitimately pay for their MP3s at a $1.29 a pop to have someone in another country be able to get it for free, or for a mere fraction of the cost. Capitulation to a standard that being paid at all is better than the specter of mass piracy has forced many artists, when dealing with Chinese music services, into deals that are being subsidized by legitimate sales in other countries.

To be fair, the Chinese consumers have for a very long time seen little or no value in music, and expect it to be free. The various services have traded off that idea to gather as many people under one umbrella because the hope is to eventually monetize most of what they have to offer. So it’s an uphill battle for companies like Apple (whose users have no problem dropping $1000 for an iPhone in China) to create a revenue generating service that engenders in its users a feeling that most have never had, which is that music should be treated as art and should be curated, collected, and most of all, given its due respect.

So Taylor Swift where are you now? Can you help use your clout to get a better deal for the bands that appear on Netease, Xiami, Kugou and QQ? Because if the industry doesn’t take heed soon and institutes a global standardized pricing structure, then all it takes is a tech savvy American to purchase a cheap VPN ($5 a month), sign on from a China node, download the relevant app from the Google Play or App store, and start downloading to their heart’s content, ensuring the cycle of piracy continues unabated.

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