On June 6, Apple launched its Apple Music service. Unsurprisingly, despite the massive size of the China market, Apple did not launch the new service in China. The reason is simple: Apple Music is a paid service, and Chinese consumers are not used to paying for content given the prevalence of free pirated media in China.
Copyrights in China’s online music market are tied to three companies
Although piracy is rampant in China, China’s online music market is not small. According to data from CNNIC, the market size is 478 million users and up to 366 million users access music though their mobile phones. Daily downloads have reached 200 million, and in the next two to three years, annual downloads will reach 1 billion, while online music users will number 600 million.
In China, online music is becoming the driving force in the music industry. Competition that used to be played out on different channels is now moving to the copyright domain. In the market, Tencent QQ Music is the first mover. Kugou, the old online music giant, is also a major player. Ali Music, which recently acquired Xiami and TTPod, rounds out the top three. In addition, other important companies in the sector include Baidu Music, Music163 and LeTV music.
So far, Tencent and Kuogou’s both have over 2 million copyrighted works, including songs from Warner Music, Sony, JVR Music, HIM, LINFAIR RECORDS,EMI,Taimei Records ,EE Music, Wonderful Music, Soya Songs, Ocean Buttlerflies Music, Music Nation, YG,Huayi Media and Tian Hao Entertainment. Most of them are exclusive copyright agreements and this means that if other companies want to play the music, they have to get Tencent’s and Kuogou’s authorization.
There is one point worth mentioning. Tencent and Kuogou have collaborated in the recent past. When Tencent released the Bigbang digital album and announced it would be the exclusive platform for China Voice Music News in the fourth quarter, it worked with Kuogou. From this recent cooperation, we can see the intention of these two companies to work together to gain more market share in China’s online music sector.
Ali Music has Go Go Rock, Bin Muic, BMG, HIM and some independent musicians. BMG is one of the top 5 music labels globally, but it is relatively new to the China market and is worth less than Warner, EMI, Sony and Go Go Music. If we exclude BMG, Ali has less than 1 million songs.
The saddest thing about Ali: a lot of their songs are not authorized
If you observe carefully, you can find that Ali’s Music combined resources (including XiaMi and TTPod) give them about 2 million songs, which is almost equal to Kuogou’s music library. But Ali Music has far fewer copyrighted songs. Most people think their music library is largely composed of pirated material.
In fact, Ali Music’s affiliate TTPod is guilty of copyright infringement. Last July, Kuogou found evidence proving this violation. Kuogou pointed out that Ali Music had up to 10,000 songs in its music library that were exclusively licensed for use on Kuogou’s platforms, by artists including Na Ying, Christie Fan (Fan Fan), Harlem Yu, Angela Chang and many more. Kuogou sent official requests to Ali Music to remove those songs from its music library but so far its requests have been ignored.
In February, Kuogou filed a lawsuit against TTPod in Shanghai Minhang District People’s Court and asked TTPod to take legal responsibility for its actions. However, TTPod filed an objection, delayed the court hearing and failed to appear in court. Eventually, the court rejected TTPod’s objection. The case will begin soon.
There is no doubt that Ali Music is indifferent to its wrongdoing and wants to grow quickly by using pirated content. This model has been proven to be feasible in the past. Yet Alibaba is China’s largest Internet company. For them to act this way sets a bad example for other firms in the sector and damages their image.
Don’t let one bad apple spoil the whole bunch
Just like in China’s movie industry, it is inevitable that there will be copyright issues, but Ali Music’s behavior is inexcusable. Its dispute with Kuogou is not about two firms both claiming the right to copyrighted material: Rather, it has come about because Ali Music is using Kuogou’s exclusive content without permission to build up its user base.
Despite Ali Music’s thievery, there are positive steps being taken. The Chinese authorities are advocating a healthy development of the online music industry. Kuogou is also seeking legal recourse against Ali Music, as it should. It will take time for China’s online music sector to mature, but in the meantime, it is imperative that piracy be combated. Only then the sector can develop in a sustainable way, which will benefit both the music providers and consumers.