CHINA'S STREAMING MARKET: BIG

Online piracy is capsizing in China—or at least a tide is finally turning—as ginormous numbers of Chinese are now legally consuming their music, thanks to government crackdowns against copyright infringers. At London’s NY:LON Connect conference last week, Ed Peto, a Chinese music market expert for the industry service company Outdustry, rolled out some eye-popping new numbers, according to a report in musically.

Peto said nearly half of the Chinese population—502 million—are streaming music online (In the U.S. that number is 57%). That’s 62% more than the entire U.S. population. Fifteen million of those fork over $1.50 monthly subscriptions, a number that’s on the rise. “People are going to pay for music, and they’re going to do it en masse,” he said.

The bulk of Chinese streamers are turned to the hybrid radio/download service QQ Music, which has cornered 39% of all listeners, said Peto. With 196 million users, it’s twice the size of Spotify. Tencent-owned QQ’s subsidiary services – Kugou and Kuwo – total another 39% of the market. QQ’s dominance is a likely byproduct of its exclusive licensing deals with both Sony Music and WMG. QQ can license music to its competitors. As Peto notes, “We’re talking about the idea of someone like Warner licensing exclusively to Spotify, and then asking them to license on to Apple Music on their own terms,” explained Peto. “We’re talking about the weaponization of music here.”

Although the streaming catalogs in China are just about all licensed, the artists themselves aren’t seeing much of a windfall. Peto described it as “one of the lowest per-stream rates in the world. The transaction value is off the bottom of scale.” Transparency is also a huge problem, and copyright laws are a recent phenomenon in the country, so much work remains to be done.

Still, you gotta start somewhere, and the potential is astounding.