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Recording industry cashing in on digital music
Last Updated(Beijing Time):2007-05-15 08:58

By Wang Xiangning

When we are getting more and more familiar with music entertainment like online music, music download by Internet and by mobile phone, entertainment media has been changing unconsciously. Traditional recording industry is in depression, new entertainment mediums like Internet and wireless began to expand quickly. Entertainments mainly represented by music are penetrating into consumer electronics market through the Internet and wireless, and bringing about digital music, an entirely new kind of growth mode. It is just the huge business opportunity of digital market that gives new hope to traditional music industry.

Big development space for digital music market

There are basically two kinds of digital music industry: one is traditional IT manufacturer, the other is operator.

Business mode with IT manufacturers as dominant force primarily develops online music and download service relying on hardware and software terminals and the Internet. At present, pay-per-download is moving on very slowly. Music search service is a unique profiting mode of China's online music business. Most free music search engines extend their functions by searching special services for the purpose of attracting and maintaining more users, and then drawing the concern of advertisers more effectively.

The other mode with operators as dominant force basically relies on telecommunication networks, and with wireless music as the main part at present. Hundred of millions MP subscribers and monopolized telecommunication networks consist of a huge "wireless music market". And users have got into the good habit of paying cost by using services like Ring Back Tone, IVR, and music download. Therefore, the copyright problem can be solved well. Both operators and traditional recording companies concern more about wireless music than online music, and the advancement of wireless music is a positive factor for the fast development of wireless music.

Data provided by market investigation institution points out that the increase rate of digital music consuming market will probably be 6 times in 2010 than that of today, and the operation revenue may reach $14.9 billion. In 2006, digital music accounted for 12 percent of the total revenue of recording industry; this figure will go up to 40 percent in 2010. Music consuming market, with $33 billion global sales revenue in 2005, shall be a big market with great potential for digital music.

Unlimited opportunities for the industry

The industry chain of digital music includes four modules: content, channel, operation and terminal. Each of them is promoting the industry actively and is not willing to fall behind in the new profit-making point.

Currently, terminal is mainly wireless digital music MP. Famous mobile brands launched their own music mobile. Sony Ericsson (e.g. Walkman), Nokia, Motorola, Samsung, and Alcatel all take music mobile as the main focus.

Channel agents and operators are actively working together with contents providers on playing "music squeezer" too, some even "live apart on their own". Shanda Entertainment has brought Universal Music and EMI, two of the four big recording companies, into the camp of digital music service. Netease launched music center in January, laying the base for digital music download. In June 2006, China Unicom signed a deal with Warner Music. Subscribers of China Unicom can enjoy their favorite music through SMS, IVR, WAP and streaming media. U-Max Music, a music brand of China Unicom, has started its own business. In July 2007, China Mobile launched its wireless music strategy, and set up wireless music club, which provide subscribers with one-stop music consumption and entertainment services, including music download, sharing, promulgation and communications.

Traditional recording industry has natural borne advantages in contents, and it has started to seek for opportunities in digital music industry. Digital music created several possibilities of profit-making for traditional recordings through various kinds of music services, for example, download, recommendation, music blog and music friends services, as well as wireless value-added services like color ring back tone, ring tone, and IVR. Big recording companies are not satisfied with the cooperation with operators and big SP only, they are engaged in developing new technical platforms and integrating the whole industry chain ranging from copyright, broking, marketing, technology, broadband and wireless business, and build new entertainment media flattop.

Traditional recording combines new technology

Since the second half of 2005, big recording companies began to announce using new technology. In November of 2006, Shanghai Media Group (SMG) and EMI Music formally signed a new media agreement to become strategic partnership for deeper cooperation in fields like wireless and digital music. Both parties shall use such new media platforms as broadband network, wireless music and MP television of SMG to develop new channel and mew pattern of legitimate distribution of digital music comprehensively, and to protect the copyright of digital music. Music contents of EMI shall be issued firstly via the network platform of SMG Broadband and mobile media platform of Dragon New Media. 
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