China crackdown keelhauls music pirates

Although the legal digital music market in China is severely hampered by piracy, ongoing copyright crackdowns will allow the nation to become a major market for legal music downloading with estimated annual revenues of $222m by 2008.

According to In-Stat, promising signs in 2005 that the pirates are being made to walk the plank include the launch of several third-party online music stores.

The market watcher also noted that some unauthorised services, or those working in a grey area, are legitimising their services.

"The end of 2007 will be the turning point for China's legitimate digital music market," said In-Stat analyst Anty Zheng.

"Several large online music stores will have opened by then, and the user base of portable music devices will have surpassed 100 million.

"A major crackdown on music piracy will have been in effect for several years, 3G mobile communication system access will be rolled out, and consumers will be adequately educated about legitimate digital music."

In-Stat found that music labels are beginning to file and win copyright lawsuits in China, in association with the International Federation of the Phonographic Industry.
But the analyst warned that, although worldwide conglomerates can successfully place their selling and pricing structures in other countries, China's extremely low average selling prices and lack of royalties require a "totally different business model".

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