Digital Media in Asia Blog

Today (5/30/06), Berkman’s Digital Media in Asia Project co-founder Eric Priest will give an informal lunchtime talk on Asia’s role in shaping the future global entertainment industries. Info is as follows:

Berkman Tuesday Luncheon Series, Tuesday, May 30 – 12:30 pm
Berkman Conference Room, Berkman Center
1587 Mass. Ave., Harvard Law School, Cambridge MA

Guest: Eric Priest
Topic: Asia at the Cutting Edge?

Some believe Asia is at the cutting edge of twenty-first century entertainment industry business models. A combination of high copyright piracy levels and high-tech populations has led entertainment companies in places like China, Hong Kong, Taiwan, and South Korea to embrace the internet and emerging digital and mobile technologies as they seek innovative new revenue sources. This includes a massive new market for citizen-created media (music and movies) on the internet in China. What are the trends and are they really leading to sustainable business models for the rest of the world to emulate? Is the conservative state-run media in China creating a strong market for alternative, citizen-created Internet media and what are the implications for Chinese society, politics, and the entertainment industries? With all the emphasis on technology, is creativity increasingly an afterthought?

Eric Priest is a research fellow in the Berkman Center’s project on Internet Filtering, and a cofounder of Berkman’s Digital Media in Asia Project. He is also a visiting researcher at Harvard Law School, and an adjunct professor of law at Chicago-Kent College of Law.

Bio: http://cyber.law.harvard.edu/home/eric_priest
Digital Media in Asia project blog: http://blogs.law.harvard.edu/dmablog/

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I’m currently in Hong Kong attending the Music Matters Asia music industry conference, where, unsurprisingly, digital media and internet file sharing is the hot topic. The slogan of Day 1: mobile is the future.  The primary growth area (and really the only meaningful growth area) for music through 2010 is monetized mobile downloads.

Here are some highlights from yesterday’s panel discussions.  I’ll add info about more highlights over the next day or two.

-Major labels in Asia claim to embrace and look forward to digital, online music distribution as an opportunity more than a challenge.  I’m not sure if this was conference-induced exuberance or whether it’s a real sentiment (probably a little of both).  I’m also not sure whether this professed excitement is shared by the major label home offices in New York and London.  It would not surprise me if Asia executives were in fact more rosy about the future than their bosses because high piracy rates have historically forced music companies in Asia to be flexible and adjust to new situations, so embracing new revenue sources is natural for them.

-I thought the best panel of the day was “Meet the Neighbors,” the only non-music industry panel.  On this panel were executives from “neighboring” industries: videogaming/online gaming, television, and mobile communications.  They raised two of the most prescient points made all day.  First, one of the panelists remarked: I’ve been listening all day and I haven’t heard anyone talk about musicians.

1) Everyone talks about ringtones, downloading, market share, but what about the artists?  Cliche, yes, but it is an absolutely key point that the industry can only survive if people are able to connect and experience artists and technology and business models enable and encourage artists to create great music.

2) The industry has to get over it’s centralist, top-down mentality.  Music is not just what record companies distribute to passive consumers.  Consumers today want to create, and share their creations.  They want technologies and business models that enable that and are seeking and finding those regardless of what the business model record companies push.

Seeking to tap into China’s market of some 350 million mobile phone subscribers, Seattle’s Melodeo has formed a joint venture with Access China, a subsidiary of Access, a Japanese internet technology provider. The joint venture “will launch the first platform in China to deliver secure digital content through wireless operators and other mobile-service providers.” According to its website, Melodeo provides “an all-in-one mobile music system … to Mobile Operators. This system lets users shop for music on their mobile phone, download it to the mobile phone and listen to it anywhere or any time in high quality stereo.”

The enormous number of Chinese mobile phone users is no doubt enticing to companies like Melodeo. A fair number of pundits think mobile phone downloads is the killer app that will turn things around for the piracy-riddled music industry in China. Of course, in China the potential users of a wireless, for-pay music download service are probably a relatively small subset of the 350 million mobile phone users. Couple that with the fact that the price Chinese consumers are willing to pay for per-song downloads is something far lower than the 99-cent US price-point, and it might be a challenging business model to sustain. Of course, the biggest challenge to the music-over-mobile business model is unauthorized P2P file sharing, which is rampant in China, and threatens the future of any for-profit online (or mobile phone-based) music retail business model.

According to a study by market researcher TNS, almost 20% of mobile phone users polled in a 15-country study now listen to music on their cell phones, compared with 15% listening on home stereos and 10% on dedicated digital music players like an iPod. The US trailed others in adopting music phone technology, with a mere 4% listening to music on their phones. More daunting for proponents of music phones in the US is that a separate study suggested only 10% of US mobile users are highly likely to purchase a music phone. In Hong Kong, 23% of mobile users listen to music on their phones, while 19% do so in the UK.

South Korea was #1 in the study with 26% listening to music on cell phones and a whopping 60% choosing mobile music as one of the five applications they would like to start using, or use more of in the future. “This puts mobile music in top place as the application with highest potential. This figure is highest amongst mobile users in South Korea (60 percent) and Sweden (46 percent). Once again, the U.S. ranked last in the study, with only 19 percent of respondents stating that they want to start listening to music on their cell phones.”

The difference might be due partly to a bit more of a Luddite culture in the US (Rebecca MacKinnon has recently blogged about how the cell phones in China are higher tech and more multimedia focused than those in the US), and the fact that digital music phones have (amazingly) only been available in the US for a few months. But I think this might also suggest a difference in US and Asian consumption habits. One thing that has made iPods popular in the US is that people can use them to manage and transport their entire music collection; they can be mixed and matched with all kinds of equipment–home stereo and car stereo–in ways that it seems cell phones are unlikely to be able to, at least for some time. The US’s car culture, if nothing else, is reason to imagine that iPods will continue to dominate the digital music scene here, while that obviously would be much less of a factor in Asia, where most people do not commute by car.