PwC predicts change of tune for music, video

The distribution of music and video in China will see fundamental change in 2007, as selling music and music videos on mobile and Internet networks becomes the norm, according to global consultancy firm PricewaterhouseCoopers (PwC).

PwC said yesterday that while the media and entertainment industry on the Chinese mainland is expected to grow at an annual average of 18 per cent from 2006 to 2010 to US$137.4 billion, the recorded music segment will see an average of just 2.3 per cent growth in the period.

Although this year's growth rate is forecast at 5.9 per cent, it will fall to 1.7 per cent in 2007 and maintain at a level below 2 per cent until 2010.

Vincent Cheuk, a partner at PwC, said the slow growth of the recorded music business is mainly due to a fundamental shift of the distribution channel from physical formats like CDs to mobile phones and the Internet.

"The distribution of recorded music has become a trend that every record music company needs to pay attention to and endorse," said Cheuk.

Record giant Warner Music announced on Tuesday it would form an alliance with China Unicom, the country's second-largest mobile operator, to distribute some of its music to the latter's subscribers.

Meanwhile global media giant News Corp has teamed up with China Mobile, the world's largest mobile carrier, to form a joint venture and discuss bringing News Corp's content to the Chinese operator's network.

By the end of May, the two Chinese companies had 421 million subscribers.

According to the Chinese consultancy Analysys International, the wireless music market, including music and ringtone downloads, will almost triple to 7.2 billion yuan (US$900 million) this year.

Tencent.com, a bigger rival to MSN Messenger, formed a partnership with record firm EMI, which provides music to Tencent's new game R2BEAT. Players of the game skate to the beat of the music; but if they like the songs they must pay to listen to or download them.

The distribution of music and video on mobile and Internet networks can also help ease the concerns of copyright owners about piracy in the business.

Grace Tang, leading partner of media and entertainment with PwC in China, said piracy is still quite a serious issue in China. But she said the momentum to prevent piracy is building, with the government's increasing decisiveness in fighting it, rising incomes making genuine copies more affordable, and the popularity of wireless music.

Since telecom operators control the distribution channel tightly, they can easily stop the flow of pirated content on their networks while ensuring copyright owners get paid from phone bills.

The Internet advertising and access market is the fastest growing of the 14 segments in the media and entertainment industry with an annual average of 25 per cent and revenue will reach US$7.95 billion in 2010, more than doubling the total in 2006.

Source: China Daily