Chinese are used to downloading music for free. A couple of industry veterans might now get them to change that culture. Chen Nan reports.

Twenty years ago, two Tsinghua University graduates, Song Ke and Gao Xiaosong, founded Rye Music in Beijing, which led to the creation of what became known as "campus folk music", consisting of simple, youthful lyrics accompanied by guitar and piano. Not only that, but they also uncovered singers including Ye Bei, Lao Lang and Pu Shu, who would later become well-known pop stars. In short, Gao's and Song's contribution to China's music industry is widely credited, and the pioneering spirit they showed in those early days is once again being brought to bear, this time by Ali Music Group, a new division of the e-commerce giant Alibaba. Their mission: to revitalize the commercial side of music, which has taken a beating in recent years at the hands of technology, and in particular piracy.

Alibaba announced on July 15 that Gao, 46, a singer-songwriter and talk show host, will serve as chairman of Ali Music Group, and Song, 50, a music industry expert who worked with Warner Music and co-founded China's top performing pop music label, Taihe Rye Music, will be chief executive officer.

Before working for Ali Music Group, they had worked for about three years for Evergrande Music, where Gao was chairman and Song was chief executive officer.

Evergrande Music, a label of Evergrande Real Estate Group, one of the country's 10 largest real estate developers, was founded in Beijing a little more than two years ago. Last year, Evergrande Music owned copyright to 22,000 songs and launched the Evergrande Starlight Carnival Music Festival, which toured 100 cities across the country.

"As old warriors in China's music industry we have taken risks, achieved things along the way and survived," says Song, who after declaring "records are dead", opened a Peking duck restaurant in the capital.

"We are schoolmates, lifelong friends and business partners. We trust each other. Alibaba has powerful systems on big-data technology and online payments. We reckon the company is going to come up with a very good music service and products."

Xiami and TTPod are two flagship music apps for Alibaba, which has long aimed to become an online-media powerhouse, with music, film and television operations.

"In China, development of the music industry lags far behind that of other industries such as movies and computer games," Song says.

"I am with Gao when I say that joining Ali Music Group will be our last gig in music management. We hope we can be game-changers in the way music is bought."

Ali Music Group's arrival on the scene, which may concern some of its rivals, reflects the revolution the Internet has brought to China's music industry.

Even a decade ago, the most common way for Chinese to listen to the latest release from their favorite artists was to go to local music stores and buy a cassette or a CD.

That business model, profitable if not always highly lucrative, has been broken by the Internet. A younger generation has grown up downloading music illegally, and music fans are happy to go online to hear almost any track they can think of, generally without paying for it.

The International Federation of Phonographic Industry says in a report published this year that China remains a music market of enormous untapped potential, with an online user base of 650 million people and a growing number of licensed digital services.

However, a culture of paying for music is undeveloped, and potential growth in that direction has been hobbled by widespread, entrenched piracy.

The federation says that the value of online music sales in China last year was 9.76 billion yuan ($1.57 billion), 5.6 per cent higher than in the previous year, helped by an increase in revenue from streaming music services. The hope is for further growth in coming years as companies establish models in which consumers pay for what they listen to.

One of the first Internet companies to offer an online streaming service was QQ Music, a division of the Internet giant Tencent. Since it was set up 10 years ago, it has worked with major recording companies and built a new musical industry service model, which includes Green Diamonds, a membership subscription plan.

Andy Ng, general manager of QQ Music, says the company has more than 800 million users and more than 15 million songs with copyright obtained from more than 200 record companies, among which about 25 companies, including Warner Music and Sony Music, offer music content exclusively to QQ.

"Streaming is a pretty good deal because a monthly subscription costs little more than buying an album," Ng says. "With membership, fans can also watch recordings of their idols' live performances."

Musical streaming has also accelerated the trend of record companies and artists working with Internet companies to release digital albums and netcasting shows live.

Pop artists such as the Taiwan singer-songwriter Jay Chou, the mainland singer Zhou Bichang, the Hong Kong singer Jacky Cheung and the South Korean boy band Big Bang have released digital albums via QQ Music, priced at between 5 yuan and 20 yuan, and a total of more than 2.5 million copies.

Liu Xin, chief operating officer of the company Beijing Taihe Music Culture Development, says record companies used to rely on producing stars and physical records, cassettes and CDs to make money.

When those profit streams dried up, the companies turned to selling other products and services such as live shows.

His newly founded company aims to build a comprehensive platform, not just release new music for artists and holding live shows, but also offer services for independent artists and protect copyright.

"The challenge is not just to get people to pay for music again. It's also about creating a healthy business model for the industry," Liu says.

Contact the writer at chennan@chinadaily.com.cn

(China Daily USA 07/28/2015 page7)