This is the first of a four part series that will go over everything from Chinese tastes to distribution and promotion, all things you can do from the comforts of your living room, and we're going to begin with a conversation with Eric de Fontenay, the founder of Music Dish*China, about the recent changes in China that have made it more accessible for foreigners.
Let's start with talking about why China is suddenly a market that artists can consider entering. What's changed?
Well first of all, I would just warn artists that China is probably the most difficult market to crack, for all kinds of reasons. So while there are things that have happened in the past year that have improved the situation, and an independent music scene has been building in the last seven years, it's also early, and it's still such a fickle market to enter.
But to your question, the government is looking at entertainment and music from the perspective of growing a legitimate music market, as well as the perspective of bringing in more western products and also developing more collaboration between western and Chinese producers, artists, etc. So there's been a change of attitude in the Chinese government, but it's been backed up with a series of measures that they've been doing. They recently shut down a series of sites and, ironically, they did this using the same measures they used to make Google come into compliance with their laws, which was, “We won't give you your license." TO operate a website in China, you need to get a license from the government. What they've been doing in the last few months is they came up with a list of 68 sites, that they announced were in violation of their license agreement because they had pirated content, and a few months later they shut down, I think it was a couple dozen sites. They took away their licenses, in other words. They're also working on developing all kinds of mechanisms from developing online platforms to facilitate collaboration, instituting watermarking so they can track legitimate versus illegitimate music and also for performance fees, which they want to introduce with digital. So there's a of of things that are happening in China.
At a summer Music Dish panel on China, you also mentioned they're building industrial parks for music, which I thought was fascinating. Tell me about those.
Well, the initial opening for one of the parks...the emerging world has always had a history of creating industrial parks to foster certain industries. Maybe the most famous, successful example is Taiwan, which created an industrial park to spur research in the area of electronic semi-conductors, and now they're, I think, the leading producer of those things. So the idea is it's almost like an incubation. But this is the first time I've ever heard of this done for music, and what they're doing is they're creating industrial parks dedicated to music in three cities: Beijing, Shanghai, and Guangdong. The one in Shanghai had an initial opening on July 16 actually, and these have full, top of the line recording facilities, video/TV production facilities, mixing and mastering facilities, performance halls, and the idea is to have this as a way to entice Western artists, and expertise also—whether it's managers, producers, etc—to come to China and work with Chinese artists, and to some extent help develop those aspects of the industry. At the moment, I'd say 70% of the music in China is produced out of Taiwan. That's where most of the expertise is. They have a longer history with their music industry, much of the music industry in China's been influenced primarily by Taiwan. The whole pop scene, the super-girl, teen idol phenomenon, which is extraordinarily popular in China, that all came out, was kind of blueprinted, in Taiwan.
That ties back into what you were talking about earlier, about what makes the Chinese market so difficult to enter. Because the Chinese have basically been walled off from Western pop for over half a century. What are Chinese ears accustomed to hearing?
Just to emphasize: to me, that is the biggest challenge. All the other challenges are things that can be, over time, resolved.
The rest is mainly administrative and legal, I'd imagine?
There's a lot of that, there's a lot of building an industry too. But lots of companies that work in emerging markets know that the price of entry may be higher in some instances because of all types of barriers, that's one thing. But the question is, if your customer base isn't even attuned to your product, then that's an even bigger problem.
But what happened with Mao Zedong was basically the cultural revolution. Everything that came before was bad and evil, things from the west like rock and jazz were decadent, et cetera. The entire media landscape was not only controlled by the government, but it had one intent, which was the propagation of the government's policies, agenda, and ideology. We all know that.
In '78, Deng Xiaoping starts the reforms, what I call the New China. In the '90s, you have your first Chinese rock bands. You can count them pretty much on one hand, there were about five of them, but they actually did relatively well in China. And then you had the transfer of Hong Kong to China, which brought in access to a lot of Asian pop music and Western pop music in general. What's happened since then is the Chinese have built up their own market. Basically, a combination of what you call Mando pop, which is Mandarin pop, and also contemporary Chinese music. This is what's been developing since the '90s, and very influenced by Taiwan. Not by Western music necessarily, but more by Asian pop. So when they make pop, they're not referencing Britney Spears, although to some extent people are being influenced by Lady Gaga. Some artists have had notable impact. But they're basing more of what they do on regional pop—K-pop, J-pop are much bigger influences.
So what they don't have, and what's been developing in the last ten years, is independent, contemporary music—rock, punk, alternative, country, folk, blues—just name it, it ain't developed there. And there's a whole aspect of education that's going to come about. But the other barrier is that, if you go into Europe, you go into Germany, you're a metal band you're going into Germany, you have distribution, you're playing some shows, you can get radio to play you! You can get some press to write about you. The TV market in China is completely owned and operated by the Chinese government.
This is not to say that they don't have a lot of the same kinds of programming we do—they have comedy, romance, etc etc—it's just that it tends to focus very much on domestic market, which is really what the demand is among the people, especially when you talk about the 1 billion people out of 1.3 billion people who have access to TV, versus the 400 million that are the new middle class. It's very hard for an artist, whether it's radio, TV, or print, to be able to get any exposure at all. So it's not just the preference of the Chinese people, it's also the media market, which is very closed. And there's not very much that the Chinese government can do in the short run to change that. A lot of that is based on the demand of the people, and giving them what they want.
So it sounds like the hope for that stuff developing is going to come from the 400 million who are classified as middle class?
Well, just to give some numbers that are more concrete than trying to define what middle class is, you have 420 million people on the Internet, which is obviously significantly larger than the U.S. population. You have 800 million people on mobile, who are accessing mobile service, and out of that, 277, 280 million who are accessing the Internet through a mobile device. So that gives you the scope. You can look at, if you want, people who are accessing media beyond China, people who are better educated, who live in urban areas, and you're talking about 300, 400 million people there.
