By LUKE KIDSON:
Music piracy has been a growing problem in recent years due to the rise of the digital format. According to Music Rights Australia, Australia made $250 million less from physical and digital music sales in 2012 ($398 million) than it did when sales peaked in 2001 ($648 million).
The harm it causes to musicians in terms of revenue loss is there for everyone to see. On the other hand, piracy gives bands a valuable form of exposure and promotion they might not otherwise receive. Guitarist with Australian band Gyroscope, Zoran Trivic, admits there are two sides to the piracy coin.
“Illegal downloading has brought a lot of new fans to our music, but at the same time it’s hard. Being a musician is a full time profession so selling records is how I make a living,” he said.
Piracy in Australia may seem like a serious problem, but when compared to Eastern countries such as China, it is an insignificant blip on the radar. According to the 2013 report by the United States Trade Representation, piracy accounts for an estimated 99 per cent of all music downloads in China. The 2012 version of the report says total music revenue (which includes both legitimate physical and digital sales) in China for 2010 was only US$64.3 million, compared to $4.2 billion in the U.S. and US$68.9 million in Thailand – a country with less than five per cent of China’s population. So this begs the question, why is piracy so much more prevalent in China than in Western countries?
The high piracy rate is ultimately a result of a long chain of events, starting with China’s Golden Shield Project, nicknamed The Great Firewall of China. The Chinese government’s internet police force employs an estimated 50,000 people who collaborate with an additional 300,000 Communist Party members to make up the Golden Shield Project. Search engines such as Google and Yahoo aren’t accessible and social media sites including Facebook, Twitter and YouTube are either blocked or highly censored, preventing the Chinese from searching, sharing and discussing music in the same way as Western cultures do. It is this difference in the method of consumption that separates Chinese consumers from people from the United States. For example, in the US, peer-to-peer (P2P) file sharing is the dominant source of illegal music files. In the past, Chinese consumers have used their own mainstream search engines such as Baidu to search and directly download free music. This has meant that the Chinese population haven’t had any legitimate reason to purchase their music.
Because of the ease of pirating music, Chinese consumers don’t see recorded music as having much financial value. According to a journal article written by Assistant Professor of Law Jiarui Lui on music piracy in China, in 2010, “only 1.5 million out of 119 million online music users pay for music access, and only 10 out of over 700 music websites are properly authorized. 80% of Chinese consumers are only willing to pay two U.S. dollars or less per month for music and 37% are unwilling to pay any amount for music at all.”
The good news for Chinese musicians is that a landmark agreement was struck in 2011 between three international record companies and Baidu, that involved the settlement of anti-piracy litigation and a commitment by Baidu to close its infringing ‘deep links’ service. The government is also providing more vocal support for a paid model, according to the IFPI 2014 Digital Music Report. Vice Minister of the National Copyright Administration of China (NCAC), Yan Xiaohong, expressed his desire for a change in China.
“The time for paying for music in China has already come — this is not just a principle, but also a necessary practice. But what is also important is that, whichever we choose, whether it be the paid or advertising-supported model, we must make sure that rights holders are rewarded,” said Xiaohong in the IFPI 2014 Digital Report.
In China, the world of music piracy is a different ball game altogether, in terms of what they think they are doing right or wrong.
Senior lecturer in marketing at the University of Wales Trinity Saint David, Dr Antje Cockrill, has visited China and conducted a study on Western music consumption by Chinese music fans.
“Their notion of intellectual property rights is quite different to what it is in the west. There is generally no understanding that ideas (including artistic work) are something that could and should be protected. They live under the notion that once something is out there (music, film etc.) why shouldn’t they copy it?”
General manager of Music Rights Australia (MRA), Vanessa Hutley, says China’s piracy isn’t the same as it is in Western countries.
“You effectively get a cultural difference in terms of what is an acceptable level of taking someone else’s creative content, and these behaviours then become quite entrenched.”
According to a separate case study by Antje Cockrill on DVD pirating intentions, it was found that 80% of people had no perception they were doing anyone any harm.
“The problem is the perception of the music and film industries themselves. These industries are viewed by the general public as big, rich, exploitable of the artist and exploitative of the consumer. There’s a notion that even if you pay for music, that money isn’t going to the artist anyway. It’s just disappearing into this huge industry,” Cockrill said
This same perception could be attributed to Western countries as well, as Mark Thorley explains in his journal article Music industry aspirants’ attitudes to intellectual property in the digital age. The following is an example of a respondent’s answer in Thorley’s study, regarding pirating music.
“Really don’t care, almost all the artists I listen to are loaded anyway. The artists I respect which aren’t, I support by attending gigs and buying sheet music etc.”
These respondents see themselves as being qualified to choose what to pay for, based on perception not only of the product, but of the artist’s position. Thorley addresses personal interest verses the interest of the music industry.
“The music industry depends on protection and exploitation of Intellectual Property for its continued existence, whilst consumers who can enjoy music for free seem merely concerned with their own enjoyment. Each side has vested interests which they protect and exploit through their actions.”
Antje Cockrill believes price and accessibility are the two aspects of choice that dominate consumers choice.
“For Australian music fans there will always be a group of collectors who will want a nice physical package to go with the music, whether it’s vinyl or a special edition CD with a particular artwork. This demand will always be there, but it’s going to be a comparatively small group, it’s not going to be everyone who listens to music. Most people who listen to music will do it in the cheapest and most easily accessible format that they can find, whether it be in the East or the West.”
China’s desire for access to Western music can be traced back to the Dakou phenomenon which began in the late 80s, before the internet existed. Dakou (meaning ‘cut’) were tapes (and later CDs) deliberately damaged by the record companies and sent to China for dumping. These damaged tapes were salvaged by Chinese music fans, which effectively started an ‘underground’ group of people/fans who shared them with each other. Cockrill explains how they were used.
“The Dakou phenomenon was circumstantial in a way. There wasn’t a real attachment to the format that can be compared to CDs and records today. It was simply a tool for people to get access to Western music. Later on, the Dakou trend was replaced with downloading.”
Original CDs are actually quite common in China; the problem is what they cost, sometimes 10 times as much as a pirated CD.
“The problem with genuine CDs in China is they are comparatively expensive. You can effectively buy the same CD pirated only a few metres down the road for a fraction of the price. The Chinese market is a very price conscious market; they have always been like this. People don’t like to spend over the odds. For Western countries, CD’s are still relatively cheap.”
In regards to the Intellectual Property (IP) environments of China compared to Australia, the difference is quite substantial, as MRA general manager Vanessa Hutley explains.
“The Chinese IP environment is much less rigorous and therefore, wholesale infringement and counterfeiting is more ubiquitous within China than Australia. Australia still has a very high level of unlicensed use, but the actual production of that unlicensed product is not so high here as it is in China.”
Vanessa says that much of this will change in China when the Chinese become owners of IP.
“The trend in high pirating countries usually changes when their own entrepreneurial class becomes the owner of IP. Not just music but also the development of software, games and movies.”
China has made a huge effort to shore up its IP system, with new trademark laws being introduced in May this year, which not only covers a number of visual elements (words, devices, letters, numerals, colour combinations), but also sound marks as well. Partner at law firm Kangxin in Beijing, Gloria Wu, says the new trademark laws are just the start of a long road ahead, according to the World Intellectual Property Review.
“We are going in the right direction, but it will still take a long time. It will take a while for examiners to get used to the new practices and rules. The change of this law is just the beginning.”
China is already a signatory in many international trade agreements regarding Intellectual Property Rights, such as the WIPO (World Intellectual Property Organisation) Copyright Treaty. IP ownership for China seems like a gradual and ongoing process.
As for the future of music piracy in China, NCAC Vice Minister Yan Xiaohong, says the government has stepped up actions both in enforcement and promoting consumer awareness of intellectual property rights.
“Nine years ago when I started in this role, we were talking about copyright theoretically but since then dramatic changes have happened. Criminal penalties for copyright infringement have been strengthened and enforcement against illegal sites intensified,” said Xiaohong in a conversation published in the IFPI 2014 Digital Music Report.
Streaming seems to have become the dominant form of music consumption all over the world today because of its cheap and accessible nature, as Antje Cockrill explains.
“The tide has shifted again in the last couple of years as downloading is in the process of being replaced by streaming. I think it’s a continuum, which will continue as technology progresses.”
Kuwo is one of China’s leading digital music and streaming services that run a paid offering alongside it’s free streaming service. Their CEO Lei Ming says things are looking up in China, according to the IFPI 2014 Digital Music Report.
“In China the majority of people now use legal music — that’s a very good environment to be in, but the big question is how can we transfer consumers from free to paid, and how to do that without pushing users to illegal sites?”
China’s largest search engine Baidu offers a free music streaming service and a paid for option, which grants the user expanded cloud storage space and high quality larger files. These are just a few of many extras that streaming services are using to persuade the consumer to invest in their model, but the majority of consumers still choose the free option.
MRA Manager Vanessa Hutley says these digital music services are still in their early stages.
“I think it’s important to look at these services as early days, they are just beginning. Currently they also have to compete against unlicensed sites such as the Pirate Bay. It’s very hard to compete against someone who’s giving back nothing when you’re giving back something.”
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