Explainer | How did China’s digital music industry become the second largest in the world?
- Hindered for years by online piracy, China has morphed into the world’s seventh-largest music market, behind South Korea
- A decade ago, 99 per cent of China’s digital music was pirated, but now most Chinese consumers listen to licensed music – meaning they stream legally
How big is China’s music industry?
China’s music industry has grown rapidly to become one of the world’s largest over the past decade. Since breaking into the top 10 of the International Federation of the Phonographic Industry’s (IFPI’s) global rankings of music markets in 2017, it has risen to seventh place, just behind South Korea.
But in terms of revenue from digital music, China was second only to the United States with US$2 billion in sales last year, and that number is expected to exceed US$3 billion by 2024.
Globally, streaming revenue has risen a massive 3,250 per cent from US$400 million to US$13.4 billion in 10 years. This is also the trend in China, where streaming contributes to around 20 per cent of the industry’s revenue, while live performances still bring in around 70 per cent, according to analytics platform Soundcharts.
How did a clampdown on piracy create the digital music market?
In 2010, Chinese authorities launched an operation called Sword Net Action to clamp down on counterfeit goods and IP infringements. The campaign extended to illegal music distribution in 2015, when more than 2.2 million unlicensed songs were removed from the internet.
Immediately following the imposition of IP laws, operators of streaming platforms had to act quickly to acquire exclusive music rights to keep existing users and attract new consumers. It didn’t take long for the Chinese to adapt to changes in the market, which grew by 113.2 per cent in 2015, year on year.