Music in China Business Model: Life Without Oxygen Possible?

6 articles to go: IP Dragon on its way to its 1000th article

NASA discovered that life can exist even without the 6 building blocks that were presumed crucial; carbon, hydrogen, nitrogen, oxygen, phosphorus and sulfur, read here. In the same vain the music industry thought for a long time that their only way of survival was selling songs. But the digital revolution sucked this oxygen out of their business model. Good news for them is that life can still exist, even without seeming crucial building blocks. If paying for songs does not work anymore, it can be substituted with free songs plus advertising on the side. Just as some life can exist without oxygen, and as NASA just found out even without phosporous if it is substituted by arsenic.

Top100.cn is trying to survive in the most "toxic" (because hardly any customer wants to pay for songs) and competitive (Baidu is its formidable competitor) business environments in the world.

Top100.cn is also experimenting with charging for:

• selection of music, with recommendations and links;
• a subscription for cloud service, so that you can access music on different devices.

In Spock's words: "It's life Jim, but not as we know it." The music industry could take an example to the astrobiologists who now realise that their search should be much more comprehensive in order to achieve their goal.

Read The Economist article here.

Thank you Mikołaj Rogowski, former guest columnist of IP Dragon, for pointing to the Economist aricle and Hans Klaufus to the NASA press release.

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Giving Away Music For Free to Destroy Copyright Piracy: Operation Success, Patient Dead?

Google is trying to get a bit closer to Baidu, the number one search engine in China. Therefore it is offering the users of google.cn free music downloads. It is legal, because all copyright holders have given permission.

Murad Ahmed of the Times Online wrote:

"The service is supported by 140 record labels, including the big four (Warner Music, Universal, EMO, Sony BMG), and will earn revenue from advertising on pages that let Chinese web users download or stream licensed music – 350,000 tracks are already available, with plans to have more than a million tracks within a few months. Warner Music said that it would make its entire global catalogue available as part of the deal." Read Mr Ahmed's article here.

Advertising seems to be the only feasible business model on the internet that has emerged and the music industry also wants to give it a try. The music industry might have realised that (to paraphrase Professor Lawrence Lessig in his excellent book Free Culture) to criminalise a whole generation is not the way to go forward.

There is no question about whether this business model decreases the urge to pirate copyrights, but the question is whether the music industry can survive this way. Is it a good idea, or will this turn out to be "operation succeeded, patient died"? 

What do you think?

UPDATE1:

Also listen to/read the interview of Bob Garfield of On the Media with Greg Kot, author of the upcoming book 'Ripped: How the Wired Generation Revolutionized Music'. 

Thanks for pointing out this interview Ron Yu of novacourses.com

UPDATE2:

Mira Veda wrote a nice article for the Huffington Post about it called 'Pirates Stealing Music in China ... US ... Everywhere', don't forget to read the commentaries below Ms Veda's article.

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In South Korea Warner Bros First Releases Movies Online, Then Launches DVDs, China Could Be Next

In April 2006 IP Dragon blogged about Warner Brothers dropping its price substantially as a new business strategy in China, read more here. Now it is experimenting in South Korea with releasing movies online first and then launching the sale of DVDs. China could be next.

Mr Jacqui Cheng of Ars Technica wrote an article based on an article by Matthew Garrahan for the Financial Times:

"[..] China could be ripe for online distribution as more of the country gets access to broadband. Warner Bros. has already changed its distribution strategy in China by offering legit DVDs at prices comparable to what pirates charge for illicit discs. In fact, this is a tactic that Warner China (a joint venture between Warner Bros., China Film Group, and Hengdian Group), Paramount and Fox are trying as well."

Read Mr Cheng's article here.

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Microsoft Starts Selling 3 $ Starter Editions to Governments and Students in China

Jack Schofield reports for the Guardian Unlimited about Microsofts offer to Chinese governements and students to buy a stripped down version of Windows XP (Starter Edition) and Office (Home and Student 2007) for 3 US dollar.

Schofield asserts that piracy has been good for Microsoft in the sense that is has cut out a market for them. Microsoft has decided that it is time for them to start harvesting. 3 US dollar is relatively cheap, compared to the 100-500 US dollar users in the West have to pay for normal versions of Windows XP and Office. This volume low margin strategy might work if the legitimate offer satisfies the former users of pirated software, because of the increased safety due to online updates that are possible.

Read Schofields article here.

Microsoft's other China strategy against piracy is to sell pre-installed software, read more here.

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