Starting his record company, Modern Sky, in late 1997 as a means of promoting his own band, the last seven years have seen his venture expand from a handful of close friends to one of China’s leading private record labels.

However, he is not optimistic about the future because China's music industry is under threat from unchecked piracy and economic woes.

“It has been a lot of fun but we do not actually make any money, nobody does," he said. "We are one of the top 10 music companies and yet our primary concern is avoiding bankruptcy.”

Industry estimates place the number of pirate CDs at 93-97% of all discs sold in China. Retailing in Beijing for about $0.6, pirates are able to undercut the licensed wholesalers by at least half.

And the effect is highly debilitating.

Sluggish investment 

According to MTV’s Lisa Chen, whose company’s music videos are continually copied, artists are unable to depend on music to support them and in the end, “people will simply stop seeing music as a viable industry to work in”. 

Shen Lihui is pessimistic about
the music industry's future

The situation has got to a point, she says, where record companies are even afraid to invest in new stars.

Although China has the single largest number of potential music listeners, investment is sluggish.

At international music promoter Warner Music, strategists are taking the soft approach. Having signed only nine artists since 2000, marketing manager Huang Feng believes attitudes need to change before serious investment can be made.

“Real profits are being heavily affected but due to the scale of the problem, Warner and others do not have the budget and manpower to search out the pirates and prosecute them.

"The emphasis is on the central government to act. If they want to do something about it, it will be done.”

Retaliation

Even when record groups do retaliate, the results are limited.

According to Shen Lihui, for whom suing counterfeiters has become a second hobby, the courts bring only frustration.

“I have hired lawyers, pressed charges and won cases,” he said, “but what happens? I win back several hundred dollars in basic operational losses and the criminal goes back to work. There is no prison sentence, for them it is simply a business expense.”

Another line of attack, though, has been to outmaneuver the pirates by cutting prices and stressing quality.

“As artists we are born to complain, but in China this is a misconception. In this culture, if you create something new you are a troublemaker"

Cui Jian, Chinese rock legend

Genuine CDs now retail from $2-$4, and besides the guaranteed quality there is always something "extra" on offer to entice the consumer.

“We add posters, additional tracks, competitions, anything the pirates won’t have,” explained Huang Feng.

Uninspired music

He says the results have been positive as in-house surveys and sales figures reflects enhanced customer satisfaction, although he admits that in the long run, the difference is minimal.

The loss of sales to pirates is not just hurting profits, but is also influencing musical creativity.

With non-pop live music revenues declining 10% a year, there is a growing dichotomy between mainstream pop and alternative genres of music, as talent and money flow towards the more lucrative pop sector.

For Chinese rock legend Cui Jian, the effects on the quality of music can already be seen. 

“China is bereft of decent live music at the moment. There is nothing of value on television and people just go to sing karaoke. There is no soul left in music,” he said.

But Jian does not place all of the blame on the pirates.

Societal taboos

He says society promotes a "businessman culture" of self-serving, egotistical individuals with little interest in listening to anything but the most banal pop music.

Thus, he believes musicians have lost touch with their ability to create meaningful music.

Many believe Chinese musicians
need more creativity

In addition, with sex, drugs, politics and religion all being official taboo topics, the ability for artists to address many of the popular issues of the day have been curtailed.

“As artists we are born to complain, but in China this is a misconception. In this culture, if you create something new you are a troublemaker.

"I had thought that commercialism would help music develop by giving artists freedom to work, but in fact the reality is that the market’s taste in music sterilises artists.”

According to hip-hop artist Josh Hefferman, the same debilitating effect can be seen in industry management.

Music management 

“It is all still very chaotic. In the West, this is a billion dollar industry with relevant levels of professionalism. Here you cannot make money off record sales and this is reflected in the standards of organisation,” he said.

In the eyes of Huang Feng, local promoters leave a lot to be desired in terms of professionalism.

“At the moment there is not a single promoter able to handle a big name foreign star, they are simply too disorganised, lacking in resourcefulness and poor.”

Such disorganisation can easily be seen at major concerts where large numbers of complimentary tickets are often given out free to interested parties, fearing the venue will not be filled or be able to cover certain "expenses".

Much of these then end up in the hands of touts. At a recent international production of Verdi’s Aida, tickets with a face value of $20 were changing hands at the door for as little as a $1.

According to Cui Jian, organisers were so worried that China lacked enough Rock n' Roll fans to fill the venue that they were planning to hand out 10-20% of the tickets to “give face” to the visiting band.

“It is all still very chaotic. In the West, this is a billion dollar industry with relevant levels of professionalism. Here you cannot make money off record sales and this is reflected in the standards of organisation”

Josh Hefferman,
Hop-hop artist

Future possibilities

For some though, despite the mixed picture, the contemporary music scene continues to exude a huge potential.

At music coordinator Udo Hoffman’s office, the talk is all about "possibilities".

“What you are seeing are the very beginnings of a professional industry. People are now actively studying music management at college, international attention is turning towards China, this is an industry with a future,” he said.

This potential is already being realised at MTV where the launch of a 24-hour channel in southern China accesses 117 million households, providing a new style of music promotion for TV loving Chinese.

Reporting revenue growth of 5-7% a year, the channel has adopted the successfully proven format, seen in the US with a focus on trendy mainstream music for 15-34 year olds.

According to Hoffman, new forms of promoting music and gaining corporate and ultimately government sponsorship will be crucial to the industry's growth.

“Companies are becoming bored with the usual format of adverts. One possibility is brand association, the linking of a brand with a lifestyle,” citing MTV and his own concerts link with Volkswagen cars.