P'gram Inks Licensing Deal With Vietnam Label

HO CHI MINH CITY, Vietnam‹State-owned Sai Gon Audio-CD and Phuong Nam Film have signed a licensing agreement with PolyGram to manufacture and distribute CDs and cassettes in this country. The move is the first direct representation of a major label in Vietnam.
The deal will allow the two companies to license original CDs, tapes, and their covers and mass-produce copies at Sai Gon Audio-CD's factory in Ho Chi Minh City, with the two companies also obtaining sole distribution rights for Vietnam.
The deal also sees PolyGram gaining rights to distribute in the U.S. and Europe CDs and tapes containing music from the two Vietnamese companies. According to Sai Gon Audio-CD, the company plans to distribute music from 10 artists in Vietnam, while Phuong Nam Film is considering nine artists, primarily from the pop/rock field.
The PolyGram license comes a little more than three months after Vietnam and the U.S. signed a copyright agreement, under which the two countries agreed to recognize and protect the intellectual property of citizens of each country. The mutual-protection treaty was brokered by U.S. Secretary of State Madeleine Albright last summer here (Billboard, July 19, 1997).
Despite this, though, pirate CDs, audiotapes, and videotapes‹primarily smuggled into Vietnam from China‹are still readily available in Hanoi and Ho Chi Minh City, with traders making no attempt to conceal them from authorities and no apparent sign of enforcement. The two Vietnamese companies declined to reveal which artists they will be bringing into Vietnam officially, though both said they would avoid duplicating the efforts of the other.
The director of Phuong Nam Film, Phan Thi Le, says, "If Sai Gon Audio-CD purchases the Carpenters, Boyz II Men, or Santana, we will concern ourselves with Abba, Elton John, and a range of Chinese songs."
The artists mentioned by Le provide a good example of the sort of music the two companies feel will appeal to local consumers. Other Western artists popular in Vietnam include Michael Bolton, the Bee Gees, Kenny Rogers, Celine Dion, the Rolling Stones, and Michael Learns To Rock.
While prices for these legally produced CDs will be considerably higher than the 25,000 dong ($1.92) charged for smuggled bootleg copies, both companies are confident that consumers will pay a premium for legal copies.
The announcement of the copyright arrangement follows the application by PolyGram in May 1997 and by EMI Music in June to enter into joint-venture arrangements with Vietnamese companies to produce and distribute legal recordings in the country.
These applications followed the opening in Ho Chi Minh City by Sai Gon Audio-CD of a $2 million computer disc and CD manufacturing system from Swiss firm Robin capable of pressing 35,000 discs a day.
When PolyGram applied to the government last year to enter into distribution arrangements in Vietnam, it also said it was considering using Vietnam as a base to produce CDs and cassettes for export to other countries.
So far, PolyGram has not pursued this plan. Though the company declines to comment on the issue, part of the problem is understood to be that any disc or tape produced in the staunchly communist country must undergo inspection by the Ministry of Culture, which charges a fee for each inspection, prior to being exported.
Attempts so far this year by the local music industry to have this requirement scrapped and have inspections only carried out on master CDs and tapes, with a general approval number being used for all subsequent copies, have been fruitless, resulting in almost no Vietnamese-produced CDs, audiotapes, or videotapes being exported.
With authorized CDs expected to retail in Ho Chi Minh City and Hanoi for the equivalent of approximately $10, a question that arises is whether people here‹in a country where the average annual wage is the equivalent of $250‹will be prepared to pay a premium for legal discs, the quality of which is virtually indistinguishable from that of Chinese pirate discs. However, with a population of 74 million to target, this country undoubtedly has the potential to provide many '70s pop/rock stars with additional royalty payments.
Last May, Frankie Chow, director of business development for PolyGram Far East, said, "It's interesting and surprising to see which artists are popular here [in Vietnam]. Vietnamese listeners don't care if it's a new song or an old song, so long as it's a good song. I think artists like the Carpenters, the Bee Gees, and Abba will prove to be most popular here. [PolyGram's licensees] are free to choose whatever they like, whatever is suitable to the market. They have started with pop music first. Later, they will make a selection of jazz and classical titles."
While PolyGram initially sees Vietnam as an inbound market, it is believed the company still has long-term plans that include signing and recording local Vietnamese artists for distribution in foreign countries. More than 2 million Vietnamese live outside the country.