Bmg Looks For Net Gains In Asia

PERTH, Australia-Memories of 1997's Asian economic meltdown are fading to a twilight memory in some of the region's territories at the dawn of the Chinese Year of the Dragon-a time for positive thoughts and change, according to those in the prediction business.
Michael Smellie, senior VP of BMG Entertainment International's Asia-Pacific Regional Office (APRO), certainly emphasized that attitude at the APRO Half Year Review, held Jan. 18-21 at Swan Valley resort, near Perth on Australia's west coast.
Growth in the region between July and December 1999 was "substantially better" than in the same period in 1998, Smellie told a gathering of 35 regional managing directors and financial controllers. But the priority for APRO in the second half of the financial year is to aggressively expand market share and use the Internet in every possible aspect of the company's business to minimize operating and delivery costs.
"We clearly have a changing landscape," Smellie warned. "The market is changing dramatically, and not just in a corporate sense. Consumer behavior is changing. I believe the market will fragment further and further."
He told the assembled executives, "I can guarantee you we cannot achieve market-share gains with the right level of expenditure if we do marketing by numbers."
The Asia-Pacific region accounts for 10% of BMG's global sales. Japan was the company's strongest performer in the region during the period, followed by Australia and South Africa. In recent years, BMG has cut its local roster in Japan from 160 to 35 acts and halved its staff to 300. It had a 9% profit rise in July to December 1999. Its performance was aided by two No. 1 albums in December by domestic acts: female R&B/pop vocalist Misha and male soul singer Fukuyama, each of whom sold a million units in Japan.
While acknowledging Japan's performance as outstanding, Smellie claimed that overall, profits rose across the region. The company does, however, still face problems in its Pan-Chinese region, consisting of Taiwan, China, and Hong Kong. Sales in the Hong Kong market have fallen dramatically, with International Federation of the Phonographic Industry (IFPI) figures citing shipments of domestic repertoire down 50% from 1997 levels. Elsewhere, last year's Taiwanese earthquake in Taiwan wiped out a month of sales, and piracy continues to be rampant in the region. According to IFPI figures, pirated product accounts for 50% of sales in China, Hong Kong, and Malaysia.
The recurring themes of the review were A&R, marketing, and efficiency. Following significant steps in consolidation, first with the Pan-Chinese region and then in Malaysia and Singapore, there has been speculation that Australia and New Zealand will share some operational costs in the future. According to Smellie, APRO's prime concerns for the second half of 1999/2000 are to keep working the big sellers of the first half and to integrate the Internet throughout its business.
Strong sales from international acts during the period were led by Santana and Westlife; the former is set to tour Japan April 22-27. Hidehiko Tashiro, president of BMG Japan, says there are plans for the veteran guitarist to record with an undisclosed BMG Japanese act during his visit. February/March visits to the region by TLC, Christina Aguilera, and U.S. teen act Gil are expected to bolster sales in the first quarter of 2000. The company also has high expectations for upcoming releases by longtime local favorites Whitney Houston, Five, and Toni Braxton.
Local A&R remains a strong provider of catalog. "It's buoyant in Japan right now," Jack Matsumura, managing director of BMG Japan's international divisions, told Billboard. "There are between 40 to 50 nightspots in Tokyo alone, and some great music is coming out of these."
BMG Australia is launching four new priority acts this year: guitar-rock band Oblivia (which showcased at the meeting), former Southern Suns singer Jack Jones, 17-year-old R&B singer Lydia, and soulful trip-hopper Guvan. "These are strong acts which we're excited about," says BMG Australia managing director Tim Prescott.
The second half of the year for APRO will see BMG increasingly involved with digital downloads, building relationships with online retailers and broadcasters, and teaming with new partners on technological and marketing solutions. Japan, Korea, Australia, and Malaysia/Singapore have already taken significant steps in incorporating the Internet in daily business.
"It'd be safe to say that in these territories, our Internet presence today is far superior to that of any of our immediate opposition," Smellie says.