Uncertain Future Faces Many Asian Markets

"Challenging" is perhaps the most upbeat way in which one could describe conditions in the Asian music industry in 2002.

The state of the Japanese market is dealt with elsewhere on this page, but other such key regional territories as Taiwan and Malaysia continued to be devastated by piracy, which was also a major problem in the potentially vast but so far relatively undeveloped markets of India and China.

In a year during which Sony Music became the first foreign record label to launch a joint venture in China with mainland partners, everyone agrees that music culture is alive and well in the Asian region, but the music industry is still very much on the defensive here. Sony Music Asia president Richard Denekamp even suggests that in the not-too-distant future "some markets [in Asia] could become so small that it will no longer be sustainable to have a whole record-company organization there."

Reflecting the seriousness of the piracy problem in Malaysia and Taiwan, 2002 saw a number of music-industry representatives meeting top government officials in those territories to urge them to take a harder line against intellectual-property theft. The artistic community in Taiwan even held a protest march in April to pressure the country's government into action. The territory's recorded-music sales fell 13% in the first half of this year, according to the International Federation of the Phonographic Industry (IFPI), which says the piracy rate in Taiwan actually increased after the artists' protest. BMG Asia Pacific senior VP Tim Prescott says, "Clearly the pirates have moved in a lot more on domestic and regional music in the last few years."

In South Korea—Asia's biggest music market outside of Japan—the industry found itself fighting a foe its counterparts in North America and Europe are all too familiar with: an unauthorized file-sharing service. A court order in July shut down the Soribada file-swapping service, only for it to then relaunch itself as Soribada 2 at the end of August.

In July, the IFPI served three Chinese-language Web portals with warning notices requesting they cease activities that the IFPI believes infringe upon its members' copyrights. The three portals—Beijing-based sina.com and sohu.com and Hong Kong-based tom.com—offered services that enabled people to choose songs through the portals and send them to friends, who would then receive a call on their cell phone playing the song.

The same month, South Korea's music industry became the target of a sweeping government investigation into alleged bribery and corruption, focusing on allegations of chart fixing, payola, and "inappropriate lobbying" for talent.

On the personnel front, industry veteran Norman Cheng's decision to resign as chairman of Universal Music Asia Pacific at the end of June had long been expected, but Cheng's subsequent move to EMI Recorded Music Southeast Asia, where he took over as head man from Matthew Allison, came as a surprise.

To many observers, the most interesting thing about Cheng's new job at EMI was EMI Recorded Music chairman/CEO Alain Levy's use of the word "partner" in describing Cheng's role in helping EMI move into the mainland China market. Just what form that "partnership" will take remains to be seen.

Universal's top man in Asia is now Harry Hui, who in December was named by the Geneva-based World Economic Forum as one of its "global leaders for tomorrow." Hui believes the Asian music industry is in a transition period. "We have to adapt," he says. "We have to bring music to where it is being consumed. Secondly, I would say that the kinds of ups and downs that we're seeing right now are fairly normal for our industry."