R2G, IODA launch music service in China
Here's a value proposition for you: a subscription music service that lets you download 88 MP3s a month for a little less than $3. And you thought eMusic was a good deal.... The catch is, you have to be in China to subscribe. And in China, music fans aren't used to paying anything for MP3s.
The service, called Wawawa, is the latest in a series of efforts by music distributors and rights holders to gain a foothold into the huge but piracy-plagued Chinese market. It was launched last night by R2G, a company that heretofore had confined itself to the wholesale side of the digital music business in China, with more than a million tracks supplied by San Francisco-based indie-music distributor IODA. Although there are other online music stores in China with major-label content, such as Aigo and top100, Wawawa claims to have the largest catalog of tracks for legal downloading.
Mathew Daniel, vice president of R2G, said his company supplies licensed songs to more than 200 service providers in China, mainly for mobile-phone services such as ringtones. That's where the vast majority of the money is made on digital music in China. His company hoped that one of its customers would develop a viable music downloading service like the iTunes Store, Daniel said, but "that has not been forcoming for quite a while." So, "we decided, for the music market to progress, let's try to deliver this ourselves."
IODA head Kevin Arnold said he, too, had been looking a long time for a way to bring the thousands of artists in his company's catalog to the Chinese market. The opportunity represented by Wawawa is extraordinarily exciting, he said, but he's keeping his expectations in check. "I think of it as very experimental," Arnold said. "People are just not used to spending money there. This will be a very interesting test. I do think that the time is right, (and) the product offering is very tailored to the market."
Part of that tailoring is keeping the price low. Really, really low. "Some people may look at that and say, `That's crazy.' But you know what, it's the most sane thing that I've seen come out of China, in terms of actually having potential," Arnold said.
By eschewing DRM and providing on-demand streaming as well as liberal downloading privileges, Wawawa is emphasizing customer convenience over inventory protection. The idea, Arnold said, is to remove any of the barriers to legitimate use that might alienate subscribers. That's not to say the companies don't care about piracy -- a big part of R2G's business is anti-piracy monitoring and enforcement on behalf of music publishers (among other targets, it has sued Chinese search giant Baidu). Still, the goal is to make the service as easy to use as the search engines most Chinese music fans rely on to find and copy MP3 files illegally, then to out-compete those sites by providing better tools to discover music. "The way a search engine works," Daniel said, "you need to have prior knowledge of what you're searching for. That in itself is a limitation."
It may be a mixed blessing for IODA's artists, but downloaders who use the Chinese search sites focus on hits, not the work of lesser known indie and international musicians. "Based on a couple of surveys that we've seen, there are many people held back by their lack of knowledge of some of these artists," Daniel said. "One of the first steps is to expose them to more foreign artists.... We use some of the artists that they know as a starting point and lead them further and further into the catalog."
One IODA band eager to have a legitimate sales channel in China is Woodhands, a punky techno two-piece from Toronto that played a pair of shows in Beijing earlier this year as part of a cultural exchange sponsored by the Canadian government. Dan Werb, the keyboards half of Woodhands, said the band knew no one in China, yet the shows drew hundreds of people -- a testament to how good the support network is in Beijing for indie music. But aside from selling CDs at concerts, the band has few options for distributing its work.
"We're not supportive of people stealing our music online, but at this point it's kind of helping us," Werb said. Added Paul Banwatt, the drumming half of Woodhands, "If they're not going to buy it, I'd rather they heard it than they didn't." With Wawawa, potential fans in China will finally have a chance to pay Woodhands for their music, albeit not much. "It's a small step in the right direction," Werb said. "It's great for us. It means when we do go back there, if we're not selling CDs off the stage, we can at least keep a mark there."