Warner Music China dials up new market with mobile pact http://today.reuters.com/news/newsArticle.aspx?type=musicNews&storyID=2006-06-24T022702Z_01_N23278772_RTRIDST_0_MUSIC-WARNER-DC.XML&archived=False
Fri Jun 23, 2006
By Steve McClure
TOKYO (Billboard) - As it continues to roll out its international digital strategy, Warner Music has struck a milestone agreement to tap into the world's most populous market.
Warner Music China on June 20 disclosed a deal with China Unicom that gives the mobile operator's 130 million subscribers direct access to the music major's digitized catalog.
Warner claims it is the first of its rivals to enter a direct, catalog-wide content pact in China, a country with an estimated 1.3 billion population. The major will make available recordings as master ringtones and ringback tones, and will offer artist greetings featuring its acts via China Unicom's CDMA and GSM networks. Content will be drawn from a pool of regional acts, including Stefanie Sun, Tanya Chua, A-Mei and F.I.R. (Taiwan), Wang Jing and Paul Wong (China), Jocie Guo (Singapore), Nicholas Zhang (Malaysia) and Fiona Sit (Hong Kong).
Executives at Warner describe the pact as a key step in their global digital plan. "It is totally part of a comprehensive, cohesive strategy," says Alex Zubillaga, executive vice president of digital strategy and business development at Warner Music Group (WMG).
REGIONAL MOVES
In recent months, the music giant has ramped up its digital activities in Asia. On June 6, Warner purchased a minority stake in Tokyo-based mobile-broadcaster and wireless-application developer FrontMedia. That followed Warner's May 10 announcement of a joint venture with South Korea's SK Telecom.
Reaction to the new deal within the region has been generally positive. "It makes sense because it takes away a lot of the doubt of working with a service provider," says Ashley Whitfield, managing director of Hong Kong-based entertainment company Evolution. "It gives (Warner) much greater control of their content. Everyone would love to make this kind of deal."
One industry source notes that, besides giving labels access to millions of mobile subscribers, such label-telecom agreements enable record companies to insist that transparent accounting procedures are followed -- which is not always the case in China.
"Warner is, among the majors, the clear market and vision leader in terms of innovation in digital and mobile product mix, creative partnering and deal-making, and focus on Asia," says Rick Myers, Shanghai-based director of strategic entertainment agency Dragonfly Revolution. "The Warner-Unicom deal is going to break real new ground in China."
Sudhanshu Sarronwala, CEO of Singapore-based digital music services provider Soundbuzz, sees the pact as part of a global trend. Similar deals have been "happening around the world for the past two to three years, and specifically in Asia in markets like India, Australia, Hong Kong and Singapore."
Universal Music South East Asia launched a similar but lower-profile On Da Move service in November 2005 with China Mobile, whose 260 million subscribers make it the territory's biggest mobile operator. Industry observers note that, unlike the Warner China-Unicom agreement, the Universal deal involved third parties such as content aggregators.
MOBILE LEADER
China's digital music business is, like the country's economy, on the move. The legitimate digital music market in 2004 reached 2.49 billion yuan ($311.4 million), according to Beijing-based research firm Analysis International. That figure is expected to rise to 14.55 billion yuan ($1.8 billion) in 2008. In its 2006 Digital Music Report, the IFPI identifies Asia as the mobile music market leader, with the region accounting for half of all mobile subscriptions in 2005.
Zubillaga says that the Edgar Bronfman Jr.-led consortium that took over WMG in 2003 has always been "a big believer" in digital music distribution, "especially in Asia, where we had suffered from both physical and online piracy."
Warner will likely announce similar deals in the future, Zubillaga adds. "This is not a cookie-cutter approach," he stresses. "We'll set up deals market by market, depending on local circumstances."
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