According to a 2019 report from the International Federation of the Phonographic Industry (IFPI), China is now the seventh-biggest music market in the world, with total sales of more than 374.7 billion yuan ($58 billion) the previous year. Despite this, China’s recorded music revenues are disproportionately small, even when compared to much less populous countries.
These low revenues reflect many factors, including the low fees paid to rights holders (typically music labels and publishers), a low adoption rate of the subscription model, but perhaps most crucially, the historically weak copyright environment in China’s modern era. A poor copyright environment created opportunities for non-music companies to enter the digital music space.
China is often cited as a country plagued with rampant copyright infringement, both online and offline. Under the 2020 draft amendment, a new article would give sound recording copyright owners a further neighboring right, being a right of remuneration when recordings are transmitted by wired or wireless means or communicated to the public by audio communication technology. The existing streaming remuneration right would remain.
One notable instance was the creation of the Alliance of Digital Music Industry, formed in July of 2011, by China’s Ministry of Culture. This group is comprised of nine music companies, thirteen websites, and three wireless operators, all committed to abide by new Chinese laws and regulations designed for content providers such as Labels and Service Providers, to more easily negotiate price and profit-sharing mechanisms.
On April 7, 2007, Beijing’s No. 1 Intermediate People’s Court made the decision to allow suits to be brought against two of China’s leading search engines, Baidu and Sogou. Sogou is the music service of the Web portal Sohu. The International Federation of the Phonographic Industry will represent Universal Music, Sony BMG Music Entertainment (Hong Kong) and Warner Music Hong Kong in a suit against Baidu. Gold Label Entertainment Ltd., backed by EMI Group Ltd., is also bringing a suit against Sogou as well. The music-industry lawsuits claim $9 million in damages against Baidu and $7.5 million against Sogou. The lawsuit against Baidu is based on 127 copyright music tracks, which are just a small representative sample of the wider infringement.
While the West has blamed China’s central government for its failure to eliminate the problem, the Chinese government believes it is not obligated to protect the interests of private parties with the same urgency with which it protect its own interests. China has employed gradual reforms, while performing occasional campaigns against infringers in response to pressure from foreign and domestic copyright owners.
It has to be noted, that weak IP protection in China is not necessarily a growth obstacle to commercial hubs. While for the aforementioned reasons financial centers in mainland China may be negatively affected, their host country may actually benefit from intellectual property rights not being fully enforced The development of the music industry in China has taken a new road. China is facing a very significant task of updating its copyright laws for the 21st century in order to achieve country’s respective social, economic, and cultural goals.