INTERVIEW: KKBOX battles for Taiwanese market

KKBOX chief operating officer Izero Lee spoke about the company’s plans in Taiwan in an interview with ‘Taipei Times’ staff reporter Helen Ku. Although Japan is set to take over as its biggest customer, Taiwan stays a vital market for the music provider, while it has ambitions to expand further in the region and to add to the entertainment services it provides

Mon, Oct 14, 2013 - Page 14

Taipei Times (TT): How has KKBOX been doing after entering Japan’s market this summer?

Izero Lee (李明哲): With our expanded consumer base, we have seen our business continue to grow at a steady pace. Currently, KKBOX has about 10 million registered users and the majority of them are Taiwanese.

Last month, we made our debut in Thailand as the telecom network there has become more extensive than before. So far, we still have no plans for markets in South Korea and China, because competition in the former is fierce and it remains risky for us to break into the latter where too many Internet users are downloading unlicensed songs from all sorts of Web sites.

TT: Is Japan likely to replace Taiwan as KKBOX’s biggest sales source?

Lee: Japan, compared with other Asian countries, has high per-capita GDP and a market where demand for music is robust.

According to the International Federation of the Phonographic Industry’s (IFPI), Japan could replace the US as the world’s largest music market this year. It is amazing to us that Japan, a country that has only one third of the population of the US, has so many music listeners.

We expect Japan to replace Taiwan as KKBOX’s biggest sales source next year at the earliest.

TT: Last month, the digital music provider Spotify entered Taiwan’s market. How did you respond to this move?

Lee: We had been prepared to compete against any new rival for a long time. We think that, compared with Spotify or iTunes, KKBOX knows more about Asian music listeners and pays more attention to providing customized services in different markets.

KKBOX also competes with Spotify in Hong Kong, Singapore and Malaysia. While many people may think Spotify will knock KKBOX down in the intensifying music-streaming market, we hold firm confidence in our top-tier technologies and talent, our knowledge of Asian culture and Asian business models.

Step by step, KKBOX will explore new markets such as Australia and expand its customer base to catch up with Spotify.

TT: Will KKBOX go west to take on Spotify?

Lee: So far, KKBOX does not have plans to explore Western countries, at least not in the near term. In the long term, of course we will not miss any opportunity that can grow our business.

TT: Why does KKBOX publish a print music magazine every month?

Lee: In 2010, after KKBOX’s core business was on track and growing steadily, the company wondered whether to issue a monthly publication that introduces the Mandarin music industry as well as Taiwanese singers and their work.

Together with Cite Media Holding Group (城邦集團), we published the first issue of KKBOX Magazine in January of 2011.

True, the company is unlikely to make a profit from the publishing business, but we still want the magazine because KKBOX understands the value behind it.

Given Taiwan is currently the world’s largest Mandarin music market, there must be a music publication out there telling people what Mandarin music is about. That is the value we care about and why the magazine is still on the shelf.

TT: Will KKBOX continue offering services to users of BlackBerry and Nokia devices?

Lee: Yes. We will continue offering service on Windows and BlackBerry platforms to ensure different groups of mobile device users can enjoy listening to music with KKBOX.

Given Nokia and BlackBarry’s business still outperforms others in the Indonesian and Dutch markets, we think there is chance for the two companies to make a turnaround.

TT: How about your plan to launch an online ticket-booking platform next year?

Lee: KKBOX decided to jump into the market to enhance the online buying experience for people when they buy concert tickets because there is huge scope for existing ticket-booking platforms to improve their services.

Next year, KKTIX will be available for every mobile device user and it will have an intuitive user interface to let users get tickets in the shortest possible time. In addition to selling concert tickets, KKTIX will also be selling tickets for sport events, academic seminars and other entertainment shows.

TT: Does KKBOX plan to provide an online radio service?

Lee: So far, KKBOX has not seen demand for online radio services in Asian countries except Japan. I can say Asia has never been a target for Apple to sell its online radio services because Asian people are reluctant to pay to listen to the radio. Due to this cultural difference, KKBOX has not considered serving online radio services to take on Apple or Pandora.

TT: What about online movie-streaming services?

Lee: KKBOX has been considering audio or visual-related digital content-streaming services and we have even considered streaming manga online, but the hardest part is negotiating with distributors.

From our point of view, Netflix is very successful in the US and we believe the online movie-streaming market has huge growth potential. As soon as KKBOX can reach an agreement with distributors and let them know the maintenance expense is accounted for as one of KKBOX’s biggest operating costs, we may join the market.

TT: HTC is one of KKBOX’s shareholders. How do you view this struggling smartphone vendor?

Lee: I think HTC is a great company. As a global brand based in Taiwan, HTC once achieved glory, selling the world’s first Android-powered smartphone and making top-tier products in the intensifying smartphone market.

It is not easy for Taiwan-based tech companies to establish brands in the global market, but HTC made it. I think the company sets a remarkable example to other Taiwanese tech firms.

TT: Any plans for an initial public offering soon?

Lee: As KDDI Corp remains the largest shareholder to KKBOX, the Japanese telecoms operator is the one to make a final decision on whether KKBOX wants to be a listed company.

If KKBOX has plans to expand into new markets, which requires capital, we will ask KDDI for permission to raise funds from the market. Currently, the priorities for KKBOX are plans to stream manga online and make music TV programs in Taiwan.

We are also paying attention to the online movie-streaming market. We believe it will be great for Taiwanese movies to gain publicity through KKBOX because they, like Mandarin songs, show foreigners what Taiwanese culture is all about.

This interview has been condensed and edited.