Despite piracy problems, Asia is a major market for US record label Warner Music Group because legal downloads of music are becoming more popular, the firm's chief executive, Edgar Bronfman, said yesterday.
Bronfman also announced at a music industry conference in Hong Kong that Warner Music will set up a joint venture with South Korean mobile phone operator SK Telecom Co to distribute digital music.
He said the "rebirth of our industry is not only well underway" in Asia, but the region will produce "explosive growth."
Asia boasts a vibrant local music scene and already accounts for 20 percent of worldwide music sales, a share that's expected to grow rapidly, he said.
Using China as an example, Bronfman noted, "Even here, where the piracy rate is among the highest in the world, China, including digital revenue, has grown into the second biggest legal music market in Asia."
Still, China needs to do a better job in cracking down on pirated goods, he said.
China is widely regarded as the world's top source of illegal copies of music, movies, software, designer clothes, medicines and other products. Such pirated goods are still widely available despite repeated government crackdowns.
One major area for growth in Asia is digital music, Bronfman said. In countries like South Korea and Japan, technologically advanced cellphones that play music tracks and different ring tones are common.
South Koreans spend twice the amount of money they do on CDs buying mobile phone playable music, Bronfman said.
Asia is the world's largest market for music downloaded onto mobile phones, with the market valued last year at US$2.1 billion, five times the size of the US market, said entertainment industry researcher Marcel Fenez at consulting firm Pricewaterhouse-Coopers.
He said one in three cellphones in South Korea can download music.
Announcing Warner's joint venture with Seoul-based SK Telecom, Bronfman said the project "will be able to leverage Warner expertise in the signing and development of artists with SK's telecoms strength in the digital delivery of content."
He did not say how much New York-based Warner will invest in the new venture, named WS Entertainment, or give other details.
Bronfman predicted that the shift away from CDs to digital music -- known in music industry speak as the "unbundling of the album" -- will lift, not dampen sales.
"Flexibility in what consumers can buy, the vast array of music-based products they'll be offered, the personalization of music access ... all these have the potential to drive exponential growth for music and for music-based content," he said.