The music industry needs to obtain more revenue from karaoke royalties and radio stations in China to offset losses to piracy, the head of an industry association said yesterday.
"The new business model is built on the diversification of revenue streams," International Federation of the Phonographic Industry (IFPI) chief executive John Kennedy said at a music industry conference in Hong Kong.
Revenue from CD sales still represents a big chunk of the industry's overall earnings, but its share is decreasing, and record companies need to branch out into digital music, radio and karaoke royalties, especially in China, Kennedy said.
He said the industry was "enormously underpaid" by radio stations for the use of music and that in the US, excluding digital broadcasters, "a major league music station doesn't pay anything."
The lobbyist said if the industry can get royalties from radio play in the US it would gain "many" hundreds of millions of dollars of revenue -- and that it is seeking to do the same in China.
Kennedy said the industry has secured a deal that requires karaoke bars to pay royalties for the use of music videos. He said fees averaged US$1.30 per day per room, with an estimated 50,000 karaoke bars in China.
Digital music is also a promising field, with a predicted US$3.1 billion digital business this year from the Internet and mobile phones, a 45 percent surge from the previous year, Kennedy said.
However, he said record companies aren't cashing in on the boom enough, pointing out that China Mobile, the world's largest mobile carrier by subscribers, earns US$1 billion in revenue from music but that the music industry pockets less than 5 percent of that figure.
IFPI, which represents the recording industry worldwide, estimated that sales of pirated music products worldwide were worth US$4.5 billion in 2005 and that nearly 20 billion songs were illegally downloaded that year.
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