In my day as a teenager, record stores and radio DJs were extremely influential social institutions. They were so central to what we ended up listening to, or where we would gather to rub shoulders and shoot the breeze with our fellow punk, skin head, ska, reggae tribe members. And indeed, they were important trend hubs.
That was then, but this is now, and this is China. Here, teens in Beijing, Shanghai and Guangzhou are much more likely to have downloaded music from the internet (60%) than have purchased music from a record store (38%). What makes this revelation even more staggering is that penetration of PCs is still far from universal amongst this age group, where approximately two thirds have a PC in their home.
A remark often heard in the past, “They’re playing our song,” will definitely be a comment confined to the pages of history, much like the term LP has slipped into the jargon of folklore now. Radio will never make its mark felt in China among the teens; not when only four percent of 15-19 year olds in the trend hub cities prefer this medium to listening to music. Instead, digital music is king. Three quarters prefer this format, either courtesy of their MP3 or their PC.
But earning money from this situation is a different story. While three out of every five teenagers in China's most modern cities have downloaded music from the internet, only 14% have ever paid for it. However, in all fairness, this is quite difficult. They are too young to be issued a credit card, and PayPal is only just starting out here. Interestingly, even among those who own a credit card, and thus have a viable means of paying for items acquired over the ether, less than a quarter of 25-34 year-olds who have downloaded music from the internet have actually paid for it either.
But all is not lost for the owners of music equity. Consider this: Nearly nine out of every ten passionate, music-loving teens in major Chinese cities wish that the music industry would work more closely with telecoms companies to deliver music via mobile phones.
What a solution! In one major move, so many problems solved. Teens have a channel that they themselves want to use. From the money angle, it is much easier to collect funds for the music that is downloaded, as song download charges just get added to the monthly mobile phone bill.
And what a major coup it would be for distribution, access to the teen market. Mobile phone penetration remains very, very high even into second-tier cities, mainly China's provincial capitals, where it is holding steady at about 80%. Meanwhile, PC penetration in homes, the other source for digital, drops to approximately one third.
Darryl Andrew is the Shanghai-based managing director of Synovate, an Aegis-owned market research company based in Hong Kong.