Asia at the Cutting Edge?

Berkman Center Lunchtime Talk SeriesMay 29, 2006

Eric Priest, Berkman Fellow© 2006 Eric Priest

“Today, Asia leads the world in so many aspects of digital technology that it is no exaggeration at all to say the whole world is now watching you . . ., and we all have a great deal to learn from the experience.”

- John Smith, CEO, BBC Worldwide, CASBAA 2006

Why all the excitement?

Much revolves around the high rate of technology adoption Asian economies/consumers fully embraced digital South Korea: broadband in 62% of households China: 400 million mobile subscribers; 65 million broadband

subscribers 20% of mobile revenue is generated from

entertainment

Piracy

Mobile distribution all the rage

Monetizable! “Hip” factor Massive customer base Secure, established billing

Personalization Ringtones Ring back tones Mastertones

Enables the re-monetization of a song

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Source: Jay Kim, WiderThan (Music Matters Asia 2006 PowerPoint Presentation)

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Global File Sharers (in millions)US File Sharers (in millions)

Source: Digital Music News/BigChampagne

Chinese entertainment co’s competing with online piracy Taihe Rye Music

Only sell music from most popular singers

Deal with search engines: 2 week head start

Lots of value-adds (art, lyrics, karaoke version)

Hook the hard core fans Partner with artist, bundle

music products + services

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Chinese entertainment co’s competing with online piracy

Jingwen Records Create popular music portal (Koook.com)

Promote artists and encourage user

submissions

Catalog of 20,000 user-submitted songs

The internet: user-created content

The Back Dorm Boys!QuickTime™ and aSorenson Video 3 decompressorare needed to see this picture.

Song of Pig - Over 1 Billion ServedPig, you have two holes on

your nose, when you catch cold, you are snorting

Pig, you have black eyes which we cannot see beyond;

Pig, you have two big ears, and you cannot hear that I'm cursing you silly

Pig, you have a curling tail which you cannot run without

Pig head, pig brain, pig body and pig tail, you are a good baby who eats everything

Every day you won't wake up till noon,and you never brush your teeth and you never fight

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The internet as source of alternative media

Hu Ge: The Case of the Steamed Bun Murder

How is Asia at the digital cutting edge? Unbundling digital rights Blurring the line between content creator and

consumer Video Music Blogs

Flexibility/adaptability in business model Multiple revenue sources Avoid tragedy of the anticommons - retain more rights Facilitate licensing Cultivate the hard core fan Piracy as promotion

How is Asia at the digital cutting edge? Have really monetized the consumer

“expression” factor Convergence with other forms of online

entertainment (i.e., gaming) Artists taking control; moving straight to

deals w/ distributors Cultivating the hard-core fans (build a

sustainable business model on the 1/3 of fans that will pay)

Concerns with the emerging Asian model? Extremely hits-centric

Long Tail left on the table (except for Karaoke - maybe)

“Phones Matter, but does music?” - Highly technology-focused Distribution focused

Are various digital revenue sources sustainable?

In what ways is Asia behind?

Value adds Searchability Recommendation engines Mobile sphere vs. online sphere

Lack of differentiation between SPs/lack of supporting technologies

Monetizing the digital Long Tail Content-based social networking Interoperability

Anything the West can learn?

Flexibility - let market conditions dictate business models (facilitate, not control)

Embrace user-created content Bundling - products + services Be aggressive about experimenting

with alternative business models Don’t fear digital!