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Business News (more headlines) 03-08-2017

Japan-based Entertainment Management Firm Avex Group Rediscovers Mainland China Market

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Japanese entertainment firm Avex Group Holdings Inc. and leading Chinese digital music platform NetEase Cloud Music jointly announced the signing of an agreement forming a strategic partnership that grants the Chinese platform an exclusive license in mainland China to the copyright of the entire inventory of Japanese songs under Avex's management. The agreement calls for NetEase Cloud Music to handle the distribution and promotion of the Avex collection of music in the mainland Chinese market, placing NetEase Cloud Music in the position of being the platform with the largest collection of copyright-protected Japanese music in the country. The move signals Avex's reentry into the market after a six-year hiatus.

Avex decided to return to this important market on the heels of the success of the efforts on behalf of China's regulator, the National Copyright Administration of China (NCAC), to bring order to a market that had been a flagrant violator.

Avex Group, the holding company for a group of entertainment-related subsidiaries based in Japan, is the largest of its kind in the country as well as one of the biggest independent record companies worldwide. The entertainment firm has dominated the Japanese market in terms of record sales for years and manages many of the country's leading acts, including Ayumi Hamasaki, Every Little Thing, Koda Kumi, Ai Otsuka, AAA and the Wagakki Band. Avex firm first set up an office in Taiwan as early as 1998, when it planned its first formal entry into the Chinese market, followed by an office in Shanghai. Six years ago Avex retreated from the market when it found itself no longer able to deal with the rampant pirating of music on the internet.

The partnership between NetEase Cloud Music and Avex sets a precedent for the importation of Japanese music into China on a large scale. Chinese online music platforms had been struggling with what they could offer in terms of Japanese music with proper copyright protections, resulting in fans of the music remaining dissatisfied with what was available.

NetEase Cloud Music's track record was one of the big factors that led to them being selected as Avex's exclusive copyright agent in China. Since going live in April 2013, Netease Cloud Music has built up a fan base of 200 million users and become one of the top three online music platforms in China. In addition, with more than 200 million play lists created by fans and 400 million user-generated reviews, Netease Cloud Music has developed an enviable reputation coupled with a social framework centered around the music, making it easy for fans to share their enthusiasm for their preferred songs. The site has been named as "China's best platform for music promotion".

The increasing demand for Japanese music on NetEase Cloud Music as well as the managerial competence of the staff also played a role in leading Avex to choose the platform as their partner. According to usage data from the platform, there has been a considerable increase in the number of times a Japanese song has been streamed, especially songs associated with Japanese animation, comics and games (ACG), with the number of music streams from Japan increasing 80% over the previous year, while ACG-related music saw its streams soar a whopping 280%. Among these users, it is mainly the youth segment that dominates, especially fans born after 1990.

After an absence of many years, Avex sees in NetEase Cloud Music a partner that can help accelerate the Japanese firm's return to and expansion into the mainland China market.

In contrast to the environment of just a few years ago, users now expect to pay for the music they listen to. The social media tools that NetEase Cloud Music offers and that allows fans to get in touch with like-minded audiophiles further enhances their willingness to be a paying customer. In 2016 nine times as many fans paid for a membership on the platform as compared to the previous year. The number of users who bought a digital albums jumped 7 times while the average amount of time that a user spent on the platform daily moved up to 1.5 hours. During the year, several albums racked up sales surpassing one million yuan, including "Jay Chou's Bedtime Stories" by Chinese pop singer Jay Chou, "Unable to Grow up" by balladeer singer Zhao Lei, "Through Every Sad Street" by Li Zhi and "Reams of Dream" by Chen Li, quite a feat in a music market that is just beginning to experience the first stirrings of a turn around.

The newfound respect for copyright and the willingness to pay for access to music, two elements of the new environment that have been cultivated by platforms including NetEase Cloud Music, has opened the door and created opportunities for music companies like Avex. As for the fans of foreign music in China, the importation of music from overseas with copyright protection can only serve to enrich their music listening experiences.

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