Why is China’s music market still so small?

China's Transition
China's Transition

China loves music. Nearly 75% of its 1.3-billion-strong population listens to music regularly; the country’s government even has an official (albeit bizarre) rap song!

Yet the world’s biggest economy (at least by some measures) is tiny in terms of the size of its music market, which is smaller than that of Austria or Switzerland. It’s a mere sliver of the size of the US music industry.

According to the International Federation of the Phonographic Industry (IFPI), the organization that represents the global recording industry, China ranks 19th in music market size.

Rampant piracy is the main reason China is such a bleak place for music companies. Pirated audio content is so available, accessible, and popular that the idea of buying albums or paying for streaming subscriptions can seem absurd—especially to poorer consumers. (The West has a problem with piracy, too, but not to the same extent.)

Given that resistance, and the dueling Chinese services already crowding the market, it’s especially hard for foreign companies to break in. While the IFPI calls China a country of “enormous untapped potential,” it also notes that only 10% of the market goes to non-Chinese-language music right now.

Global music companies hoping to strike gold in China are about to have an even tougher time. As per the Chinese government’s bomb-drop declaration last week that all foreign media companies will be blocked from publishing digital content in the country, any online text, audio, or video content produced abroad—starting March 10—will be in violation (link in Chinese) of national law.

While the new rules may most deeply affect news outlets like the New York Times and the Financial Times, which have invested millions in Chinese expansion in recent years, they’ll also rattle the music business.

The fates of iTunes and Apple Music, for instance—which is available in China—seem entirely up in the air. The new rules say foreign companies will be allowed to publish content if it’s pushed through a Chinese digital distributor, but such rigidity will likely lead to complicated licensing hurdles and may also deter newer, cash-strapped music ventures from attempting to nudge their way into China at all.

Read this next: Recorded music is in trouble, but live concerts are making more money than ever

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