China has long been notorious for rampant music piracy, but Beijing is now taking bigger steps to crack down on illegal online distribution.
Last week, the National Copyright Administration of China said 2.2 million songs have been removed from online music platforms in China, after the government copyright watchdog last month ordered service providers to remove unlicensed music from their platforms by the end of July.
The crackdown indicates the willingness of China's largest Internet companies – Alibaba Group Holding Ltd., Tencent Holdings ltd. and Baidu Inc. — to work with the government and clean up the online music market themselves, industry experts say. Alibaba, Tencent and Baidu all operate online music streaming businesses.
Industry experts say that major Internet firms will likely continue expanding their libraries of licensed music, while smaller online distributors that can't afford licensing deals may struggle to survive. There are more than 100 pirated music sites in China, according to industry estimates. Popularity of such sites has made it difficult for music companies to generate revenue from online distribution in China.
"There have been many crackdown attempts before, but this is the first one in which major digital service providers are actually working with the NCAC towards a shared goal." said Ed Peto, managing director of Outdustry Group, a Beijing-based music industry consultancy.
The end game is to create a landscape in which the only free music available in China is provided by legitimately licensed platforms, and those platforms will try to get more users to pay for premium subscription services, Mr. Peto said.
So far, few companies have succeeded to get Chinese consumers to pay for music, given that most Internet users have long been accustomed to free online entertainment.
Tencent, a social networks and online games company, is promoting a paid subscription service as part of its QQ Music online streaming platform. While QQ Music lets users stream most songs free of charge, some users pay for the premium Green Diamond membership, which offers higher-quality sound, members-only concerts and other perks. Still, the number of Green Diamond members account for only a single-digit percentage of all QQ Music users.