Google, Record Labels Launch China Venture

Google and the major labels are working on a joint project to give China free online music. Now the trick is getting the Chinese to accept legal, ad-supported music instead of illegal, pirate-supported tunes.

It seems a lot of China’s citizens have downloaded illicit tracks. Illegal music sites have dominated that country’s Internet landscape to such an extent that some Chinese artists have refused to record any more songs unless something is done.

“This is the first really serious attempt to start monetizing online music in China,” said Lachie Rutherford, president of Warner Music Asia and regional head of the global record biz group, the International Federation of Phonographic Industries.

Google’s new service will include 1.1 million tracks, including the full catalogs of Chinese and Western music owned by Warner, EMI, Sony and Universal. The new service will be operated by Top100.cn, a 3 ½-year-old Chinese Web site partly owned by Google. The plan calls for the site to sell advertising on its download page and split revenues with music companies.

To summarize, it’s a free, advertising-supported music site operating in a communist country. What could go wrong? Well…

On this side of the Pacific Ocean, the much talked about, ad-supported SpiralFrog closed its doors in March. SpiralFrog’s business plan called for users watching advertisements in exchange for music downloads. With a debt reported to be more than $34 million, the company went dark March 19.

The new Google service in China will rely on banner ads to pay the labels, with about half of any revenue from banners going to record companies while Top100.cn gets the remainder. Google stands to benefit from increased traffic on the site, as well as selling its search ads on top of the page, according to the Wall Street Journal.

China has the world’s largest online population, and the Chinese government estimates that more than 300 million of its citizens are Internet users. Despite all those people constantly pointing and clicking, online commerce is still in its infancy in China even though most of the country’s Web surfers are looking for music, games and other forms of entertainment.

One of the sticking points for operating the new service in China is a condition that’s sure to haunt Google and the labels in the States – mainly that providers abide by Chinese censorship and withhold songs that are banned by the communist government.

“When you’re in the music business in China you know you have to follow the regulations,” said Rutherford. “We wouldn’t give files to people in China [in situations] where a song has been banned.”

Google is no stranger to what is permissible in China. The Chinese government recently prevented its citizens from accessing Google’s YouTube, and has been known to block videos considered to be critical of the government.

The new service is not China’s first online music operation. EMI launched a free streaming service with the country’s top search engine, Baidu, in 2007. The service also sells downloads for a small fee.

However, the lure of free, albeit, illicit music can be awfully strong. There have been plenty of pirate sites serving up free music in China for almost as long as that country’s citizens have had Internet access, even though the government has tried to halt their illegal commerce. So far it looks as if Google and the labels may have come up with a better mousetrap.

Kai-Fu Lee, Google’s Greater China president, told the Journal that, during the service’s testing phase, users either listened to, or downloaded, music about 1.5 million times per day. Now he hopes the number will grow to be “many, many times that.”

 

Tickets Goin’ Mobile

Three new services promise to take ticketing to the next level by delivering ducats directly to cell phones.

Ticketmaster Entertainment, Tickets.com and Canada’s Rogers Communications have each developed mobile ticketing operations for the consumer-on-the-go.
Starting this month, U.S. and Canadian BlackBerry users will be able to purchase tickets from Ticketmaster on their cell phones, according to the Wall Street Journal. Meanwhile, Tickets.com will hook up baseball fans with tickets starting with the April 10 home opener for the Oakland A’s.

Then there’s Rogers Communications and its Wireless Box Office, a new service delivering tickets for Live Nation shows to the company’s cellular customers in Canada. Clearly the days are numbered for hold-in-your-hand tickets.

Why mobile tickets?

The short answer is the smart phone, as in BlackBerries and iPhones. With more people opting for smart phones over basic mobiles, suddenly there’s a large chunk of the cellular market using their handsets for things other than making calls. With larger screens and more interactive capabilities, smart phones are just the thing for mobile e-commerce, as in buying tickets.

Furthermore, according to the Journal, mobile ticketing is just what Major League Baseball needs. With more than 81 home games on sale, the MLB is looking toward cell phones for making many of those day-of-game, last-minute sales.

For Rogers Communications customers, the procedure is simple enough. Using your cell phone’s Web browser, access the Wireless Box Office, find the concert you want to attend and buy the tickets. Moments later, a ticket will arrive in your phone’s message area.

That’s right. One ticket. Specifically, one Mobile Ticket, which represents your purchase, regardless of how many tickets you actually buy. Purchase two tickets for, say, Travis at the Sound Academy in Toronto on April 21 through the Wireless Box Office and you’ll receive one Mobile Ticket good for admitting two for the show.

Wireless Box Office users never print out a ticket. Instead, they bring their cell phones to the Rogers Preferred Ticket entrance at the venue where an agent will scan Mobile Tickets on the handhelds. Ticketmaster and Tickets.com are expected to have similar operations where neither users nor ticket takers actually touch a physical ticket.

“The challenge is not all the digital technology in delivering the ticket,” Forrester Research Chief Analyst Charles Golvin told the Wall Street Journal. “It’s getting through the gate.”