Digital sales not enough as users increasingly get music fix online Media Eye

By Frederick Yeung
© South China Morning Post Publishers Limited, Hong Kong

Digital music sales in Hong Kong have doubled over the past two years as recording companies cash in on tunes delivered through music portals or mobile phone downloads.

But the boost in digital revenue is still a long way off recovering losses from traditional record sales, with pirated music still dominating the virtual world. Internet users can easily download music files from discussion forums without paying copyright owners.

Digital music accounted for 10.4 per cent of Hong Kong music sales last year, up from 7 per cent in 2006. Digital sales have grown 99.7 per cent over the past two years, according to the International Federation of the Phonographic Industry (Hong Kong Group).

Despite growth in legitimate digital sales, the industry is still struggling with illegal downloads. Industry data shows that global record sales in 2006 dropped 38 per cent. In Hong Kong, sales fell to about HK$600 million last year, down from more than HK$2.1 billion in 1996.

Harnessing the increasing popularity of subscription-based services is seen as one way for publishers to gather new revenue streams.

In Hong Kong, users pay a fixed monthly tariff to have unlimited access to music libraries provided by service operators such as PCCW and SmarTone-Vodafone.

PCCW’s Moov service, which was launched in 2006, is now open to subscribers of other broadband service providers.

“Moov now partners with 90 record labels, up from only 20 when we launched two years ago,” Janice Lee, an executive vice-president at PCCW, told Media Eye yesterday. “Music publishers recognise that digital trends can help their business.”

TVB beams into new territory

Television Broadcasts, the city’s largest television broadcaster, has entered the non-Chinese speaking market with the launch of TVB Korea. The channel will be run in partnership with cable television operator Central Multi Broadcasting (CMB) of South Korea.

TVB will provide CMB with programming dubbed into Korean.

TVB Korea is one of 85 channels offered by CMB, which reaches more than 9 million cable users in Korea.

Advertising growth to slow

With the United States financial sector in turmoil, the Asia-Pacific media market is expected to face a tough advertising market in the second half of the year and into next year.

Media Partners Asia said the advertising market in the region was likely to expand at an annual compound growth rate of about 5.3 per cent between 2008 and 2013 against 6.5 per cent last year.

A reduction in economic growth due to high oil prices and inflation would hit the advertising market more visibly next year, it said.

The mainland and India will lead earnings growth in the industry over the next three years, while digital and outdoor media will be the growth engines among all media platforms by 2010.

The mainland market is expected to deliver 11.8 per cent compound average growth rates over the next five years, while India could grow by 11.4 per cent. This will outperform other media markets such as Hong Kong, Taiwan and Singapore, where growth is tipped to be in the low single digits.