Fee-Based Web Music Hits Asia. But Where Is Apple?

By | July 7, 2004 at 12:00 AM

Computer audio equipment maker Creative Technology Ltd and online music service Soundbuzz.Com launched an alliance on Tuesday aimed at capturing Asia’s infant fee-based online music market.

The two companies are setting up online music stores in Singapore, Hong Kong and India – regions where knock-off CDs burned by sophisticated piracy syndicates or downloaded off the Internet for free are hammering sales of recorded music.

Soundbuzz.Com and Creative launched the first of their online stores in Singapore on Tuesday, offering 250,000 songs at $1.16 each in a format designed for quick downloading into Creative’s digital music players.

“We’ve all been through the huge CD-burning mania of the past. What has clearly emerged over the last 12 to 18 months is that the method of consumption of music is changing,” said Sudhanshu Sarronwala, chief executive of five-year-old Soundbuzz.

“It’s very much portable device-led. That’s really the future of consumption of music,” Sarronwala, a former managing director of MTV Networks Asia, told Reuters.

The idea closely resembles Apple Computer Inc.’s iTunes online music store, where users download songs at a price on to Apple’s popular iPod digital music player in services available only in the United States and Europe.

Sony Corp. entered the fray last week, launching a Walkman digital music player. Singapore-based Creative will soon sell a 20-gigabyte “Zen Touch” media player equipped with a function for transferring songs from Soundbuzz.Com stores.

But while competition is brutal in the European and North American online music download markets, fee-based services are virtually non-existent in Asia. Few Asian music labels are willing to release digitized music, often fearing piracy.

Apple has yet to announce plans for an Asian iTunes online music store, while Sony said on Tuesday it had no plan to build an Asian version of its “Connect” music stores, although it sells some music online through a PlanetMG.com site in Singapore.

But music labels are clamoring for growth in a region dominated by music piracy syndicates.


Sarronwala said he expected Singapore, a wealthy, tech-savvy island of four million people, to download 300,000 to 500,000 songs annually – a market worth as much as S$1 million a year.

He said he planned to launch a similar service in India and Hong Kong this year, estimating Hong Kong’s 6.8 million people would download about a million songs a year. India could be about twice the size of Hong Kong’s market within two years, he said.

“Like the rest of the region, licensing has just become a reality pretty recently in India,” he said.

Taiwan and China would wait, he said. Taiwan accounts for 80 percent of Mandarin-language music sales worldwide but half of all music sold in the past two years was pirated, while nine of every 10 recordings in China were fakes, industry data showed.

Sarronwala said the start of Taiwan’s fee-based online music market could be delayed by two years as the music industry battles in court with so-called peer-to-peer networks, where surfers can download an entire 10-track album in 15 minutes.

Uncertainty over pricing is delaying services in China. The price of each song would need to be about 25 percent below other Asian markets, he said. “The music industry is very, very keen to see whether a legitimate digital market can be created there.”

Asian 2003 music sales slid 9.8 percent to $5.8 billion, a fifth of the world’s total and outpacing a fall of 7.6 percent globally, data from the International Federation of the Phonographic Industry (IFPI) shows.

Soundbuzz.Com, which operates in Australia through a relationship with telephone company Telstra Corp., plans to bill customers through Internet Service Providers rather than credit cards, hoping the easier form of billing will spur growth.

“We have to find a credit-card alternative for these services to really take off,” said Sarronwala.

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