Analysis

Music’s global evolution: K-Pop, China, and Eastern Europe


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The second morning at this year’s NY:LON Connect conference focused on ‘emerging international and influential markets’. Three territories in particular: South Korea, China, and Russia / Eastern Europe.

The track began with a keynote from Sun Lee, YouTube’s head of music content partnerships and subscriptions for Korea and Greater China. Lee was interviewed by Billboard K-Pop and Pop correspondent Tamar Herman.

“In 2018 it was the sixth largest market in the world, just five years ago it was tenth. You can imagine how quickly the Korean music market has grown,” said Lee, who added that thanks to K-Pop’s global popularity, exports are 37 times bigger than imports for South Korea’s music industry, with Japan and China the top markets in the former case.

Lee outlined some of the key platforms in Korea. YouTube, of course, but also the biggest audio-streaming services Melon and Genie Music, controlled respectively by internet giant Kakao and telco KT Corporation.

“They use it to acquire subscribers, and to maintain the subscribers within their services. Music is a really good driver for carriers and IT companies to grow their user bases in Korea,” said Lee.

She also talked about the development in 2018 when the Korean government raised streaming royalty rates, before explaining some of the key habits for Korean streamers.

“People really stream everywhere, on the subway, the train or the bus. That is the biggest distinguishing factor for Korean users,” she said – the reason being the fast, reliable mobile networks and data plans to match. “And Korea is a very chart-oriented country: people like to lean back and listen to what others are listening to.”

That means that charts – weekly, daily and even real-time rankings – have been the key discovery methods for many listeners. That’s a pattern that superfans have learned to make work to their idols’ advantage.

“Fans can easily push their artists to the top rank by streaming a lot, in the real-time chart,” she said. A band might release their album at midnight, to encourage their fans to stream it as heavily as possible to make it number one in the real-time chart, at a time of night where there may not be much competition.

However, Lee said that personalised recommendations, of the kind familiar on western streaming services, are now becoming a popular alternative to charts for music discovery in Korea, including on YouTube.

Lee predicted that K-Pop’s current global popularity, led by BTS and Blackpink, will only grow. Super-M and Super Junior are among the other acts building fanbases well outside Korea, and she sees more following.

“When I look at the top 25 most-watched videos on YouTube in 2018, 90% of views are from outside of Korea, so I strongly believe this kind of phenomenon will continue, and I also expect to see new names from K-Pop artists. Who will be the next BTS or Blackpink? I am so excited to see the new artists from Korea,” she said.

She praised the video-first strategies of the leading K-Pop artists, with backstage videos, dance-practice videos and other spin-offs besides the official music promos. And Lee said that new K-Pop bands from the start “look at the global audience as their target audience… they are globalising their processes”.

That can include ensuring band members have names that are easy for foreigners to pronounce, and including foreign languages in their (famously intense) training, to help on the promotional trail.

Lee also said that K-Pop bands are very savvy in their use of online video, with “very casual” livestreaming during tours one example. “Every night they come to their rooms and talk to their fans,” she said. “Their fans love it, because they feel like they are part of the artists’ daily lives. This is a big thing about the K-Pop fans. They appreciate that they are part of the journey of the band’s success, rather than just a spectator.”

Are there opportunities for international artists in the Korean market? “They are open to collaboration with international acts. I expect more and more collaboration opportunities will be coming. From YouTube’s side we are more than happy to be the bridge between the Korean artists and international artists… we hope to see more and more collaborations in the future.”

She added that K-Pop should not be underestimated in terms of its musical qualities either. “K-Pop is evolving. So far people only know they are good looking, good dancers. But I can say there are so many more genres from K-Pop artists,” she said. “I’m not sure if you have to define it as K-Pop, because if you say K-Pop you easily think about one perception about the songs and genres. We have much more genres which are evolving.”

The keynote was followed by a talk about China’s new music and tech landscape by Xiaoman Zou, co-founder of industry-services company Kanjian Music – disclosure, Kanjian is our partner for Music Ally China, which we launched last year.

She talked about some recent breakthrough artists in China, who fans flocked to not just for their music, but for their image. Her two examples illustrated the sheer scale of China’s music ecosystem.

Hua Chenyu released his new single on 4 December, and within 20 days it had earned the equivalent of $4.7m from 11m sales. A week later, Wang Yibo, an actor-turned-artist, released his new single and smashed even that record.

“He sold six million copies in just 20 minutes! That’s $2.6m in 20 minutes. Can you imagine that? It shows how crazy the kids are for a new song, and for a new idol of course. But things change very quickly back home. No song stays popular for a long time: maybe six months to one year.”

Xiaoman also talked about the dominant digital platform in China, messaging app WeChat.

“China basically lives inside WeChat now. We talk to the DSPs on WeChat, we fix problems for the releases on WeChat too. Of course we use email, but if you want to do business in China, you have to use WeChat,” she said.

Companies have to also consider the government. “No company in China is really disconnected from politics. Anyone who works with content must have all the licences,” she said.

One of Xiaoman’s slides set out the Chinese music market size: $49bn, although only 16.4% of that is digital music. Karaoke (27%), music education (22.8%), audio equipment (14.9%), music instruments (11.3%), live music (4.9%) and radio and TV music (2.2%) are also included.

She also reminded the NY:LON Connect audience that while they may know the biggest three players in the Chinese music streaming market, Tencent, NetEase and Alibaba, there are many more apps and services to which companies like Kanjian sub-license music to and get royalties from.

What does all this mean for international artists? Xiaoman talked about Finnish artist Janji, who signed directly to Kanjian for China, and who already has 130,000 followers on NetEase and 123,000 on QQ Music, compared to 41,000 on western service Spotify. He has released covers of some of his songs with Chinese lyrics, and is also collaborating with Chinese artists.

“There is indeed an opportunity for every artist who makes good music to make China a number one territory,” she said.

Making best use of China’s social media apps is key to that. “Promoting music and music artists is not easy, and although it may look even more difficult in China, it is possible. You just need to learn a bit more about China.”

The two individual sessions were followed by a panel exploring the music landscape in both countries. Columbia Records associate director of digital marketing Soy Kim; peermusic Korea GM Heesun Park; Gracenote SVP of music and auto Greg Gentschev; and Outdustry head of international Alex Taggart were the panelists, and journalist Cherie Hu the moderator.

Taggart hailed China’s development as a market capable of delivering revenues to artists and rightsholders, not just big listening numbers.

“We’ve seen a lot of improvement in the last three to five years in the rights space specifically, particularly on the masters side. Some serious conversations are happening, and some people are starting to make some good money,” he said, while predicting that it may take another couple of years for this growth to really ramp up.

“The karaoke and livestreaming market is actually misunderstood, it’s where a lot of the money is being generated, but how much of that is making its way back to rightsholders is a big question,” he added, while warning that the historic model of DSPs paying labels for exclusivity with upfront cheques rather than ongoing royalties still needs improvement.

“We’re still off the bottom of the scale in terms of per-play revenue shares. You see revenue shares that would be unthinkable in the rest of the world,” he said.

Park talked about the trends in Korea, including the way BTS’ success is fuelling healthy growth, including for collecting society takings. She also noted that Melon and Genie Music regularly invest in music labels and launch joint ventures, a role in the ecosystem that is controversial in some parts of the world, but increasingly part of the fabric in Korea.

Kim talked about marketing models for artists in Korea. “The role of celebrity and the brand is very huge. If you’re used to looking at product placements on your screen on TV in America, it’s probably someone you’ve never seen before… In Korea, a lot of those products have an artist that is attached to them,” she said.

“Everything that is advertised is really linked to a celebrity in a very different way to how we advertise in America,” she continued. But for emerging artists trying to get to that level, digital is the key. “Digital media and social channels are playing a major role… That’s how BTS really rose to the top, they were on social media 24/7, there was no barrier between them and their fans,” she said.

Kim talked about the fan power of BTS fans, who come together and push new tracks to the top of charts, and to ask Spotify and Apple for inclusion on certain playlists. “That’s unique to K-Pop bands, I’ve never received that from other fans, reaching out and pitching us on specific places they want to see their artists.”

Gentschev talked about the way curation is evolving in Korea, agreeing with the earlier suggestion that personalised recommendations, fuelled by better data on artists, music and fan habits, are becoming increasingly influential.

“Korea and China, a few years ago were a little bit behind the global trend on metadata curation for artists and enabling those types of features, but they’ve done a lot of heavy lifting on building those metadata sets,” he said. “They’re actually starting to take the lead on new ways of highlighting artists.”

The conversation ranged widely. Taggart explained how important influencer marketing is in China, compared to online ads.

“The influencer economy in China is so developed, way beyond what it is in the rest of the world. Influencers make a ton of money,” he said. “You have to approach them very very carefully, because they’re very powerful.”

K-Pop may be fuelling a music-exports boom for Korea, but China is a different kettle of fish. Taggart explained that the industry simply hasn’t seen it as a priority.

“There’s so much money for them to be made inside the Chinese market, that any moment spent thinking about outside the Chinese market, they’re losing money,” he said. “I think a lot of them could [break globally] if they took it really seriously, but there’s just such a huge opportunity cost. I think some of the new generation of artists are seeing themselves as a global artist from day one though.”

Gentschev agreed. “There’s been this long-term idea that music has been an export industry in Korea, and in China it’s been the opposite. In China I think it’s going to be about exporting the services, be it music services or social services, and the music going along with that,” he said. TikTok being the current example of a Chinese service (originally Douyin) that has become a global hit.

Taggart finished off by considering the potential for collaborations and breakthroughs, and warning that it shouldn’t just be seen as Chinese or Korean artists looking at well-developed western markets.

“I am really looking forward to the day when we’re talking about emerging artists from emerging markets breaking in other emerging markets. Nigerian artists breaking in India, Indian artists breaking in China,” he said.

russia eastern europe panel

The final session in the track moved westwards to focus on Russia and eastern Europe with panelists Jorge Brea, CEO of Symphonic; Anca Lupes, president, partner and CEO at Star Management; Konstantin Sidorkov, director of strategic communications at vKontakte; and Marek Włodarczyk, CEO of Independent Digital. The moderator was Helena Kosinski, VP global at Nielsen Music / MRC Data.

Sidorkov provided an update on vKontakte’s music growth since signing licensing deals. “We now have 2.5 million paid subscribers, which is similar to Apple Music in Russia, and also to Yandex [Music],” he said. “In general [all the Russian services] we have about eight to nine million paying subscribers now… We are very excited to work mostly with local artists.”

Włodarczyk offered some stats for Poland, which has been “switching from physical to digital rapidly” – he expects that by 2021 the market will be 60%-65% digital. Physical isn’t dying just yet though: “We’ve got a really, really strong community of hip-hop music, and hip-hop fans buying and supporting their artists, so that’s why physical is still a big amount.”

Włodarczyk said that there are more than two million people paying for a music subscription in Poland, with Spotify having 2.8 million users in the country – half paying and half on its free service.

In terms of overall listeners: “YouTube is the biggest service still, the second one is Spotify, and the third one, which is a little bit weird, is Tidal, because of a really big bundle with a mobile operator in Poland. We’ve got about 300,000 paid subscribers of Tidal.”

[In March 2016, Tidal said that it had three million subscribers globally. Even if it has maintained that number since then, that would mean that Poland accounts for 10% of its total. If it has lost subscribers, then Poland may have an even bigger share.]

“The Polish music business is growing up rapidly, and we’ve got a lot of potential still for the growth,” he added. “I presume it could be doubled in eight to ten years in Poland, the music business incomes.”

Lupes talked about Romania, which is the second biggest music market in eastern Europe after Poland. “It’s the country that bought you the ‘Numa Numa’ song!” she laughed, referring to the famous meme.

“YouTube is king in Romania, with an estimated eight million users, which is almost 40% of the country’s population,” she added. Spotify launched relatively late in Romania in 2018. “It’s estimated at 1.7 million subscribers overall, paid and free.”

Sidorkov talked about the intensely-local nature of the Russian streaming market. “Around 90% of the top 100 tracks, of the day or the month or the year, are local,” he said. Last year, Billie Eilish and Lil Nas X were the only international artists to make vKontakte’s top 30 tracks. Everyone else was Russian.

Brea said that there is potential for international artists to collaborate with artists from Russia and eastern Europe, however. “For us hip-hop is definitely the number one genre there in Russia. To know we have individuals who speak one language and work with US artists to create a record is an exciting thing,” he said.

Włodarczyk said that hip-hop has a burgeoning scene in Poland too. “The hip-hop scene in Poland is very much connected to the indie world, indie labels. Mainly the hip-hop artists don’t want to work with the major labels because they don’t feel independent enough,” he said. “We’ve got a few artists which are really amazing right now, singing in Polish language.”

Some of these artists also release tracks in English, which do well, even if they’re not as popular as the Polish-language ones with that domestic audience.

What would surprise the audience about what’s happening in these markets? Lupes cited the thriving live industry in Romania. “Romania is a country who loves international music, because in the communist era western or American music was prohibited in Romania. We’re catching up now!” There’s also a festival, Untold, in Romania that attracts 360,000 people.

Sidorkov said that some international artists play to their biggest audiences in Russia. “Imagine Dragons had their stadium show tow years ago with 65,000 people in Moscow, and it was the biggest show in their career. And it was the same situation with Hurts.” The latter play to 15,000 crowds in Russia, more than double their usual audience in the west.

He also talked about vKontakte’s own festival, which has been running for six years. It attracts 100,000 fans, with no alcohol or cigarettes allowed – matching the company’s online policies – with five music stages and an entirely-local lineup.

The panel finished up with advice to the NY:LON Connect audience about how to capitalise on the growth in these markets.

“It’s just education. Educating new artists or even established artists on how things are working outside their regions, and educating artists that are US-based on the opportunities to expand their base and revenues,” said Brea.

Lupes agreed. “We are trying to educate people: artists and managers and labels,” she said, citing the launch of a music-industry conference in Romania, which takes place in March. Mastering the Music Business.

Sidorkov hailed the opportunities when international artists don’t just release music and tour in Russia, but also use its social-media platforms – particularly vKontakte, which is essentially Russia’s Facebook.

“The best collaboration which we have is with bands like 30 Seconds to Mars, when bands start to run a page on VK, and just upload content on Russian language to the social network, start to communicate with fans,” he said. Muse, meanwhile, asked fans on the network to choose a song for them to play at a concert, and got hundreds of thousands of replies AND an increase in streams.

“Imagine if we have 97 million users every month and just 2.5 million paying subscribers [now], how interesting the next 10 years will be!” he said.

Stuart Dredge

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