2019-01 Digital Online Music in China

CREATe Working Paper 2019/01 (Feb 2019)
Digital online music in China – a

“laboratory” for business
experiment
Authors
Shen, X Williams, R
Zheng, S Li, Y
Liu, Y Gerst, M
CREATe Working Paper Series 10.5281/zenodo.2590553.
This release was supported by the RCUK funded Centre for Copyright and New Business Models in the
Creative Economy (CREATe), AHRC Grant Number AH/K000179/1.
Edinburgh Research Explorer
Digital online music in China – a “laboratory” for business

experiment
Citation for published version:

Shen, X, Williams, R, Zheng, S, Li, Y, Liu, Y & Gerst, M 2018, 'Digital online music in China – a “laboratory”
for business experiment' Technological Forecasting and Social Change.
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Technological Forecasting and Social Change
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Download date: 31. Oct. 2018

Digital Music China Revision. October 2018
Digital online music in China – a “laboratory” for business

experiment
Xiaobai Shen1 and Robin Williams2, Shufeng Zheng3, Yinliang Liu4, Yixiao Li5, and
Martina Gerst6
Acknowledgement
The research on which this paper is based was funded by the AHRC China Digital
Copyright Centre, the Newton Fund and the RCUK Research Centre for Copyright
and New Business Models in the Creative Economy (CREATe). We would like to
thank Prof Charles Baden Fuller, Prof Neil Pollock and Dr Hyojung Sun for helpful
feedback on earlier drafts.
Abstract
The digitisation of music and other creative industries has followed a
dramatically different trajectory in China, patterned by its distinctive historical
and institutional context. In contrast to the West, where established intellectual
property rights holders (e.g. record labels) retained control, despite digital
disruption, China has become a laboratory for sustained, large-scale
experimentation with services.
Though a liberal environment initially allowed many online music services to
emerge, recently enforced requirements to pay license fees provoked rapid
restructuring. Through merger and acquisition, the wealthy internet platforms
(BAT: Baidu, AliBaba, Tencent) now dominate the market.
This detailed qualitative study of the strategies and interactions between
industry players, the administration and international business reveals how BAT
competed to sign up content and establish ways to provide low-fee or free music
services that would be sustainable in the Chinese context. They were compelled
to pursue discovery-driven innovation, based on ‘trial and error’ learning,
launching and adapting services at scale in an extremely turbulent setting.
Building on their differing core businesses they developed diverse online music
businesses, integrated with services across adjacent platforms (film, TV, games)
1 University of Edinburgh Business School, [email protected],

2 University of Edinburgh, Institute for the Study of Science, Technology and
Innovation, The University of Edinburgh, [email protected]
3 Peking University (PKU) Law School, [email protected]
6 Tsinghua University, Business School, [email protected]
1
and in lateral markets (e-commerce, payment systems) to create cross-platform

service infrastructures, through which they can capture multiple value
propositions.
Keywords
digital music; China; creative industries; science and technology studies; ecology;
discovery-driven innovation; cross-platform service infrastructure
Introduction
Digital technology with its near zero copying and (since the internet)
transmission costs has disrupted value chains based upon the trading of music
and other cultural products stored on physical media such as records or compact
disks (CDs). A 2014 Special Issue of Technological Forecasting and Social Change,
examined these processes of “disassembly” and “reassembly” of business and
service models (Mangematin et al. 2014:2). It highlighted the efforts of
entrenched industry players in the West to reassert their control over the sector
(Blanc and Huault 2014; Dobusch, and Schüßler 2014), an observation
confirmed by later work (Rogers and Preston 2016, Sun 2016).
The study we present here, conducted between 2015 and 2017, charts the
strikingly different picture of China’s digital music environment. The rapid
proliferation of a wide-range of online services in music, film, literature and
beyond is driving radical reconfiguration of business and service models and
paving the way for a resurgence in its cultural industries.
Focusing in this paper on digital music services, we will show how China’s so-
called ‘internet giants’1, Baidu, Alibaba and TenCent (jointly described as BAT)
have become heavily engaged with the whole process of digital cultural content
creation and distribution. Exploiting, through takeover and emulation, the
flowering of start-up digital music platforms and services, BAT has launched a
huge range of free and low-priced services.
Our project had an overarching objective to understand how the rapid and far-
reaching changes in China’s digital cultural ecosystem had been shaped by
China’s very different institutional and legal setting. Our specific research
questions addressed the distinctive dynamics of innovation in terms,
respectively, of process and outcomes: how these contextual features had driven
a process of sustained experimentation (discovery-driven innovation) at scale;
and, how this has resulted in the emergence of distinctive novel service models
and value propositions.
Writers from organisation studies and science and technology studies (STS) have
examined the potentially disruptive outcomes of digitisation in creative cultural
industries. However their differing analytical tools and presumptions have
generated somewhat contrasting accounts. STS would anticipate that digitisation
2
in differing contexts may generate different pathways and outcomes.

Institutionalist perspectives instead highlight isomorphism that might arise for
example from global harmonisation of regulatory environments and shared
technologies and service models. We were excited to discover conceptual and
methodological convergence between STS and a group of institutionalist analysts
of technological fields undergoing profound transformation (Aldrich and Fiol
1994, Lewin and Volberda 1999, El Sawy et al. 2010, Meyer et al. 2005).
Drawing upon these complementary traditions we developed a multi-sited study

of the evolving digital music ecology in China, centred on BAT and
regulatory/policy players. Our contextual and processual analysis charts the
complex sets of interactions and changing relationships over time between BAT
and other key commercial players, regulators, creators and customers. We
highlight twin distinctive features characterising the exceptional dynamism of
the development of digital music and other cultural industries in the Chinese
context: i) rapid and sustained reconfiguration (disassembly and reassembly) of
Western templates has thrown up novel service models; and ii) China has
become a laboratory for business experiment as firms responded to this rapidly
evolving and uncertain context by launching at scale a rapid succession of
service innovations. These have underpinned the elaboration by the internet
giants of distinctive service models and cross-platform service infrastructures2,
which allow diverse value propositions to be pursued.
This paper is organised into five sections. We outline our analytic framework,
and discuss our methodology/research strategy. After characterising the Chinese
context, we chart in detail the evolution of online music development. We then
analyse how the development of China’s digital music industry was shaped by its
historical institutional and regulatory context. Our conclusion highlights the
dynamic evolution of China’s digital cultural ecology, through sustained
discovery-driven innovation at scale and reflects upon conceptual and
methodological issues involved in addressing the evolution of sectors in flux.
Analytical framework and research strategy
We approached these developments from a background in STS. The social

shaping of technology perspective (MacKenzie and Wajcman 1999) would
anticipate that these developments might unfold in a very different manner in
the contrasting context of China’s digital cultural industries, shaped by
differences in the legal and institutional landscape and in the strategies of the
players involved and interactions between them.
Cognate research from Organisation Studies has explored the implications of

digital technology for creative industries in the West. Institutionalist studies of
established players in the music sector (Blanc and Huault 2014; Dobusch, and
Schüßler 2014), in France and Germany respectively, have drawn attention to
the efforts of entrenched players to maintain the status quo in the face of
potentially disruptive digitisation.
3
Traditional institutionalist perspectives (Di Maggio & Powell 1991; Zysman

1994), with their concern to explain the emergence of shared logics and
practices within and between organisations (Zietsma and McKnight 2009;
Zietsma and Lawrence 2010), seem better equipped to address stability than
dynamism (Meyer et al. 2005; Mangematin et al. 2014). In this connection, Meyer
et al. (2005:459) critically observe that “mainstream theories of industries and
organizational fields presume that equilibrium is sought and achieved by firms,
markets, and sectors”. They argue that “these ideas and tools do not apply” (ibid.
456) in organisational contexts far from equilibrium, such as emerging
industries or industries in rapid flux. These warnings would seem highly
pertinent to current disruptive digitisation (Wang et al. 2015), and in particular
the developments we examine in China which seem to exhibit what El Sawy et al.
(2010) have described as hyperturbulence. Meyer et al. (2005) and other
institutionalist analysts have begun to outline the “new intellectual perspectives
and methodological heuristics” (idem:456) that may be needed in these contexts.
Whilst neo-institutionalism emerged around a concern to explain isomorphism,

stability and equilibrium (Di Maggio & Powell 1991; Meyer et al. 2005;
Mangematin et al. 2014), STS perspectives have from the outset emphasised the
need for accounts that attend to both dynamism and stability, and to both
(emergent) “hot” and (institutionalised) “cold” contexts of innovation. In seeking
to address in tandem the scope for action as well as the constraints of particular
historical settings (Law and Bijker 1992, Bijker 1995, Callon 1998) various
writers have sought evolutionary explanations of change, drawing notably on
work on technology regimes and paradigms from the related field of innovation
studies (Nelson and Winter 1982; Dosi 1982), to explore how change takes place
through interactive learning across a diverse ecology of actors (Andersen and
Lundvall 1988). STS analyses how technological innovations were shaped by
their societal contexts (MacKenzie and Wajcman 1999). Later work addresses
the distributed ‘social learning’ processes through which suppliers,
intermediaries and consumers seek to understand and exploit new technological
opportunities (Sørensen 1996).
Parallel intellectual moves have arisen within organisation studies amongst a

group of analysts arguing for greater attention to be paid to rapidly changing and
emerging industries (Aldrich and Fiol 1994; Lewin and Volberda 1999; Meyer et
al. 2005). They proposed very different conceptual and methodological
approaches. In particular, Meyer et al. (2005) map out in detail a ‘research
posture’ that is “coevolutionary, multilevel, contextual, processual, and
emergent” (idem 456) to address ‘fields in flux’ and undergoing profound
transformation. Their recommendations, based on an “an unabashedly social
constructionist account”3 (Meyer et al. 2005: 467) demonstrate striking
conceptual and methodological parallels with contemporary STS research
frameworks. Thus calls by Meyer et al. (2005:470) for multi-level and multi-
temporal (historical and longitudinal) research with “nuanced temporal
theorizing about cycles, pacing, and event sequences.” mirror frameworks
advanced for investigating the Biography of Artefacts and Practices (Pollock and
Williams 2009, Hyysalo, Pollock and Williams, forthcoming 2018).
4
Other institutionalist contributions have also proposed evolutionary accounts

(Lewin and Volberda 1999, Mangematin et al. 2014), addressed through
ecological approaches (Meyer et al. 2005; Aldrich and Fiol 1994; Lewin and
Volberda 1999, El Sawy et al. 2010; Wang et al. 2015) and longitudinal studies
(e.g. Aldrich and Fiol 1994; Lewin and Volderba 1999).
These debates also bear upon ecological and ecosystem perspectives. The
critique advanced by Meyer et al. (2005) of equilibrium presumptions can
equally be applied to life-cycle models (e.g. Waldner et al.’s [2015] account of
how opportunities for innovation vary at different stages in a product life-cycle).
Such cyclical models, with their tacit presumption of homology between
successive cycles, are perhaps better suited to addressing changing product
cycles within a broad technology paradigm; their relevance may be questioned in
the case of sectors that are emerging or in flux (like this case) where radical
disruption may transform boundaries, structures and paradigms (Meyer et al.
2005).
A similar critique can be applied to ecosystem models (Shaw and Allen 2016,
Tsujimoto et al., in press), whose current popularity is driven in part by the
salience of technology platforms (Wareham et al. 2014). Applying templates
from biology food chains (Moore 1993) these accounts focus on the
establishment of stable structures and locations within a sector, highlighting the
role of focal organisations or other governance structures (Wareham et al. 2014)
in generating the alignments needed within a multilateral trading community
“for a focal value proposition to materialize” (Adner 2017:40). These analyses of
ecosystems in terms of characteristic positions and structures within the
community of players, conceived as coherent systems (Tsujimoto et al., in press)
or meta-organisations (Gawer 2014) also rest upon equilibrium presumptions
which are not appropriate for the developments we address. We note the
observation by Tang and Lyons (2017) that existing business ecosystem models
do not match well the development of digital music in China. Other, more
appropriate conceptualisations are available, which we explore below. They are
often couched in terms of ecologies (Abbott 1995), to avoid the presumption of
set boundaries and positions that besets much ecosystems writing.
Recent contributions helpfully focus upon the dynamics of ecosystem evolution

(El Sawy et al. 2010) and the consequent tensions between stability and
flexibility (Wareham et al. 2014). Wang et al. (2015) highlight the influence of
community structure and context on the evolution of ecologies in the case of
digital innovation strategy. They suggest that different starting points and
alignments within ecologies may yield different outcomes (El Sawy et al.
2010). The scope for manoeuvre and constraint may vary across contexts
(Lewin & Volberda 1999:523). Intriguingly, Lewin and Volderba (1999) and
related organisation studies accounts, in describing how technological and
institutional structures constrain in a manner that is not rigid but leaves
scope for and may enable choice, have resorted to a terminology of
configuration (see for example, Lewin & Volberda 1999; El Sawy et at 2010;
Gawer 2010; Shaw and Allen 2016; Adner 2017). In so doing they
serendipitously align with a parallel conceptual development in STS accounts
5
that addresses contextual influences in technological change (Fleck 1993,

Hyysalo, Pollock and Williams forthcoming 2018).
This departure from presumptions of isomorphism opens up questions about

management strategy (Lewin & Volberda 1999). Thus McGrath (2010) notes that
traditional analytical approaches to management decision-making that might
prevail in stable contexts give way in a fast moving and unpredictable
environments to ‘a discovery driven approach’. In an uncertain context, “it is
more sensible to engage in experimentation and discovery than to try to assume
the relevant information is all known”(McGrath 2010: 252). Similarly Sosna et al.
(2010) observe that, in dynamic and uncertain contexts, innovation may proceed
through “trial-and-error learning” [Idem.:402]. Thompson and MacMillan (2010)
argue that such discovery-driven principles are particularly applicable when
developing business models in emerging markets “characterised by significantly
high - or near-Knightian – uncertainty” [Idem.:291]. As developments are highly
path–dependent – early experiments shape the trajectory for models yet to come
- it is nearly impossible to anticipate which will succeed (McGrath 2010).
Incompleteness of information, particularly about user responses to new
offerings, favours experimentation including collective learning experiments (de
Vasconcelos Gomes et al. 2018) and other strategies to manage collective
uncertainties confronting players. Thompson and MacMillan (2010: 296) suggest
that these settings favour particular kinds of experimental or discovery-driven
approaches, characterised by the nostrum “launch inexpensively and redirect as
the business evolves … or stop them while resource commitments are still
minimal. These observations closely mirror STS analyses of social learning in
technological innovation - defined by (Sørensen 1996:6) as “a combined act of
discovery and analysis” – supported through practices of experimentation and
‘learning by doing’ (Sørensen 1996, Williams, Stewart and Slack 2005).
Firms may need to balance and manage tensions between experimentation and
exploitation (Smith et al. 2010; Achtenhagen et al. 2013; Massa et al. 2017).
Experimental approaches may give way to more carefully calculated choices
geared towards securing competitive advantage as markets become stabilised
(Massa et al. 2017). These observations are particularly pertinent to rapidly
changing digital creative industries. Hadida and Paris (2014) criticise the
continued resort to traditional value chain models despite evidence that they are
not applicable or effective for industries in a state of flux like digital music. They
highlight “the diversity and plurality of value propositions, the co-construction of
value, and the expanded role of intermediaries in the creative industries” (Idem.:
94) despite the absence of a proven economic model.
Mangematin et al. (2014), in their introduction to the 2014 Special Issue of

Technological Forecasting and Social Change on “digital technology and creative
industries”, have characterised these transformations as involving processes of
disassembly: “the shaking of existing business models of transaction and
distribution”, and reassembly, using “new tools and architectures to interact with
audiences and communities in selected creative industries” (Mangematin et al.
2014:2). Mangematin et al. (2014) note that the papers in their collection are
mainly rooted in European national settings. China offers a very different
6
context in which to explore the radical reconfiguration of value chains in

creation and distribution and consumption of cultural products. We explore the
relevance of these perspectives to this multi-centric study of the opening moves
in the evolution of China’s digital music ecology.
Methodology
Research strategies for addressing dynamic ecologies
These discussions highlight important points of conceptual overlap between STS

and organisation studies in their treatment of emerging ecologies. A much
clearer convergence is evident in relation to the methodologies proposed for
addressing these settings where various organisation studies scholars have
turned towards the less-structured qualitative methods of enquiry traditionally
favoured by constructionist STS researchers.
Meyer et al. (2005: 458) argue that organisational science researchers studying
“volatile ecosystems, emerging sectors, shifting boundaries, and proliferating
network forms” need to adopt more complex research strategies, triangulating
between diverse historical, ethnographic and structured survey
methodologies. Meyer et al. (2005:458) note how, in seeking to engage with
rapidly changing settings, their “research design shifted from cross-sectional
to longitudinal data collection” while “the theoretical platform shifted from
testing a variance theory to building a process theory. … In each case, the
unit of analysis shifted from focal organizations in exogenous environments,
to be replaced by a set of nested units— organizations, that collectively
constitute a population, amalgamated into an ecological community,
embedded in a changing organizational field.” (see also El Sawy et al. 2010).
Dynamic developments, shaped by local interactions, may not be effectively

captured by the traditional institutionalist research methodologies based on
sector level surveys or studies of focal organisations. If the role and
orientation of the various actors is diverse and changing, they need to be
addressed through less structured qualitative research instruments (Shaw and
Allen 2016) such as ethnographic interviews (Meyer et al. 2005) rather than
quantitative surveys with their presumptions about the stability and
comparability of classes of actors. Large-scale survey methods in particular run
the risk of losing detailed insight into the specificity of organisations and the
dynamics of their interactions within a community.
Alongside this move towards ethnographic, historical and other qualitative

research methods are calls for multi-actor and multi-level enquiry (Meyer et al.
2005; Shaw and Allen 2016). Lewin and Volderba (1999) argue the need to
move away from a single lens perspective (whether of firm level studies or of
sector level studies) and instead to study the co-evolution of firm and industry
and the emergence of new organisational forms within an ecology. A growing
body of studies address these developments at multiple levels of analysis
encompassing specific firms and the population of entities they interact with
including consumers/consumption as well as production and distribution
7
(Huygens et al. 2001; Zott et al. 2011; Mangematin et al. 2014; Baden-Fuller and
Mangematin 2015, Massa et al. 2017).
Research design
The findings presented here arose from an investigation: Convergence or
differentiation in IP protection? A case study of new models for digital film, music
and e-fiction production and distribution in China, funded by the AHRC China
Digital Copyright Centre, the Newton Fund and the RCUK Research Centre for
Copyright and New Business Models in the Creative Economy (CREATe). Our
attention had been drawn to novel developments in China’s digital cultural
industries which differed from those in the West, in which the BAT internet
giants appeared to be playing an important role.
Our research emerged with a broad concern to understand how digitisation had
been shaped by China’s very different institutional and legal setting. As the
project developed this evolved into a more specific set of research questions that
sought to account for the rapid and far-reaching changes in China’s digital
cultural ecosystem; how these had driven a process of sustained
experimentation (discovery-driven innovation) at scale; and, how this has
resulted in the emergence of distinctive novel service models and value
propositions.
These considerations profoundly shaped our research design. To capture

developments across an ecology in flux, we followed Meyer et al. (2005:459)
who propose triangulating between a range of sources through a ‘bricolage’ of
different methods including brief ethnographic engagements to capture
emergent responses across a range of settings.4
Careful preparation was needed to develop and guide this exploratory study
(Walsham 1995). We established an interdisciplinary team of seven Chinese and
UK scholars, supported by research students, who began to develop an
understanding of developments in digital cultural industries in China initially
through desk research. We tracked cognate developments in Europe and North
America through desk research, doctoral research (Sun 2016) and discussions
with colleagues in the CREATe programme. We refined these initial
understandings through informal discussion with established academic experts
in these fields from Chinese universities/research institutes active in the
industries in question and extending research access through ‘snowballing’
techniques to Chinese industry and policy players. Establishing research access
and broadening and sustaining it over time presents particular difficulties in the
Chinese context where there has not been a tradition of access by industry and
policy communities to social science research.
Our goal was to establish a long-term relationship with key stakeholders in the
field. A concise description of the research project was produced to attract and
sustain the interest of the targeted players and establish consent and research
governance arrangements. Data collection and processing sought to gain
understanding of complex processes unfolding in real time primarily through
8
detailed personal interviews, repeated over time, to capture accurately the

changes taking place and participant’s understandings of these changes.
Interview topic guides were adapted for particular respondents in different
sectors and roles and were modified as new issues emerged as the research
progressed. Post-interview communications with almost all Chinese
interviewees, particularly via WeChat5, allowed us to check data accuracy,
request clarifications and pose additional questions from respondents who were
highly engaged with (and also struggling to make sense of) these complex
developments. The period between these blocks was devoted to reviewing the
data and preparing for further rounds. Interviews with key industrial players
were repeated over at least two rounds: the first typically involved senior
management players; follow up interviews extended to those with more hands-
on involvement in the commercial and legal dimensions of the business. This
extended engagement provided opportunities not only to collect and verify data
about a highly uncertain and rapidly changing setting, but also for joint sense-
making about the character and implications of these still-unfolding
developments. Our respondents were also trying to understand these
developments from their particular perspectives and points of insertion. In this
respect, our respondents became co-researchers in a joint process of sense-
making, providing insights throughout the life of investigation, continuing to
reflect and comment upon emerging findings until the end-of-project workshops.
Our primary investigation targeted three groups:

1) key players in the Chinese online creative industries, and in particular the
three Internet giants (Baidu, Alibaba and TenCent);
2) professional associations, commercial, licensing and regulatory bodies and
other key intermediary organisations influencing the development of the sectors,
including professional associations in the creative cultural sectors, commercial
and regulatory agents of both domestic and overseas; and,
3) experts and academic specialists in the fields.
Fieldwork was conducted between December 2015 and April 2017, a duration
that afforded some opportunities to observe changes over time in the strategies
and activities of the players involved. The primary data collection comprised 59
semi-structured interviews, conducted in three blocks, with a total of 73
respondents (a table showing anonymised respondent roles has been uploaded
as an appendix). This was supported by diverse secondary sources in English
and Chinese. We reviewed policy documents and the existing literature, and also
tracked the enormous array of media reports, online blogs and commentary.6
The research team also embarked upon an array of exploratory activities
including, registering and using purposively the online services provided by the
platforms under scrutiny, taking part in events organised by key players and
stakeholders, and discussing various pressing issues with them. The team also
kept a watching brief with their peers and contacts regarding the evolution of
new services and practices (e.g. regarding consumption of online music, e-
literature, videos) during the period of the project. We also organised end-of-
project workshops (Beijing 6.4.2017; Edinburgh 5.6.2017) to which we invited
academic and industry experts, policymakers and practitioners, including most
of our respondents. The workshops were designed to elicit additional inputs and
9
verify and extend emerging findings. In a context in which there are few
established sources or fora they provided an opportunity to explore and
reconcile different stakeholder perceptions.
Our investigation encompassed three creative cultural industries: music, e-

literature and film. Our enquiries explore the specificities of different types of
cultural production and consumption and also flagged significant interactions
between these areas. These interactions proved to have crucial importance in the
case of Chinese internet-based operations (for example where popular
performers were able to exploit their reputations across platforms – e.g. singers
becoming film stars [Lui 2010]). In this paper we focus on digital music where
we were also able to derive insights our previous research in the UK (Sun 2016).
Though we were not able to directly address the experience of music consumers
and music creators engaging with these services - a matter of concern insofar as
our framework and industry perceptions flag their crucial importance - we were
able to examine the understandings of consumers/consumption amongst the
practitioners we interviewed and also draw upon online sources and the modest
academic literature on this subject and finally draw upon the experience of our
Chinese researchers (and that of their peers) who registered on these platforms
and used as many services as possible.
The Chinese context

The socialist history
In China’s socialist regime, music and many other forms of cultural production
and dissemination were under the control of the government. The
administration determined who could become a musician including the (modest)
number of people to be regarded as composers, lyric writers, singers
(performers), and music instrument players. Musician was a prestigious
professional role, on the government payroll, employed by public institutions at
local, provincial or state levels. This elite status was not easily attained by those
outside the professional system even if they possessed artistic talent. Music
related activities, as part of the development of culture and arts of the society,
had nothing to do with commerce or profit. Rather, it was regarded as a
propaganda instrument of the state for uplifting peoples’ spirit in the
construction of China’s socialist society. To achieve this goal, music production
and distribution, like other arts and literature, were closely
scrutinised/controlled by the state. During the extremes of Cultural Revolution
(1965-1976), Eight Model Plays (八个样板戏) were promoted by the
government as the model of socialist art and the whole population of China was
expected to sing from this repertoire.
As a result, the music industry in China was very undeveloped compared to the
West in terms of both the quantity of music works and music related business
entities.7 The other feature inherited from the socialist regime was the weak
copyright regime. As music and other creative works had been created with
resources from the state, they were seen as belonging to the entire population.
10
So even though, as part of accession to the World Trade Organisation, China

rapidly put into place intellectual property (IP) legislation and enforcement
mechanisms modelled on those in the West (Liu 2010; Shen 2015) there was
little popular support for copyright protection. As a result, as China opened up to
the global economy following economic reforms, it became the biggest ‘black
market’ for pirated music, not only Chinese music, but also Western products.
Pirate CDs or Digital Video Discs (DVDs) were easy to get held of. Soon after
release, a music CD or DVD album, which might sell in Britain for £15, could be
purchased on the Chinese black market for one US dollar. China faced continued
criticism by international business institutions, such as the International
Intellectual Property Alliance (IIPA 2012) for the persistence of rampant piracy.
“A hundred flowers blooming”
Though widespread piracy and the weak enforcement of Intellectual Property

(IP) rights in China was seen as inhibiting innovation and the health of creative
industries (Lui, 2010; Priest 2014: 539), the arrival of digital technologies
stimulated new ideas and opened opportunities to build a new and dynamic
music industry. Many individuals and enterprises took advantage of the
opportunities to distribute digitised content through the internet and later,
mobile technologies.
Government policy seems to have been generally favourable towards

innovations, delaying regulation until it was clearer whether problems would
emerge. The national copyright administration only stepped in after legal battles
over copyright infringement began to have negative effects on the whole
industry. Existing censorship mechanisms, implemented through a small
number of publishers, importers or distributors, were not effective in the
emerging digital environment with multiple channels for content creation and
distribution. Digital music posed particular problems as regulators found it
difficult to tease out the meaning of contents from the whole performance
(interviews with TenCent and Alibaba respondents). (Paradoxically the
subsequent restructuring of the industry around a few platforms created a
context that is far more amenable to administrative control and self-censorship.)
With access to the new technologies in a liberal environment, amateur musicians

uploaded their songs onto the internet in search for an audience. Perhaps
foremost here is the case of Xue Chun (see box). 8 Younger musicians in
particular started to get involved, applying their creativities to satisfy rising
demands on the internet. They also became involved in creating "network music"
- background music for online games, videos and other internet entertainment
industries.
The case of Xue Chun: an amateur musician becomes a multimedia star

A widely circulated story concerns the amateur musician, Xue Chun, an ordinary
person without any professional music training. In 1995, he wrote a song,
Northeast people are Living Lei Feng (the household name of a hero in socialist
China)(东北人都是活雷锋). The song is easy to sing with a humorous
arrangement of tunes and an entertaining narrative of the experiences of a truck
11
driver in the Northeast region. It remained unknown until 2001 when he decided
to put it on a website. It rapidly became a major hit without any professional
promotion. The story was made into various online flash animations. The song
became very popular across the country – and was seen as the first example of
popular original online music that became known as "network music". A TV
drama series used the song as its theme music. The author subsequently became
a household name, enjoying fame not only as a composer and singer but also as
an actor and movie producer.
This period saw the mushrooming of music-related online services offering

uploading, downloading, searching, collecting and streaming of music. Initially
small and medium enterprises launched websites offering downloads of music
and other cultural products, notably film. They were closely followed by the
large internet companies. Foremost were the Chinese search engines like Baidu
and Sogou which came to play a key role in identifying pirate sites, publishing
links (which constantly changed to avoid IP enforcement) for users to download
pirated music. Baidu, China’s largest search engine, launched its Baidu MP3
search service in 2002 (Liu 2010), with features that helped users find the music
they wanted, including Baidu 500, a list of the most downloaded music (Dong
and Jayakar 2013).9
The result was a highly dynamic and diverse ecology. Various players including
software developers and equipment makers as well as musicians (Tang and
Lyons 2017) entered the arena and pushed out music apps and services. In this
period, the digital online music space was far from "stable". No business made
significant income (apart from mobile phone service providers selling
"ringtones", a business based on a very low unit price and a huge volume of users
[Liu 2010, Priest 2104]).10 Because of piracy, the Chinese music industry had to
identify alternative sources of revenue to selling records, including income from
live performances, merchandising, brand sponsorship deals, advertisement-
funded music services (Liu 2010). These services broadly mirror, and indeed
were often copied from, similar developments in the West. However in the West,
actions by established music industry players against Peer-to-Peer and other
unlicensed downloading services kept these services in the informal economy
and left little space for legitimate businesses to emerge (Sun 2016). In China the
internet became an arena for the integration of old and new business operations
in which innovation could flourish. 11
China’s huge and still growing base of netizens creates varied demands for
entertainment from users with differing backgrounds and preferences. Music
websites were prompted to develop diverse services to meet these diverse
needs. The People’s Republic of China, Ministry of Culture highlighted a surge in
the number of new music websites which increased from 452 to 695 between
2011-2013 (Ministry of Culture 2012, 2014). Though these competing services
copied Western models and copied each other in terms of the applications and
services offered, this was only the start of a sustained innovation process.
12
Copyright enforcement and licensing provokes radical restructuring

In 2011 – 2, a series of changes in China’s copyright environment had dramatic
consequences for the digital music sector. Previously enforcement of copyright
protection regulations by the Chinese government was limited by the weakness
of the enforcement system and the widespread practice and acceptance of
piracy. As a result, copyrighted content was freely distributed on the internet.12
This situation continued despite periodic compensation cases by rights owners.
In particular, Baidu’s MP3 search service had been sued several times by
different organizations, including IFPI (in 2005), the Music Copyright Society of
China (in 2008), Universal, Sony BMG, and Warner Music (in 2008). These cases
failed, mainly as Chinese courts accepted the “safe harbour” rule that if search
engines did not store infringing content on their servers they would not be liable.
There was thus widespread surprise in 2011 when Baidu agreed an out of court
settlement for copyright infringement with the Western record majors -
Universal Music Group, Warner Music Group, and Sony BMG for infringing their
copyright (Dong and Jayakar 2013) who, for an estimated RMB 37 million (USD
$5.7 million) signed a two-year deal to license over 0.5 million songs from their
catalogue. This development was a combined product of a number of pressures:
growing international pressure on China to comply with World Trade
Organisation rules, tightening up of China’s domestic internet regulations and
stronger Administrative Enforcement (in the face of pressure from Western and
domestic cultural industries), (Dong and Jayakar, 2013; Street et al. 2015)
coupled with a significant shift in Baidu’s business strategy (Dong and Jayakar,
2013). In that period, Baidu’s dominant position in digital music was being
eroded by the proliferation of new services. QQ music, set up by Ten Cent in
2004, had by then acquired over 10 million users, closely followed by Xiami
Music (9.5 Million) and Douban FM (8M). Baidu saw an opportunity to gain
market advantage as the “only legal music distributor in China.” (Dong and
Jayakar, 2013:98). Some saw this as a turning point that “changed the whole
ecosystem” in China.13 In particular, industry players realised that copyright
could be utilised as a tool for competing with their peers.
These developments were consolidated in 2012, with the third revision of the
Copyright Law of China in 21 years, and above all by the decision of the Standing
Committee of the National People's Congress of 31 August 2014 which led to the
establishment of Intellectual Property Courts in Beijing, Shanghai and
Guangzhou. Under the new enforcement regime, Internet platforms were forced
to buy licenses for contents and review materials before putting them online to
ensure that all contents on their platforms did not infringe copyright and the
rights of performance, broadcasting and other neighbouring rights. In July 2015,
the National Copyright Administration further ordered that all online music
service platforms must take down unauthorised music from their platforms by
31st October 2015.
These developments triggered a process of rapid and far-reaching restructuring

and consolidation within the industry. Small and medium-sized companies could
not afford to pay for licensed content which, given the continued prevalence of
piracy, they could only subsequently offer to consumers for free or at low price.
13
This prompted a rapid process of acquisition and merger in the creative cultural
industries, reinforced by powerful economies of scale, in which the cash rich BAT
‘internet giants’ became the dominant players.
By December 2016, the number of internet music users in Mainland China had
risen to 540 million (70.8% of all netizens).14 The pace of online music
development has been accelerated by the advanced state of mobile technologies.
China is becoming one of the global front-runners in terms of 3G and 4G services
and there has been rapid growth in use of mobile devices, such as affordable
smartphones. Digital music services, initially based upon pcs, all migrated onto
mobile devices. Mobile access therefore figures strongly in China, particularly in
the youth market (21-30 year olds) (Xiang 2014a). Numbers are still growing,
indicating the considerable potential of the online music market (China Internet
Network Information Center, 2016).15
The evolution of China’s online music ecology
The development of online music in China was strongly patterned by its

historical context. First, the digital music business was a largely ‘greenfield
development’16 (unlike the West, where powerful entrenched incumbents - the
record companies, studios and other IP intermediaries - were determined to
hold on to their position in the face of potentially disruptive digitisation). The
huge public appetite for music and other cultural products attracted large
numbers of new players. Second, a liberal environment and lack of public
support for intellectual property protection allowed the emergence of novel
services (for example online Karaoke) that were at risk of infringing IP
protection rules. This unleashed a wave of experimentation and innovation in
China’s music industry that we described as “a hundred flowers blooming”.
Third, government intervention shaped the landscape for innovation: initially
providing a liberal environment and later tightening up IP enforcement and
further intervening to mitigate destructive competition for exclusive content
licencing deals.
The recent measures adopted by the Chinese government to tighten copyright

protection prompted rapid and profound restructuring in the music industry.
SMEs struggled to find ways to cover the costs of fees for distributing licensed
content that was mainly provided to consumers for little or no charge. They were
taken over by larger organisations with deep pockets, who could afford to build
up libraries of licensed content. Though in the West record companies, studios
and other cultural IP intermediaries were entrenched, in China these players
were weak or absent. In this context it was the BAT internet giants which
identified and seized new opportunities in the creative cultural sector and came
to play dominant roles.
Though Baidu, Alibaba and TenCent are all actively engaged with music,
literature and film distribution, their service development strategies have
differed, shaped by their particular historical core businesses and distinctive
strengths. We now briefly examine how each player has been pursuing their own
14
trajectories and strategies, building upon their existing market position and
capabilities, to explore new opportunities and to strengthen positions in the
Chinese market and to respond to the challenges posed by its competitors.
Baidu
Baidu, by far the largest player at the outset, was the first of the BAT players to
engage with music services. Its successful Chinese search engine, established in
2000, was one of those widely used to locate pirate content. From 2004, use of
its MP3 search service, providing ready access to a virtually unlimited selection
of unlicensed music, grew rapidly to include a large share of the population.
In the aftermath of its landmark legal settlement, in October 2012, it relaunched
its music products as Baidu Music, with licensed music rather than MP3 search
on the front page of its website “putting all the legally available music on its
various services into one place” (Custer 2012). Its licensed services were based
upon providing a share of advertising revenue to license holders on a per
play/download basis.17 Baidu saw music services as a way to enlarge its base of
internet users. However it was less innovative and lost market share to the
emerging fremium music streaming services. In December 2015, Baidu Music
announced a merger with Taihe (太合) Music Group, a conglomerate of pop
record labels and publishers.18 They could be seen, in some sense, as a
‘traditional’ player in China’s music industry, with a catalogue of 700,000 songs
around half the Chinese music market (Tang and Lyons 2017; Ingham 2015;
PRNewswire 2015). It also appointed managers with digital music backgrounds
(from Douban and Netease) (Music Business China 2016).
Alibaba
Alibaba’s core business is e-commerce, which made it at the outset China’s
highest valued internet player. Alibaba explored the viability of a wider range of
online creative culture services, drawing on its role as an e-commerce platform
offering business services. In January 2013, Alibaba Group had surprised many
by announcing its acquisition of China’s 5th biggest digital music streaming
service Xiami music. Xiami (or little shrimp -虾米音乐), was a platform targeted
towards individual musicians, founded in 2007 by a former Alibaba
programmer/analyst (Shen 2013). The subsequent acquisition in December
2013 of the TTPOD music-streaming app (TianTianDongTing 天天动听) led
some to suggest that Alibaba was taking over the music industry (Kaufman 2013,
Dredge 2016). These were merged in 2015 into a new division: Alibaba Music
Group (阿里音乐). Music sector players (Gao Xiaosong, onetime singer-
songwriter and Song Ke, a former executive with Warner Music) were brought in
as chairman and CEO respectively (Flanagan 2015).
Though Alibaba moved earlier in responding to the new licensing market, it was
TenCent that made the most decisive interventions, as we will see below. Though
Alibaba responded to developments by Tencent and other players with a
comparable range of free and subscription services, Alibaba has developed a
more distinctive strategy in its focus on creator services, like “Xiami yinyueren” [
虾米音人] (“shrimp musician” in Chinese), aimed at fostering grass-root
development of musicians and targeting not only reputed musicians but also,
increasingly, unknown and would-be musicians. Its initial services allowed
15
people to register as independent musicians and upload their new pieces and/or
demos online. Gradually, these services expanded and were adjusted to meet
local needs. Each registered independent musician is allocated a domain name
and webpage. On this dedicated space, musicians can present new work and
share albums with their registered fans in return for getting feedback and
comments. This kind of service is termed “Zaoxin” (造新) novelty creation. For
example, in 2014, Xiami launched a programme - “looking for unseen originality”
(寻光计划) – deliberately designed to help unknown, amateur or new musicians
bring out their debut albums to a wide audience. It has published 13 dedicated
albums for these new artists, who have, from being unknown, become popular in
China and well recognised in the music field.19 Since becoming part of AliBaba in
2015, Xiami Music has continued to focus on serving “unseen /undiscovered
talents” and has stepped up the activities of this musician platform. The new
artists and their albums have been praised for their originality and quality.20
Building upon this, Alibaba launched an integrated platform – Ali Planet in
2016.21 This brings in elements of Alibaba’s Taobao e-commerce platform with
its core mission of providing business opportunities for small and medium-sized
companies. Four of Xiami’s founders had worked for AliBaba and were familiar
with its Taobao model. AliPlanet promotes a range of music related activities
outwith streaming, including online promotion of music contents, sale of
merchandising and other related products (e.g. album cover design tools). This
includes front and backstage services to assist creators for example with music
recording, stage concert organisation, and live broadcasting online. As well as
offering opportunities for potential and unknown talents, it also creates business
opportunities for professional music studios and live concert organisers.
TenCent likewise announced its own “Musician (音乐人 in Chinese) Plan” in
2017 to attract more grassroots musicians and composers to its platforms, after
experimenting with platforms for independent musicians for several years.22
TenCent
TenCent’s free instant messaging service WeChat, launched in 1999, attracted
around 300 Million users in only two years and became the foundation for a
huge range of services (China Internet Watch 2014). In 2004, TenCent launched
its QQ music platform. Building on these popular services it developed a
profitable online games business and subsequently launched a stream of
interactive entertainment services. Its subsequent success in combining free and
subscription services across its growing range of services – most notably online
games and mobile applications - allowed it to catch up with Baidu and Alibaba
(Hariharan 2017). By 2015 had become the 2nd biggest player in music
streaming services with an estimated 15% of China’s digital music streaming
market (Osawa 2014). In a further dramatic development, in July 2016, TenCent
established itself as by far the largest player amongst online music platforms in
China through a merger involving acquisition of over 60% of the shares of China
Music Corporation (CMC). CMC had in 2015 acquired China’s largest music
service provider Kugou (酷狗) with around 28% of the market and the 3rd
largest player Kuwo (酷我) with 13% market share (China Internet Watch 2014,
All Tech Asia 2017).
16
TenCent has developed a distinctive strategy – launching services with simple

interfaces, broadly similar across many applications, focusing on building
markets (especially attracting users by imitating successful products and
adjusting them to improve user experience) rather than establishing income
streams (China Internet Watch 2014).
Given the prevalence of pirated music in China, consumer services typically

feature “free music”. People continue to be able to retrieve downloads from
many websites at no cost. This creates a challenge for service providers as it
limits their scope to charge for access. TenCent was particularly determined to
make its music services profitable (interview with TenCent 2016), though its
initial fee-paying services were not successful.23 As in the West, digital music
companies sought to attract and keep users with ‘fremium’ services combining
free and paid for services – in particular by launching low-cost subscription
services. Subscription fees are in the range of 10RMB (equivalent to £1 sterling,
April 2016 values) to 19RMB per month – approximately an order of magnitude
lower than in the West.
Users increasingly access music through mobile devices. However, in China,

mobile data charges are relatively high. For example, 1G of mobile data costs
50RMB (equivalent to £5 sterling, April 2016 figures). This could be used up
quickly if listening to music online on the move. One consequence is that all
mobile software applications can also be used in a Wi-Fi environment. People
can download content when they have access to Wi-Fi e.g. in fixed locations at
home or work so they have a selection of music to listen to on the move (an
exigency that means that streaming does not entirely displace downloading).24
To reduce consumer costs, the internet companies have made deals with internet
service providers to cover the cost of mobile data usage. Thus TenCent’s QQ
music has a music subscription service for 15RMB per month which includes a
bundling deal for mobile data access with China Mobile whereby they receive 5-
6RMB - keeping 9-10RMB for itself.
To increase uptake of its premium services for fee-paying users, TenCent has
bundled in a variety of other services, offering, including, variously:
• better sound quality;
• immediate access to newly-released albums; and,
• access to online broadcasts of live concerts of popular musicians.
Other streaming services offered similar arrays of services to fee-paying users.
The digital music companies have launched various other kinds of offering in a
process of sustained experimentation. This includes, for example, allowing fans
to follow their favourite celebrities online and giving them exclusive tickets for
live events. Though these are targeted to subscribers, non-fee paying members
who do not have the money or are unwilling to pay, are still able to access the
content if they can wait for a week or so and do not mind the lower quality of the
music recording, or are willing to earn credits (see below).
The evolution of China’s online music ecosystem is summarised in Figure 1

(below). The timeline highlights how the liberal ‘hundred flowers’ environment
gave way with stricter licensing enforcement from 2012-5 to a more stable
17
environment in which Baidu, Alibaba and TenCent have become the dominant
social media platforms in music (and elsewhere) by acquiring smaller start-ups
with their music specialists and user bases.
There are many other players however. The largest independent is Netease (网
易), originally a Chinese Internet technology company, which recently (April
2017) secured substantial venture capital financing (RMB 750 Million) for its
NetEase Music Cloud(网易云音乐).25
Learning by competing: creating and navigating a rapidly changing ecology
As shown in the preceding section, players deployed different strategies,

building on their historical context and capabilities, to pursue market growth
and potential (subscription or advertising) revenue by launching diverse
services variously targeted at creators as well as consumers; at different ways of
valorising music (advertising/subscription); at different consumer segments
(e.g. for new or specialised content); at different ways of consuming music and in
diverse forms (e.g. audio-visual).
The major players eye each other closely. Their strategies are visibly shaped by
the interactions between them: strategic moves by one player triggering
responses by others through imitative attempts to catch up or by differentiation
– involving fierce competition and at times also collaboration. Though this
account focuses on competition in music, the competitive struggles between BAT
have been waged across digital music, film, video, literature and games.26
Having achieved leadership in digital streaming services, TenCent started to

acquire exclusive music distribution rights, particularly from overseas record
labels (Owsinski 2015). In 2014, it signed deals with record companies, such as
Sony Music and Warner Music, to exclusively distribute their content on the QQ
music platform in China (Cookson 2014).27 Its competitors followed suit. AliBaba
responded in 2015 by establishing a Music Division and signing exclusive
18
licensing agreements with BMG (the world’s fourth biggest music rights
company, with over 2.5 Million copyrights) and Universal Music Group (Music
Business Worldwide 2015). Though this was ‘a drop in the bucket’ (Owsinski
2015) compared to pirate sites or QQ Music’s armoury of 15 million pieces of
licensed music, AliBaba was able to exercise competitive power in the music
market because of the quality of the music in its listings which included for
example the Rolling Stones.
This struggle to sign exclusive rights marks a qualitative shift in the character of
competition for music access. What had previously revolved around allowing
easy access to the widest possible selection shifted to providing exclusive access
to what Alex Taggart, from China Music consultancy Outdustry Group, described
as “weaponised” music (Tang and Lyons 2017:12) that the platforms “couldn’t
afford to lose” (cited in Horwitz 2015). In this period platforms began suing
other platforms for distributing songs they had acquired licenses for (Horwitz
2015).28 Licensing thus shifted the focus of competition from the ‘body’ to the
‘head’ of the long-tailed music market. By offering exclusive access to music that
was trending, the platforms were competing to build their customer bases and
promote uptake of subscription services (even temporary exclusive distribution
agreements would attract subscribers seeking access to new releases before
pirated copies became available). While users of free services could afford to sign
up to multiple services, paying subscribers needed to discriminate: consumers
would select services that offered the particular music they wanted at a cost they
could afford.
The competition for exclusive deals drove up the cost of licensing contents,
particularly from overseas record labels. Though initial attempts to dampen
down competition between Alibaba and TenCent were not successful (China
Music Business, 2016), by the time of our second round of fieldwork at the end of
2016, the main players had come to the view that this competitive strategy was
“unsustainable”(TenCent Legal consultant, interviewed 9 December-2016).
The deals that were signed, for example, between TenCent and Warner Music,
unusually allowed the internet companies to negotiate licensing deals with local
Chinese music services (in contrast to the rest of the world where labels license
their music directly to music services) (Cookson 2014). The platforms have
begun to sub-license their content (e.g. TenCent offered part of its catalogue to
the smaller service Duomi) (Tang and Lyons 2017). As the result of direct state
intervention, the big players like TenCent Music agreed to sub-license their
contents acquired from overseas record companies to other platforms to avoid a
bidding war in the industry (discussion at project final workshop, Beijing, April
2017).
New service developments on multilayer cross-platform service infrastructure
A wide spectrum of services has emerged in China’s music space. They are highly
differentiated and change in form and scope over time. Many of these elements
(including use of pirated copies of software) were copied from the West.
19
However the overarching pattern of sustained experimentation differentiates

China from other economies. The internet companies are seeking to find ways
of engaging with the fullest range of targeted audiences – including those with
limited current ability/willingness to spend. With free registration, users can
access the same music collections that the platform will give its paid subscribers,
though they may have to wait for a week or two for new releases. Various kinds
of premium service (e.g. tickets for live performances or meeting with celebrity
musicians/singers) may be offered as paid options for non fee-paying users. The
companies are finding ways to incentivise and valorise engagement with their
platforms and services. Every registered user can accumulate credit points by
contributing to the services in a variety of ways including simply visiting
platforms daily, using music apps, providing lyrics, translating lyrics from a
foreign language into Chinese, introducing friends, and linking bank information
with the registered account. Overall, the more active and committed you are to
the platform, the more credits you can collect. These credits have real monetary
value and can be used for shopping directly online.29
Services were shaped by spillover from related sectors. The early commercial
success of online music show platforms shows like YY and 9158, which became
unexpectedly lucrative after they introduced virtual gifts that audience members
could buy for performers, prompted similar offerings from internet companies
including TenCent (Xiang 2014).30
The commercial success of online services and the established popularity of

Karaoke in China tempted many online platforms to offer online Karaoke
services, such as QQ Music “All-People’s Karaoke” (全民 K 歌). Extended Karaoke
services emerged offering emulated performance environments (for example
indoor or outdoor performances, in small or large concert auditoria), together
with additional functions to help singers improve the quality of their
performance - for example by editing multiple versions of their singing. Karaoke
singing performances are shared within a group of friends or wider community
who may rate them and even send a “gift” (free or paid for by listeners) back to
the performer to show their appreciation. The revenue is then shared between
the platform and the performers. Online karaoke services like Changba allowed
individuals to record and share their performances, and uses gamification - such
as local charts and competitions between singers - to engage users (Xiang 2013).
These developments arguably provided a template (including valorisation

models) for the emergence of a range of services based upon the creation of
online communities linking consumers together and bringing them together with
creators. Parallel developments have emerged in digital music services. Xiami
music offers a music billboard service on which users collect their current
favourite songs or albums and comment on and grade singers or songs. This also
records information about an individual user’s preferences for music, and in turn
provides recommendations of songs that users may be interested in and artists
they might follow. The billboard service has become a ‘public space’ where
musicians can introduce their debut demos and albums to listeners before
publishing them. The public space leads to the formation of virtual communities
for music lovers to share their favourite music pieces amongst those with similar
20
tastes. Technically, the platform can help users find each other by knowing their
downloads and their comments and rating of the music pieces. This function has
been promoted by the Xiami music platform with the label “sharing the same
rotten taste” (臭味相投): a humorous way to describe the like-minded.
As with early music streaming services in the West, users within communities
share each other’s album folders. Other services offered include for example
“Xiami loops” (virtual spaces online), in which groups of users can gather at a
particular time and organise a forum to discuss a particular topic or host a
concert by one of the users, to introduce his/her favourite music pieces
selectively (like a DJ), and set the stage by inviting comments and views from
attendees. Through these activities, individuals can gradually build a reputation
within the group/community, playing a role like music critics. The online “loops”
(forums and concerts) with specially selected themes attract the attention of
artists and celebrities, particularly when hosted by “online music critics” with a
reputation. When professionals and musicians take part in these events, the
events add further values to all attendees, for example, co-generating new
meanings to existing works.
TenCent representatives, in our second round of fieldwork in November 2016,

highlighted how they had created a novel income stream from fans’ gifts to their
favourite artists. During recent online broadcasts of live concerts, fans were able
to send virtual gifts to the performers. A large image of the gift, such as “a luxury
car”, would be simultaneously displayed on a big screen at the back of the stage,
where the names of the donors were also shown. There are several examples of
this kind of gift scheme run by many internet platforms for entertainment
services. Users can send virtual gifts to praise artists or performers. The virtual
gifts can be symbolic with no monetary value and/or purchased with real money
- in which case recipients can cash the money. The platform and performers
share the income from the virtual gifts (Interview with TenCent music,
November 2017). These formed the basis of a lucrative, burgeoning ‘fan-
economy’ (Liang and Shen, 2016).
These various services have the effect of linking consumers together and linking
them in many different ways to creators and to the digital platforms. This creates
a method to collect information and sentiment that have value to the parties
involved. This web of services is crucial to understanding how the financial
viability of services may be established.
BAT were rich with cash from their highly profitable core businesses (and did
not need venture capital). Our industry interviewees indicated that the large
internet companies are not expecting their investment in music services to be
profitable in the foreseeable future. For example AliMusic staff were told that
they had 7 years to build their industry. This long-term perspective enabled the
emergence of a wide range, and numerous configurations, of services directed
towards consumers as well as creators. Though protected in the short term,
these operations arise within organisations that are subject to fiscal discipline.
The issue will be posed at some stage of how digital music services can become
financially sustainable. Not many of the customer services we reviewed directly
21
generate profit. There is significant revenue from advertisements (which are

substantial in the huge Chinese market) but this is unlikely to suffice in the face
of rising licensing fees.
In 2016, TenCent’s digital music general manager Wu Weilin announced at a

digital music media event that "QQ music has been profitable."31 Though
confirmed by our respondents,32 given the complexity of revenue accounting,
many specialists in the field raised doubts about the claim. Though precise
figures are not available we can offer a broad estimate. There are around 10
million fee-paying users out of 400 million registered customers using TenCent’s
music service. Income from adverts on website pages and mobile apps brings in
about 50% of the revenue . The rest is from the sales of special albums,
membership subscription fees, and tickets for live concerts and online
broadcasting of live concerts, and similar activities (interview with TenCent
Music November 2016).
The incentive for the internet giants to invest in music and other cultural content
production and distribution has been to attract users and keep them active on
the platforms. Thus Baidu respondents saw the retention of their music business
as crucial regardless of whether it brings in income revenue or not. “You have to
know, for us, internet business is ‘liuliang’ [流量, meaning “the volume of data
flow”] “liuliang” brings us users that we have to focus on… in music, we have
been burning moneys [sic], lots of them…”. (Baidu manager interviewed
December 2015).
TenCent managers expressed a similar view: “Music is a very important part of

peoples’ life. An internet company like us had to do music and to engage with
people for profit or not” (TenCent respondent interviewed November 2016).
According to our respondent from Ali Entertainment management, ‘We did not
make a profit for many years at the start of the platform for e-commerce business,
it was the future that our CEO, Ma Yun, foresaw. Ali Music is still young. We may
follow the same line as we did before. We are not under any pressure from the top
to make a profit. We are now concentrating on creating service platforms for
people to come to us. It may take as long as we need, five years, or seven...’ (Alibaba
manager interviewed 2016)
Tang and Lyons (2017) suggest that these developments may constitute an
alternative model to the digital music value chains established in the West. They
differ from the conventional investors who drove specialised digital music
services elsewhere in that: “their interest in music services is not solely directed at
profits; instead, these music services are combined with their other services (e-
commerce, search, social messaging, games) to create synergies within their own
corporate structures.” (Tang and Lyons 2017: 17).
By weaving together a wide range of online services across the digital economy,
including e-commerce services and their own payment systems, across a range
of cultural industries as well as their digital music services, the BAT internet
giants in China have been able to establish cross-sector platform infrastructures
through which an array of different value propositions can be simultaneously
22
exploited. In contrast to existing studies of the role of technology platforms in

double-sided markets (see for example Gawer, 2014), these players are
leveraging an increasingly rich array of diffuse value streams through multi-
sided markets (encompassing for example not just creators and consumers but a
range of intermediaries – publishers, venues, financial and e-commerce
services). In the West these value propositions have to date mainly been
explored within industry sectors, defended by entrenched intermediaries
(record companies, studios, banks, retailers). In China the internet companies
seem to have been able to expand and integrate their services rather more freely
across sectoral boundaries. This has, critically, allowed BAT to extract value from
a user engaging in one service not only in that service but across an array of
more or less adjacent markets and services (whether music, games, e-commerce,
or payment systems).
Figure 2 seeks to illustrate this process. It shows how, through the integration of
services across different platforms, the BAT internet giants have each created
their own cross-platform service infrastructure which can capture multiple value
propositions (both through direct monetisation and through aggregating
volumes of user data and engagements). It shows how these strategies operate at
(at least) three levels:
Within cultural industry sectors: ‘Vertical’ integration within sectors such as

digital music, which allows sales of complementary products and services (e.g.
merchandising) and closer engagement with and better understanding of the
dynamics of these highly uncertain long-tailed markets (Anderson 2006).
‘Lateral’ Integration between cultural industry sectors: Vertical integration

is complemented by ‘lateral integration’ to exploit synergies between cultural
sectors (e.g. trading upon reputations of works and performers in adjacent
markets).
‘Horizontal’ Integration at the platform level: Attracting huge and growing

numbers of users onto their platforms brings income from advertising and from
bringing customers onto their commercial platforms and payment systems, as
well as other kinds of value they may seek to obtain from the big data
accumulated.
23
Figure 2 cross-platform service infrastructures to capture multiple value propositions
Conclusion
Our analysis highlights the extended process of experimentation and ‘learning by

doing’ (Sørensen 1996, Williams, Stewart and Slack 2005) through which these
players identify, elaborate and test these opportunities at scale, in practice with
real producers and consumers. In this sense, China has become a “laboratory”
for service and business model experimentation. We also emphasise the role of
the powerful intermediaries at the heart of multiple digital service ecosystems
which not only opens up a wider array of service and value propositions but can
lead to radically different outcomes from the West where developments have
been patterned by deeply entrenched and industrially segmented value chains
(Thompson 2016).
We have seen how in China, the absence/weakness of record companies and

other traditional intermediaries created a space in which the BAT internet giants
identified and seized new opportunities in the creative cultural sector and came
to play dominant roles. These companies, cash rich due to their established core
businesses, launched a flood of new service offerings. Many of these elements
(e.g. fremium services) also arose in the West. Though perhaps initially
imitations, we see their adaptation, further elaboration and recombination in
China, leading to a remarkable variety and density of interwoven services. By
integrating services across different cultural content sectors (music, film/TV,
literature, games) and in lateral markets (online markets, payment systems)
Baidu, Alibaba and TenCent have each created a cross-platform service
infrastructure through which they can capture multiple value propositions.
24
Our empirical analysis highlighted differences as well as commonalities between

the three, readily related to their historical core businesses, their strategic
manoeuvres and the interactions between them resulted in different evolving
configurations of capacities, services and markets. Intense competition between
these major players provoked massive investments, particularly in acquiring
content, driven by the perceived strategic imperative to maximise their presence
in a key market and increase their already large customer base. These moves
were made at a time when these firms were not able to demonstrate a
prospective return on investment (whether in terms of advertising revenue,
sales of subscriptions for paid music services, ancillary income e.g. from
merchandising and ticket sales). Despite some stabilisation and convergence as
particular service configurations and models become established and
demonstrate their viability, competition continues to drive dynamic processes of
innovation in China’s digital environment.
China’s music and other digital creative industries have in consequence followed
a distinctive trajectory. 33 The outcomes are likely to differ significantly from the
models that have emerged and became dominant in Western contexts controlled
by powerful record labels with huge IP rights holdings. Developments in China,
where record labels were weak and where the technology platforms have come
to play a key role, may constitute an alternative model (Tang and Lyons 2017)
and offer a strikingly different pathway for the evolution of digital music and
other cultural content services. Players outside China may wish to explore the
applicability of the models emerging in China for their own settings.
We conclude that the “disassembly and reassembly” processes described by

Mangematin et al. (2014) are taking place in China’s digital creative industries.
However, they exhibit sharply differing (processual) dynamics and (substantive)
outcomes under these radically different circumstances.
Substantively: with few established service models and only weak institutional
templates, Chinese players drew extensively from a range of Western digital
business and service models. However they have adapted them selectively to
their own business contexts, recombining and progressively extending them to
create radically different configurations. Such ‘realisation of new combinations’
of already existing ideas, reconfigured and combined with the entrepreneur’s
own novel ideas are of course at the heart of Schumpeter’s (1912: 159) ground-
breaking definition of innovation (Kurz 2012). As a result, these mimetic
processes (and coercive isomorphic pressures from the globalised licensing
system) have not to date resulted in convergence with the West (c.f. Di Maggio
and Powell 1991).
Processually: our study confirms Thompson and Macmillan’s (2010) suggestion

that discovery driven approaches (see also McGrath 2010) may be needed in
uncertain and emerging contexts. Though Thompson and Macmillan (2010)
suggest that risk may be mitigated by launching services inexpensively and
redirecting them in the light of experience, in China’s current hyperturbulent
context, these processes of experimentation and ‘trial and error’ learning (Sosna
25
et al 2010) take a very different form. Seeking to develop and exploit customer
linkages across multiple markets and services, BAT have launched and further
innovated services at scale – turning China into a laboratory for developing and
realising business innovations. We find evidence of what Aldrich and Fiol
(1994:666) described as “meaning making on a grand scale”. The commanding
heights of China’s digital economy are characterised not by risk avoidance but by
a more aggressive learning economy, combining pace and scale through the
proliferation of full-scale business launches and sustained innovation. Similar
observations have been made in relation to other sectors including renewable
energy (Korsnes 2015). We must reconsider prevalent accounts of China as “a
nation of copycats” (Thompson, 2016:1). Thomson argues (2016:10) that China’s
current high tech boom has generated, as well as tolerance of risk, “manic and
fierce competition”, illustrated by the emergence of thousands of Uber-like
services in China compared to the handful typically emerging in Western
economies.
Our explanation of why differences in China’s institutional setting generated

such distinctive competitive dynamics in the digital cultural industries highlights
a number of linked factors: the absence of entrenched music labels and studios
within the sectors; the weak boundaries around and between sectors; the arrival
of new entrants (the cash-rich BAT social media platforms) and the fierce
competition that ensued between Baidu, Alibaba and TenCent to secure market
share across many overlapping markets; in previously under-developed cultural
product markets that were growing rapidly to meet unfulfilled demand. The
result was a system that is far from equilibrium. This observation calls into
question the applicability of institutionalist models based upon presumptions of
stabilisation and equilibrium (Meyer et al. 2005). Thus the development of
digital music in China did not correspond to ecosystem models derived from
established business in the West (Tang and Lyons 2017).
Different conceptual frameworks and methodologies are needed to capture

developments in turbulent settings that are far from equilibrium (Lewin and
Volderba 1999; Meyer et al. 2005). In addressing these, our study identified and
exploited striking conceptual and methodological synergies between neo-
institutional accounts of emerging sectors and ‘fields in flux’ and contributions
from STS that, from the outset, have emphasised the need to encompass
symmetrically both hot (dynamic) and cold (stable) settings. Both traditions
have emphasised processual accounts, based on triangulating multiple sources
including qualitative methods (e.g. ethnographic interviews) rather than the
structured quantitative methods traditionally preferred by institutionalists for
testing variance theories (Meyer et al. 2005; Shaw and Allen 2016).
Calls by many of these writers for multi-level and multi-temporal investigation to

achieve an evolutionary account from institutionalist writers (Lewin and
Volberda 1999, Aldrich and Fiol 1994; Meyer et al. 2005; Mangematin et al.
2014), are mirrored by parallel methodological developments in STS. The latter,
described as ‘strategic ethnography, calls for a detailed longitudinal focus on an
array of key actors interacting in historically shaped arenas. Our analysis
addresses how they are configured - constrained and enabled - by their historical
26
context and also how their strategies and interactions between them may
reconfigure this context and enable different pathways and trajectories to
emerge (Pollock and Williams 2009; Hyysalo, Pollock and Williams forthcoming
2018).
Observations on this research, limitations and future opportunities
We have provided some insights into the opening scenes in an enormously

complex and rapidly changing context. Our exploratory research strategy
provided effective tools for gaining insights in this highly turbulent setting,
tracking changes in services, business strategies and the understandings of the
players involved. Some service elements identified in our initial round of
fieldwork had already been revised less than a year later. For example, the
government is currently encouraging the key players towards more
“collaborative competition” in place of the fierce “zero-sum” competition for
exclusive licensing deals that recently prevailed.
This exploratory study of an emerging ecology was limited in duration and scope
(focused around the key BAT players). More robust understanding could be
achieved by extending the depth, breadth and duration of enquiry. The
methodology adopted did not allow the insights into specific organisation
processes that might be afforded, for example, by more detailed ethnographic
case-study of a particular organisation. A key limitation was that it was not
feasible to undertake primary research into the (crucially important) experience
of music creators and consumers.
We have charted some opening scenes in the emergence of China’s digital music
ecology. Processes of experimentation and longer-term distributed “social
learning” (Sørensen 1996) will continue as China’s cultural industries and legal
system evolve. We see this exploratory study as the starting point for a longer
term programme of investigation. By extending this study we hope to track the
further evolution of the sector and the unfolding biography (Hyysalo, Pollock and
Williams forthcoming 2018) of China’s digital cultural industries.
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Transformation of an Organizational Field: The Interplay of Boundary Work and
Practice Work’, Administrative Science Quarterly, Vol..55, Issue 2, pp. 189 - 221
Zott, C., Amit, R. and Massa, L. (2011), ‘The business model: Recent developments
and future research’, Journal of Management, 37, 1019–1042.
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of Growth’, Industrial and Corporate Change, 3 (1), 243-283.
Funding
This work was supported by the UK Arts and Humanities Research Council
(AHRC), China Digital Copyright Centre [grant number RGS 116357] and the
Research Councils UK, Centre for Copyright and New Business Models in the
Creative Economy (CREATe) [AHRC Grant AH/K000179/1].
Notes
1 In this paper we use the actors’ term ‘internet giant’, though Western usage might characterise these as
social media platforms – such as Facebook Amazon Netflix Google(with the inelegant acronym FANG).
2 The definition of platform varies between analytic traditions. This paper follows the usage of Plantin et al.
(2018) who also highlight the emergence of infrastructurised platforms.

3 See also Aldrich and Fiol (1994:649) who develop an ‘institutional constructionist’ argument that ‘Social
contexts present entrepreneurs with many constraints, yet they also set the conditions that create windows
of opportunity. Through processes of social construction, entrepreneurs can develop new meanings that
may eventually alter institutional norms”.
4 Here we were guided by our STS-informed methodology which addresses the “translation terrain”
(Williams, Stewart and Slack 2005), comprising: the character of the key players involved; the perceptions,
capabilities and strategies of these key players; how these are shaped by the historical context; the
relationships between players, the dynamics of the interaction between them; changes in their strategy and
arrival of newcomers and how these shape the development trajectory (co-evolution).
5 WeChat is an alternative messaging service to email communication while having various advanced
features, such as on-time audio & visual conversation, and existing messaging transfer.
35
6 Online media searches in Chinese were particularly fruitful using search terms baidu baike (百度百科 in
Chinese), baidu wenku ( 百度文库 in Chinese) and zhihu.com (知乎 in Chinese). The information collected
in this way was often inconsistent and partial, requiring careful triangulation between sources.
7 The weak development of China’s music industry can be illustrated by comparison with the UK. In 2014
there were 41,000 musicians in the UK (source: https://www.statista.com/ sampled April 2017) compared
to around 16,800 registered members of the Chinese Musicians Association (the body established in 1949,
which includes composers, singers, music critics, lyric writers, educators, translators and music activity
organisers). Though there are no official statistics, industry estimates suggest that in 2017 60,000
independent performers were registered on the six online music sites and had released more than 100,000
digital albums. These were previously mainly amateur music enthusiasts (Chen 2017)
8 Hou Yan, Sell feelings? Xue Cun make the movie ”Northeast people are living Lei Fengs”, December 13th 2016,
http://ent.163.com/16/1213/08/C85EVQ5F00038FO9.html (in Chinese) last accessed June 1st 2017.

9 With between 10 and 15 million unlicensed music downloads per day via its Baidu MP3 service,
accounting for almost 80% of the music market in 2011, Baidu was fiercely criticized by Western industry
organisations such as the International Federation of the Phonographic Industry and was subject to 84
cases in Chinese courts, seeking compensation of RMB 17.3 Million (Dong and Jayakar 2013:88)
10 The mobile phone operators created the earliest charged services. China Mobile’s Migu service launched
in 2002, China Telecom’s i-music and Unicom’s Wo Music, charged users to download music for ringtones.
These even by 2013 still accounted for the majority of revenue for digital music. The mobile operators also
offered data plans in partnership with digital music services such as Xiami and TenCent (Xian 2014). The
mobile companies were slow to develop a wider range of services oriented towards users (Wang 2017).
Though China Mobile set up a streaming service in 2015, they have not become major direct players in the
provision of digital music.
(https://www.chinatechnews.com/2015/11/04/22260-why-is-china-mobile-forming-an-internet-
company-now last sampled 25th July 2017)
11 Peer to Peer technologies arguably heralded a similar process of experimentation in the West – most
famously Napster. Though this was closed down in 2002 as a result of copyright enforcement it culminated
in new service developments like Spotify and other providers of music streaming services (Sun 2016). The
period of experimentation in China started later than (and is clearly informed by experience of) their
Western counterparts – but seems to be continuing relatively unabated.
12 A manager from TenCent, the biggest player, noted, “before 2013 there was no copyright management
mechanism installed in any music platforms.” (interviewed, November 2016).

13 Andrew Chan, SVP, digital & strategic planning, Universal Music China, commented: “The Baidu deal was
the milestone that changed the whole ecosystem. Since then the government has said that it is stepping up
its commitment to protecting intellectual property rights and that the development of the music industry is
a major priority.” IFPI (2014:36)..
14 Analysys.cn, (10/4/2017) 2017 Annual analysis of Mobile Music Industry in China, (in Chinese)
https://www.analysys.cn/analysis/8/detail/1000720/ last sampled 5th May 2018.

15 Estimated user base of the top five digital music providers in China (monthly active users) in order of size
Kugou 231 Million (acquired by TenCent)

QQ 165 Million TenCent
Kuwo 87 Million (acquired by Kugou then TenCent)
Netease 36 Million
Baidu 24 Million
Xiami 9 Million (acquired by AliBaba)
QuestMobile ‘2016 Q1 app report.’ QuestMobile 17th April 2016 http://www.questmobile.cn/blog/blog-
39.html sampled 30 May 2017.
16 Thanks to an anonymous reviewer for this interesting observation
17 Kaiser Kuo, Baidu director of international communications, stated: “Baidu has an ad-funded model and
our core strategy is based on online advertising and dominating at consumers’ main points of entry to the
internet.” (IFPI 2014:36-7).
18 Taihe Entertainment Group was a leading Chinese independent record label that owned two leading
Chinese pop music labels (Taihe Rye Music, Ocean Butterflies Music) and Touch Music Publishing (Ingham
2015).
19 http://www.xiami.com/collect/40906776 last sampled 2 August 2017
20 http://science.china.com.cn/2015-05/20/content_7919304.htm last sampled 2 August 2017
21 Alibaba Music have upgraded their music streaming service with a new online platform - Alibaba Planet -
to connect fans and performers. Jacca-Route, “Alibaba Music Connecting Fans and Artists With New Planet
App’,, Digital Music News 21 April 2016 http://routenote.com/blog/alibaba-music-connecting-fans-and-
artists-with-new-platform/ last accessed 11 May 2017
22 Cussion Pang, chief executive officer of TenCent Music Entertainment group, stated: “Our goal is to ensure
that original music composers and musicians on our platforms would have earned a total income of 500
million yuan (US$74 million) in three years,” Meng Jing (2017), ‘TenCent banks on original music to become
36
China’s Spotify’, South China Morning Post, 24th July 2017, sampled 31st July 2017
http://www.scmp.com/tech/enterprises/article/2103911/TenCent-banks-original-music-become-chinas-
spotify (original article title ‘TenCent to shake up the market for music’)
23 Thus TenCent’s green diamond - the most popular paid-for digital music service – charges 10RMB per
month 114RMP p.a. (2016 figures) and was estimated in 2015 to have 3 million subscribers (IFPI 2015).
Baidu’s advertisement-free “VIP” streaming service also costs 10 RMB/month (Millward 2015). Price and
features of the main subscription services are summarised in Tang and Lyons (2017:12 Table 2)..
24 As well as the price, uneven access to mobile data services meant that users might cache 30-50 songs on
their mobile phones from streaming services for “listening on the go”. (“Matthew D.”, 2015)
25 https://www.crunchbase.com/organization/netease-cloud-music#/entity and
http://istock.jrj.com.cn/article,yanbao,30086488.html last sampled 2 August 2017

26 For example TenCent’s deals with western music companies were matched by similar agreements with
Hollywood studies (Cookson 2014, Osawa 2015).

27 ‘TenCent to merge QQ Music service with China Music Corp to create streaming giant’ South China
Morning Post 15 July 2016 http://www.scmp.com/business/companies/article/1990254/TenCent-merge-

qq-music-service-china-music-corp-create-streaming last sampled 11 May 2017. See also Osawa (2014),
Cookson (2014), Music Business Worldwide (2015).
28 Thus in November 2014, TenCent sued Netease; in December 2014 Kugou sued Netease and in May 2015
Alibaba sued Kugou (Horwitz 2015).

29 https://www.zhihu.com/question/34100979. (in Chinese) posted 7.5.2016. last sampled 2 August 2017
30 For example, in the 2nd quarter of 2016, YY Music’s 600,000 paying users spent an average of 269 RMB
on virtual gifts (a total of $28 million). (Xiang 2013)

31 Quoted at http://business.sohu.com/20161010/n469887776.shtml (in Chinese) posted 10 Oct 2016, last
sampled 2 August 2017

32 Interview with TenCent music in November 2016, Beijing and discussions with participant at final
workshop Beijing 6 April 2017

33 See the comment by the deputy director of the research centre for Chinese Internet+ Association, on the
media, http://news.pedaily.cn/201804/430060.shtml (in Chinese) last accessed May 3rd 2018.
37
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New Business Models in the
Creative Economy
College of Social Sciences / School of Law

University of Glasgow
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Digital online music in China – a

CREATe Working Paper Series 10.5281/zenodo.2590553.

Digital online music in China – a “laboratory” for business

Citation for published version:

Take down policy

Download date: 31. Oct. 2018

Digital online music in China – a “laboratory” for business

1 University of Edinburgh Business School, [email protected],

and in lateral markets (e-commerce, payment systems) to create cross-platform

in differing contexts may generate different pathways and outcomes.

Drawing upon these complementary traditions we developed a multi-sited study

Analytical framework and research strategy

We approached these developments from a background in STS. The social

Cognate research from Organisation Studies has explored the implications of

Traditional institutionalist perspectives (Di Maggio & Powell 1991; Zysman

Whilst neo-institutionalism emerged around a concern to explain isomorphism,

Parallel intellectual moves have arisen within organisation studies amongst a

Other institutionalist contributions have also proposed evolutionary accounts

Recent contributions helpfully focus upon the dynamics of ecosystem evolution

that addresses contextual influences in technological change (Fleck 1993,

This departure from presumptions of isomorphism opens up questions about

Mangematin et al. (2014), in their introduction to the 2014 Special Issue of

context in which to explore the radical reconfiguration of value chains in

These discussions highlight important points of conceptual overlap between STS

Dynamic developments, shaped by local interactions, may not be effectively

Alongside this move towards ethnographic, historical and other qualitative

These considerations profoundly shaped our research design. To capture

detailed personal interviews, repeated over time, to capture accurately the

Our primary investigation targeted three groups:

Our investigation encompassed three creative cultural industries: music, e-

The Chinese context

So even though, as part of accession to the World Trade Organisation, China

“A hundred flowers blooming”

Though widespread piracy and the weak enforcement of Intellectual Property

Government policy seems to have been generally favourable towards

With access to the new technologies in a liberal environment, amateur musicians

The case of Xue Chun: an amateur musician becomes a multimedia star

This period saw the mushrooming of music-related online services offering

Copyright enforcement and licensing provokes radical restructuring

These developments triggered a process of rapid and far-reaching restructuring

The evolution of China’s online music ecology

The development of online music in China was strongly patterned by its

The recent measures adopted by the Chinese government to tighten copyright

TenCent has developed a distinctive strategy – launching services with simple

Given the prevalence of pirated music in China, consumer services typically

Users increasingly access music through mobile devices. However, in China,

The evolution of China’s online music ecosystem is summarised in Figure 1

Learning by competing: creating and navigating a rapidly changing ecology

As shown in the preceding section, players deployed different strategies,

Having achieved leadership in digital streaming services, TenCent started to

New service developments on multilayer cross-platform service infrastructure

However the overarching pattern of sustained experimentation differentiates

The commercial success of online services and the established popularity of

These developments arguably provided a template (including valorisation

TenCent representatives, in our second round of fieldwork in November 2016,

generate profit. There is significant revenue from advertisements (which are

In 2016, TenCent’s digital music general manager Wu Weilin announced at a

TenCent managers expressed a similar view: “Music is a very important part of

exploited. In contrast to existing studies of the role of technology platforms in

Within cultural industry sectors: ‘Vertical’ integration within sectors such as

‘Lateral’ Integration between cultural industry sectors: Vertical integration

‘Horizontal’ Integration at the platform level: Attracting huge and growing