Chinese Serial Entrepreneur Gary Chen to Build an Ideal Model for Musicians with a Smart Headphone and a Mobile Solution

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Starwish is the new startup founded by Gary Chen, a serial entrepreneur in China’s music industry. He never believed digital music content could be a significant revenue source to musicians but now thinks fans who’d spend money for stars they fancy can be. With Starwish Gary wants to build a platform for musicians worldwide, by taking advantage of the mobile Internet and smart hardware trend, engage the willing payers.

Half a year after the founding his company is launching VOW, an Android-powered smart headphone, and StarChat, a mobile app for musicians to interact with their fans.

Though Mr. Chen isn’t a believer in digital content sales, he once had confidence in online advertising.

He is well known for managing to, after two years of effort, convince the major global labels to offer free digital music downloads in mainland China through Google China’s music search service which was launched in March 2009.

The search results returned by the Google music search would direct users to Top100.cn, an online music site ran by Gary’s team and funded by Google China, to download authorized digital tracks; Top100.cn, in turn, shared  advertising revenues generated from Google AdSense with labels or other music rights holders.

Top100.cn, launched in 2006, was one of the first in mainland China to offer legitimate digital music and so far the only one with such a business model. The deal with Google China was remarkable back then when digital music piracy was the norm in mainland China — Google China’s direct competitor Baidu, now the dominant search engine in the market, would continue to deliver pirated digital music for several more years.

Google China retreated from mainland China in 2010 and would pull the plug on the music search in September 2012. Then Top100.cn would suffer drastic decline in both traffic and advertising revenue. The site was closed in 2013.

Many Chinese online music services have been, since they started paying digital music rights not very long ago, struggling to survive with advertising as a major revenue source. We saw a wave of consolidation in the past two years. But Gary doesn’t think his model has proved a failure given Google’s moves.

There have been online services trying to help musicians reach users directly so as to get rid of all the distribution channels and pocket all the money that used to go to those channels. Xiami.com, a Chinese online streaming and download service, was founded five years ago as a peer-to-peer marketplace for digital music transactions. Xiami had been struggling to pay music rights before it was acquired by Alibaba Group about one year ago.

The problem with business models like Xiami’s, according to Gary Chen, is users wouldn’t pay for music content at all in China — it’s also true in many other markets. So long as the music market is still dominated by content production or distribution companies, whose job is selling content, musicians couldn’t make big money, he concludes.

So the whole idea of the StarChat mobile app is to help musicians reach fans directly and make money from somewhere else. The direct communication with stars, Gary reckons, must encourage fans to purchase all kinds of goods, physical or virtual, created by stars or just sold by them. The idea actually, to some extent, has been proven to work in China. Purchases of virtual gifts to singers on online singing services contributed about half of the total revenues in China’s online music market in 2013.

StarChat works like the WeChat Subscription Account system. Fans are able to subscribe to a musician’s account and receive messages of various formats from the musician.

StarChat

Musicians a user has subscribed to (left) & Interacting with a musician (right)

It will support Alipay in mainland China and Paypal outside China for mobile payments. StarChat also includes a feature that shows metrics of fans and income.

The the iOS version is waiting for Apple’s approval and the Android one is about to launch.

Last week, Li Yuchun, one of the most famous pop singers in China, debut her latest single on Weibo, the most popular microblogging platform here, charging 2 yuan ($0.3) for a download. It’s similar to StarChat’s model that fans can follow her and now able to purchase goods directly provided by her. Gary Chen doesn’t think this way will prevail for the user experience isn’t good — for one thing, users have to visit a third-party website, which must be the singer’s business partner, to download and make payments.

VOW1

Android-powered VOW Headphone

VOW

The goal of VOW, according to Gary, is to provide higher sound quality than Beats headphone and be Smart.

Today it’s really not difficult to find the best manufacturers in China, such an experienced manufacturing country, in order to beat Beats in sound quality — Beats headphones are made in China — or build a hardware product loaded with Android. VOW is designed and made in Shenzhen, a city that has attracted makers around world for sourcing manufacturers or buy low-cost electronics parts.

The Android-powered smart brain of VOW is a separate part that can be attached to one side of the headphone. There have had four pre-installed apps, VOW setting, music streaming app (Douban FM for mainland China and Pandora for markets outside China), WeChat and StarChat. So you can listen to streaming music, chat with WeChat friends, or interact with your fans or musicians. When WiFi connection isn’t available, you’ll also be able to use it by putting in a SIM card or loading songs an 8G drive can hold.

Like on most Android-powered small screen devices, apps on VOW are not customized for a smaller screen but are half-size versions of them for average smartphones.

VOWs are now available in ivory and light gold. More custom designs will be made for certain celebrities later on. Gary plans to get those celebrities sell the headphones on StarChat, promising to share a percentage of sales revenues with them. Their adopting StarChat must encourage fans to sign up to the app too.

VOW lands on Kickstarter today, will begin taking pre-orders in China on April 28 and has sold some 200 pieces to Amazon China. When it comes to prices, it will be a little bit more expensive than Beats outside China while less expensive in China.

Gary said they’d develop more music hardware products if this one performs well. The combination of StarChat and VOW gadgets seems an ideal model — and sounds similar to where iPod started?

Chinese tech people always say, “it’s all about execution”. A few years ago a lot of people thought mobile messaging app was a good idea for smartphone-based communication. Finally WeChat stood out of a flock in China and evolved to be a great product. The music industry is way more complicated than the software development market. We’ll see how Gary’s idea will change it. But it must be really hard work.