Chinese Musician-turned Tech Investor

Hu Haiquan (Weibo) is a musician of a Chinese two-men vocal band Yu Quan (Weibo Page). The band celebrated its fifteenth anniversary this year. As of the most successful musicians in China, the two witnessed the China music industry in the Heyday and then declined thanks to the rise of digital music and massive music piracy in online and offline China.

The Chinese Internet giants are not older than the band. Tencent was founded in the same year with Yu Quan. One year later, Baidu, the one that would become the public enemy of China music industry because of its MP3 search service which didn’t filter out pirated digital songs, and Chinese e-commerce giant Alibaba were founded.

Realizing the power of the Internet, the two decided to establish their own label, named EQ, in 2004 to produce artists tailored to the Web. Different from conventional labels, theirs was to introduce low-cost new artists, produce as many copyrighted songs as possible and promote those singers and songs mainly through new media. A lot of songs made by the company managed to become hits on China Mobile’s mobile ringtone platform which was once one of the few channels the China music industry could make money from digital. But currently China’s copyright market doesn’t make life easy for EQ.

Yu Quan launched its ninth self-written album last month. It’s not a CD anymore but a dongle. It’s the first in China but still physical. Chinese users, however, don’t need to buy the physical for all the tracks of it are available for free on major Chinese online music streaming services, including those owned by Tencent, Baidu and Alibaba.

image credit: NPC Taobao Store

The times of online music piracy are gone as Chinese online music services, or their parent companies, pay music labels or agencies like Yu Quan’s for music rights. Regardless of the costs, those services never planned to charge users. For cash-rich big players, Baidu, Tenent and Alibaba, they prefer to pay for users in order to have them stay on their platforms to consume other online services — some like online gaming are way more profitable.

The music industry began urging those online services charge users directly in the past couple of years. Finally those online music providers rolled out premium subscriptions, offering high-quality music, downloads and so on, that cost subscribers several yuan (about 1-2 USD) a month. But what music companies including Yu Quan’s can get from revenue shares from subscriptions is minor.

It seems the whole music industry have come to a consensus that musicians now should offer free music online for branding and reaching audiences, and count on offline shows to generate revenues. But it is found that it’s still very hard for less known independent musicians. Even big stars Yu Quan found unreasonable obstacles there. The organizer of each concert is required to pay Music Copyright Society of China for the songs performers sing at the event. But Yu Quan never received a penny from it as most songs they’d perform are written by themselves. This one example showing that the China copyright market isn’t well organized.

Yu Quan nevertheless have decided to embrace the rise of mobile Internet. They planned to have audience to their next concert select seats online, pay with WeChat and check-in with mobile tickets, according to Hu Haiquan’s latest talk (in Chinese).

Musician-turned Tech Investor 

Mr. Hu actually invested in a mobile ticketing company. Actually now he is known as a tech investor in mobile gaming, smart watch and so on. Dragons Summon, an Android/iOS casual game he invested in, was launched in early this year. It is reported that it will be able to make 500 million yuan (about $82 mn) in revenue by year end (report in Chinese). The smart watch maker Hu has invested in is Tomoon, founded by well-known Chinese tech entrepreneurs. What he has invested in are not merely a game or smart watch but the teams behind them who he believes will always be able to develop well-designed, sophisticated apps or gadgets, he said in a recent interview (in Chinese).

Hu said his ultimate intention to invest is to figure out ways to change the music and culture industry in general he always loved with the distribution channels and approaches in tech sector. Although there are positive changes in copyright market in China, he said, it hasn’t started a virtuous cycle yet. He’s learning about new technologies and distribution channels in mobile Internet, hoping they’d help with music right distribution, music sharing and the commercial value of music.