Music 2.0 - Exploring Chaos in Digital Music

August 21, 2008

Major Labels Pull Out Of IFPI Hong Kong

Filed under: Music Industry — maths @ 4:04 pm
Gang of Four

In a sudden announcement in Hong Kong yesterday, the majors revealed that it was pulling out of the IFPI in HK and they will be setting up a parallel organization to manage their rights. In a press conference yesterday attended by management representatives from Universal Music, Sony, Warner Music and EMI (or what’s left and not owned by the Typhoon group), they announced their formal withdrawal from IFPI Hong Kong and proclaimed it an appropriate time for what they call a commercial decision - a decision that our sources say had been in the making for the past 2 months.

Ariel Feng of Sony Music tried to explain it as,

“Europe and the US have different music associations representing different companies with varied directions and interests as befits different labels and this has been the general trend over the past few years. Record labels develop in many diversified areas and it is time to establish a new organization to coordinate this development. This is a purely business decision.

Certainly if this is the true rationale for pulling out of the IFPI, then surely it is time for the majors in other parts of the world to similarly question and reconsider their membership of the IFPI.
On being asked if domestic powerhouses Emperor Entertainment Group (EEG) and East Asia would join the new organization, Feng stated,

“I cannot speak on behalf of other companies, we have had many discussions, but it starts with 4 companies first. In future there will be more than 4 companies and we are adopting an open attitude on it.

He also indicated that they have yet to have a name for the new association, and will hold a meeting to decide on it.

Hong Kong has had a thriving recorded music industry in years gone by and the changes in distribution and the internet have impacted it dramatically affecting both majors and domestic labels. Membership of the IFPI in Hong Kong extends beyond just the majors to include influential domestic labels with a total of around 76 members and it is likely that friction and power play between the majors and domestic labels’ influence within the IFPI could be the reason for this breakaway organization. On June 12, EEG’s Wu Yu was selected as the IFPI HK President and there is word on the street that dissatisfaction with EEG’s appointment could be a factor in the majors’ dramatic decision. Furthermore, sources have indicated that the majors have been unhappy with the IFPI’s progress on tackling piracy issues, and failure to capitalize on their bargaining power to obtain better revenue shares.

This certainly points to a more plausible explanation than Feng’s denial that there was “definitely no dissatisfaction with IFPI”. On a more immediate impact, this will certainly throw into disarray the upcoming annual IFPI Hong Kong Top Sales Music Awards presentation, an awards ceremony based on sales figures - and casts doubt on whether the majors’ artists would attend it. Universal Music’s Duncan Wong certainly did his best to leave it hanging in the air,

It is not a good moment to answer this, if we attend the ceremony, we will report the numbers to IFPI, if we feel it is good to attend, we will report, if not then we won’t report.”

So with the record industry already in near crisis mode brought about by the many past missteps especially by the major labels in the industry, the turf war seems to have exacerbated in Hong Kong and the biggest losers are likely to be the artists. Our sources have clarified that the pull out is contained within the Hong Kong market only and the major labels’ international membership with the IFPI will continue while the IFPI’s satellite office in China will still represent the majors but in due course, it is expected that the majors will reel in China too. However, such a Georgian middle finger action will certainly have implications beyond the local market.

I’m gonna live right in your face
I’m gonna lie here while you play
Fuck you, yeah and fuck this place
Don’t think you’re chasing me away

- World Falls Apart, Gang of Four

Credits:

  1. Gang of Four
  2. Sing Tao Daily
  3. Major Label Representatives Image from Sina

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