SHANGHAI — Until recently, damages for music copyright infringement in China had been set notoriously low compared with other major music markets. In 2018, for example, Chinese folk singer Li Zhi sued the Tencent Video-distributed online music competition show The Coming One for 3 million RMB ($472,000) when artists on the program performed his music without the proper license. Although episodes of the show were viewed over 400 million times, Li Zhi was ultimately awarded just 200,000 RMB ($31,400).
In late 2020, though, China amended its Copyright Law (originally adopted in 1990) to give rights holders the ability to sue serial violators for up to 5 million RMB ($786,000) — a tenfold increase from the previous 500,000 RMB ($78,000) maximum. (As in other countries, claimants can receive statutory damages when losses would be difficult to calculate.)
That’s not the only change the music business has welcomed. There is now a remuneration right for the public performance of sound recordings, including broadcasts. That puts China, the seventh-largest recorded music market, ahead of the United States, where terrestrial radio stations don’t have to pay to use sound recordings. “The new copyright policies in 2020 are a turnaround change that will relatively level the playing field for creativity in the music industry,” says Leon Lin, head of BMG China.
Challenges persist in growing revenue for artists and songwriters, however. In China, 53% of artists, producers and songwriters earn less than 5,000 RMB ($784) per month. And while the updated law also gives the government tools to better regulate how China’s two music collecting societies operate — one measure requires them to regularly release data on royalties, management fees and undistributed royalties — artists and industry executives continue to doubt their effectiveness.
The Music Copyright Society of China (MCSC), which was established in 1992, collects royalties for publishers and composers but has been criticized for its high tax and management fees, connections to the government and weak management. According to the society, it had just over 10,000 members in 2020. (For context, Netease Cloud Music, one of China’s major streaming platforms, says it has over 200,000 registered musicians.)
Similarly, just 10% of musicians surveyed in 2020 were members of the China Audio-Visual Copyright Association, a 17-year-old organization that handles broadcasting rights, performance rights and internet broadcasting rights for recordings, according to the China Musician Report, compiled by Beijing’s Communication University of China. (Until last June, CAVCA’s operations largely focused on China’s 112,000 karaoke bars, but have expanded with the introduction of broadcast rights for sound recordings in the amended law.)
Tiangao Lee, founder of Chengdu-based independent hip-hop label Mintone Records, says he chooses not to work with the collecting societies, because he has little confidence that they can effectively track usage and distribute revenue.
MCSC and CAVCA have also struggled for relevance in an environment where Tencent Music Entertainment held exclusive licensing and sub-licensing deals with major labels and artists to distribute and stream master recordings, which allowed it to bypass collecting societies.
“The amendments are an important step toward creating a stronger copyright and authors rights environment,” says a representative for CISAC, the international confederation of authors societies. “But we believe there is further progress to be made, especially in strengthening the collective management system and the protection of rights online.”
Nevertheless, the amended copyright law shows how even in the face of a government crackdown on tech companies like Tencent — China’s most important music company — the country has made strides in paying music creators for their works. A decade ago, almost 100% of China’s digital music was pirated, and its biggest search engine, Baidu, was one of its major copyright offenders. Change began around 2011, when Baidu signed licensing agreements with Universal Music, Warner Music and Sony Music Entertainment. Then, in 2015, China’s National Copyright Association, a government office that oversees copyright policies, ordered streaming services to remove millions of unlicensed songs from their servers.
By 2020, according to IFPI figures, 97% of Chinese listeners were accessing music through licensed audio streaming services, up slightly from 96% in 2018, with 61% using a paid streaming service (compared with 3% on Tencent platforms in 2017). China also brought in 17.58 billion yuan (about $2.8 billion) in revenue from digital music and related activity in 2019, up 55% from 11.3 billion yuan (about $1.8 billion) in 2018, according to iResearch, a China-based online audience measurement company. (China had $791.9 million in recorded-music revenues in 2020, up 33.6% from 2019, according to the IFPI.)
But new types of copyright challenges are emerging. The rising popularity of livestream broadcasts and short-video apps such as Douyin (TikTok) and Kuaishou has coincided with an explosion of copyright violations. CAVCA revealed in January 2021 that 155 million videos on Kuaishou were infringing copyrights.
Chinese music companies are working to come up with a plan to better police livestream broadcasts, an industry that generated $862 billion in revenue in 2019, according to Forbes. An amendment to the copyright law refers to “broadcasting via information networks,” which means that composers of songs used in livestreaming will be paid, as well as rights holders. And China’s state copyright group has called on users to “say no to short-video piracy.”
Tencent, in the aftermath of a government order in July to end its exclusive licensing deals with major labels, was the first tech company to respond when it launched its Sonic Engine live-music service, which connects livestreaming artists with an authorization system where users pay fees to use copyrighted content.
To create further oversight, the government is also moving to integrate blockchain and “smart contract” technology into the current copyright system. Last year, the Copyright Association of China, which also implements copyright laws and assists rights holders, launched the China Copyright Chain, which can document proof of digital assets and help monitor copyright infringement.
“Even so,” says BMG China’s Lin, “it’s going to take a long time for the operation to take hold and for people to accept it.”
