9-708-479 REV: APRIL 22, 2010 JORDAN SIEGEL YI KWAN CHU The Glob balizatio on of East E Asiian Pop p Musicc Intro oduction Fo oreign investo ors in late 20007 had a lov ve-hate relatiionship with the East Asiian music market. m Foreig gn record labels and film studios s were attracted a by the t sheer sizee of East Asia’’s population (over 1.5 billion people) and enormo ous market po otential ($9 trrillion estimated regional GDP).1 But China C y rate of 85% %.2 Even in th he more deveeloped markeets such as Jaapan, South Korea, K had a music piracy Taiwaan, and Hong g Kong, piracy y had cost thee music indusstry at least a quarter of its revenue. Bu ut the East Asian A music market’s reccent growth and renewed d profitability y was exceptional compared with mo ost of the rest of the world d. (See Exhib bits 1 and 2.)) While global music salees had been declining forr a decade, th he East Asian n market was beginning to o record healtthy growth. From 2005 to t 2006, the In nternational Federation off Phonograph hic Industry (IFPI) ( experieenced a 5% deecline in traade revenue from f global sales s of recorded music to o $19.6 billion n; revenue from physical sales, mean nwhile, slump ped 11% to $17.5 $ billion. But againstt all odds, th he Chinese, South S Korean n, and Japan nese music markets all reccorded growth h.3 In particu ular, the Chin nese market had h tripled in n size from $323 million in 2004 to $1.09 billion in 2006. The Eaast Asian indu ustry was forrecasted to grrow at mpound annu ual growth rate r (CAGR)) of 18.5% between 20077 and 2011.4 (For backgrround a com inform mation on thee industry stru ucture of the Japanese, Ch hinese, and So outh Korean music m marketts, see the Appendix.) Jusst a few yea ars earlier, sim milar to the global musicc markets, th he Japanese and a South Korean K markeets had been shrinking at double-digit rates due to piracy and illegal Interneet downloadss. But they were w able to rebound in just j a few yeears. Subseq quently, thesee Asian mark kets were listeed by Billboaard magazinee as among the 12 “miraclee markets” thaat achieved ov verall growth h. Several interestting trends co ontributed to this t phenomeenal growth of o the music and a film mark kets in Asia. One was drriven by techn nological inn novation. “Diigital cinema” and “digitaal music” werre the latest buzzwords. In 2003, So outh Korea was w the first music m markeet where salees of digital music m surpaassed those off physical form mats. Digitall music sales had since sky yrocketed to become one of the most important rev venue sources. An nother trend in these Asiian markets was w the regio onal joint production of music m with multim counttry teams com mbining elem ments of the different d cultu ures, languagees, and art fo orms. Connecctions betweeen music com mpanies from m China, Hon ng Kong, Taiw wan, South Korea, K and Jap pan were gro owing strong ger. Joint ven ntures that co ombined Japaanese compan nies’ marketin ng and managerial skills, South S Koreaan companiess’ expertise in n technology, and China’s human resou urces and maarket potentiaal had mush hroomed in th he previous few years. Talent management comp panies also crossed c bordeers to manaage foreign artists, a or to market foreeign artists in local marrkets. In sh hort, the tren nd of ______________________ __________________________________________________________________________________________________ Professo or Jordan Siegel and Research Associaate Yi Kwan Chu prepared p this case. HBS H cases are deveeloped solely as thee basis for class disscussion. Cases arre not intended to serve s as endorsemeents, sources of prim mary data, or illusttrations of effectivee or ineffective man nagement. ght © 2008, 2010 Prresident and Fellow ws of Harvard Colleege. To order copiies or request perm mission to reproducce materials, call 1-8800-545Copyrig 7685, wrrite Harvard Busin ness School Publish hing, Boston, MA 022163, or go to http:://www.hbsp.harv vard.edu. No part of this publication n may be reprodu uced, stored in a retrieval system, used in a spread dsheet, or transmittted in any form or by any mean ns—electronic, mecchanical, photoco opying, recording, or o otherwise—with hout the permission n of Harvard Busin ness School. This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music “hybridization” of cultural consumption had emerged. Yet this hybridization was still in its early stages, and it was an open question as to whether it was a smart strategic decision for companies to focus resources on hybridization. Moreover, some companies were focusing their hybridization on the U.S. market, whereas others were openly shunning the Western markets and focusing solely on a regional strategy within East Asia. Did turning East or turning West make more sense for these music companies? Cross-Border Flow of Music and Films: Going East or Going West? The consumption of domestically-created music and film in East Asia was no longer confined within country borders. The destinations of these cultural products, as well as the ways they entered foreign markets, could be completely different. Examples of Successful Cross-Border Flows Statistics published by the South Korean Ministry of Culture and Tourism showed that South Korean music and TV dramas were mostly exported to other Asian countries. Broadly speaking, Japan was the top export destination for South Korean music, accounting for an overwhelming majority of South Korean exports (see Exhibit 3). Japanese exports most often went to the United States, Europe, and some neighboring Asian countries, according to statistics from the Japanese Ministry of Foreign Affairs. However, Chinese music products rarely flowed outside of their own home market. Cultural Proximity One obvious reason for the flow of cultural contents into foreign markets was that people living in these foreign markets shared similar cultural and historical traditions, and therefore were able to enjoy one another’s cultural products. Asia could be divided into sub-regions that were defined by geographic proximity, shared environmental conditions, and the direct exchange of information and goods.5 East Asia included cultures that had been heavily influenced by ancient Chinese culture, such as South Korea and Japan. In East Asia, Confucianism, the ancient Chinese philosophy that had been influential as early as during the Han Dynasty (206BC–9AD), was the original source of shared traditions.6 Its teachings, from the emphasis of loyalty to ritual propriety, and from the reverence of education to filial piety, had strong influence politically, socially and culturally in China, Japan, and South Korea. Among Confucianism’s other political and cultural influences, Confucian rituals, as expressed in court etiquette, could be observed in South Korea and Japan. Court music—initially performed by a Confucian ceremonial orchestra in Chinese royal court—was lost in China but still existed in Japan and South Korea. Ethnomusicologist Hiromi Lorraine Sakata noted that “the ritual and court music traditions of both South Korea and Japan [were] based on the Chinese idea that ritual and ceremonial music must represent harmony in nature.”7 They had similar traditional instruments, such as the zither, which in Chinese was qin or zheng, in Korean kayagum, in Japanese koto; and the flutes, which in Chinese was dizi, in Korean taegum, and in Japanese shakuhachi. Moreover, the Japanese noh and kabuki theater was heavily influenced by Buddhist philosophy, with many references to classic Chinese poetry. In particular, Okinawa, the largest of the Ryukyu Islands in Southern Japan, had served as a stepping stone in introducing Chinese music to Japan. Comprising hundreds of islands on the Pacific Ocean, Okinawa was formerly known as the Ryukyu Kingdom, which had been paying tribute to China and the Japanese imperial court throughout much of its history. Sanxian, a Chinese threestring, plucked instrument covered with snake skin, was first introduced to Okinawa and had since been a main instrument in Okinawan music. That musical instrument was then adopted as sanshin in 2 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 Okinawa and became an important folk and popular instrument throughout Japan as shamisen.8 Okinawan folk music reflected other Chinese music elements. The musical scales of Okinawa were different from Japanese scales and closer to that of the Chinese. Interestingly, Okinawa also served as a stepping stone from Japan to other parts of the world and has played a significant role in the current Japanese rock music scene. In fact, several famous J-pop singers, including Namuro Amie, and girl bands Speed and Max, were graduates of Okinawa Actors School.9 When Okinawa first became an American military base in Pacific Asia after the Second World War, Okinawan musicians fused local tunes with Western music that were played at the military base to formulate an Okinawan style that had both Okinawan and Western rhythms, melodies, and instruments such as the electric guitar and the bass.10 The most influential Okinawan musician in the contemporary era was Shokichi Kina: he was to Okinawan music what Bob Marley was to reggae.11 As son of a renowned Okinawan folk singer, Kina had started his own music career in his teenage years. When he was 16, he wrote “Hai Sai Oji-San” (Hey Man), which would become one of his most famous songs; and while attending college, he formed his own band, Champloose. In addition to the traditional sanshin, his band played the Western bass, guitars, and the drums. But Kina’s music was distinctly local. Music critics said his music was, “in fact, a reaction to the American military presence in Okinawa, and staked a claim for the locals on an island that had spent most of its history run by foreigners.”12 For Okinawans, paying tribute to China over the centuries did not bring lasting peace. In the 19th century, in order to make the Okinawans an integral part of Japan, the Meiji government abolished the Ryukyu Kingdom and set up Okinawa Prefecture. But during this same time period, China, Taiwan and Japan each at one time claimed sovereign rights over the islands. After the Second World War, Okinawa was occupied by the American military forces. It was not until 1972 that the sovereignty of Okinawa reverted to Japan—although American military bases continued to occupy about 10% of Okinawa.13 Kina’s music came out soon after this historic moment and it was widely interpreted as an example of “a young bunch of singers and players who were fed up with the status quo, and rocked out in protest.”14 Kina’s most popular song is “Hana (Flowers—Bring Flowers to Everyone’s Hearts),” which became popular across Asia and was covered by numerous foreign artists.15 Different versions of “Hana“ altogether sold 15 million copies in countries including Vietnam, the Philippines, Indonesia, Malaysia, Myanmar, South Korea, and Mongolia.16 In fact, Kina had tremendous natural charisma and a strong political outlook: he opposed the continued U.S. military presence on Okinawa and was an outspoken advocate of Okinawan independence. In 2004, he was even elected to the Japanese parliament’s House of Councilors under the Democratic Party banner.17 The Japanese Idol System In the early 1970s, with more disposable income in hand, young people started looking for more entertainment options. They began to identify with pop idols who seemed to lead sophisticated lives. Another reason for the idol phenomenon, according to Steve McClure, Asia bureau chief of the New York-based music-industry magazine Billboard, was that “they [reflected] the values of a society that [put] a premium on conformity at the expense of individuality. Non-threatening, non-controversial role models [were] useful tools in maintaining social harmony.”18 The pop idol system started to emerge, with wholesome-looking youngsters in their teens and early twenties dominating the pop music industry. These idols were usually popular for a season to a few years, and they were usually packaged to become all-around entertainers and media personalities (tarento) with prominent public profiles during their brief careers. The pop idol system and J-pop, which combined Western sound and beats and Asian melodies, soon spread to other Asian countries, where social harmony was similarly emphasized, living standards were improving, and the young generation was hungry for more entertainment. Musically, in the 1980s in Hong Kong, the demand for musical entertainment was large but the 3 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music number of songwriters was limited. To meet the growing demand for pop music, the Hong Kong music industry adopted Japanese melodies and localized them with Chinese lyrics. This genre of pop songs was very popular because the ballad style of J-pop was familiar to local audiences.19 For similar reasons, J-pop was also very popular in Taiwan. Although the influence of Japanese music was prominent in Hong Kong and Taiwan, it was less so in South Korea and Mainland China. The shared cultural tradition among East Asian countries was temporarily interrupted at the end of the Second World War, when anti-Japanese sentiment ran high in both South Korea and China because of Japanese imperialism during the first half of the 20th century. One of the questions for the music industry in 2007 was whether the timing was now right to vastly expand the level of musical exchange between Japan, on the one hand, and China and South Korea on the other. In the meantime, Mainland China, Hong Kong, Taiwan, and other Mandarin-speaking communities, such as those in Singapore and Malaysia, had formed a sub-regional niche, and singers popular in one country—such as Jay Chou (Taiwan), Andy Lau (Hong Kong), and Stephanie Sun (Singaporean debuted in Taiwan)—would often become popular in the others as well. Moreover, because Mandarin was a commonly understood language in all of these regions, to fully capture the market potential, singers usually sang in Mandarin, including the Hong Kong singers who were used to singing in Cantonese.20 In the film and TV markets, cultural proximity probably played the largest role in reaching out to neighboring countries as well. South Korean TV dramas were popular in other Asian societies because they depicted conservative families and the value of love, which were closer to real life in these societies than, for instance, American dramas.21 Asian Diaspora Another reason for the flow of cultural contents into foreign markets was the Asian population abroad. (See Exhibit 4.) As immigrants continued to settle all over the world and travelers worked or traveled overseas, they created niche markets in which familiar sounds and images from home were desired. Technology also made it easier for expatriates to connect with their homeland. What used to happen on a neighborhood level was now taking place on a much larger scale. Besides word-of-mouth in the respective diaspora communities, special TV channels and websites catering to the Asian diaspora were established to help spread news of popular trends at home. These included MTV-K for the Korean Americans as well as the website Yes Asia (www.yesasia.com). Statistics from the Japanese Ministry of Foreign Affairs showed that the United States had the largest number of Japanese immigrants, either for long stays or for permanent residency, and had thus been a top export destination for Japanese music and films. But Chinese films and music were not marketed overseas—despite a large diaspora Chinese population—perhaps because of the lack of a star management system that had already been established in India, Japan, and South Korea, and because the overall quality of products from China was still behind that of other Asian countries.22 But it was hard to pinpoint who was buying films and music abroad, and hence, difficult to estimate the role that the Asian diaspora played in the consumption of Asian cultural contents. Indeed, according to ImaginAsian Entertainment—a U.S.-based 24-7 TV network for the Asian American community—60% of those who watched its Asian channels were not of Asian ethnicity. Similarly, 70% of the audience of the company’s Manhattan movie theater that showed only Asian films was non-Asian.23 Some believed that the role of the diaspora was limited. Naoki Sekine, Japanese music critic and market analyst, believed that the diaspora population was a rather small niche market.24 Organic Growth Steve McClure, Asia bureau chief of the New York-based music-industry magazine Billboard, also saw the diaspora market as “not a ready market” because, he argued, music was consumed based not on race or ethnicity but on taste. Some of the more popular Japanese music 4 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 in Europe and the U.S. was not the mainstream J-pop but independent music, appealing to fans who liked specific genres of music.25 An interesting example was the Visual Kei (literally meaning “Visual Style”)—a genre that emphasized visual effects and that was characterized by the use of outrageous looks that included striking make-up, eccentric hairstyles, elaborate costumes, and sometimes androgynous looks. Musically, these performers sang in a variety of styles, from pop to rock to punk. Their visual presentation tapped strongly into the world of anime and manga, which was how they were introduced to the West; in Germany, the Financial Times called visual kei bands “living manga” characters.26 Linguistically, many of these groups used French names and sang in a mixture of Japanese and English, and occasionally, in German and French. The European slant of visual kei, not to mention its exotic Eastern influences, helped explain its significant appeal to European audiences.27 Thus, music and style preferences created niche markets abroad. Organic growth of a foreign market was possible. In 1963, Kyu Sakamoto’s song Ue Wo Muite Aruko (I Look Up When I Walk) broke into the U.S. market. The song was re-titled “Sukiyaki,” a traditional Japanese dish, because it was catchy, recognizably Japanese, and a much more familiar name to the English-speaking population. Because the song was “an incredibly good tune that had the power to move people emotionally, no matter what culture they’re from,” but also because it was a novelty to Americans, “Sukiyaki” was a smash hit. It sold one million copies in the U.S. and topped Billboard’s singles chart for three weeks—to date, the first and only U.S. hit song sung in Japanese by an Asian singer.28 In recent years, Pizzicato Five (P5) was one of the few Japanese bands to sell well overseas. Their 1994 American debut album, Made in USA, had sold more than 100,000 copies. Their follow-up album in 1995, The Sound of Music by Pizzicato Five, also sold about the same number of copies.29 Another success story was Osaka-based female pop/punk band Shonen Knife (named after a Japanese brand of pocket knife) that was formed in 1982. Shonen Knife was never in the mainstream music scene in Japan, as their style was distinctly different from mainstream J-pop and drew inspiration from Western bands such as the Ramones, the Ronettes, and the Beatles. They sang in a mix of Japanese and seemingly wonky English. They also sang about details of daily life—including topics about food (such as banana chips, sushi, cookies, ice cream, and jellybeans), but also about small animals—something the mainstream music scene had not picked up. The trios (and now duo) were amateur musicians. When the band rose to prominence overseas in the early 1990s, they still had full-time day jobs as office administrative assistants, and before forming the band, none had known how to play an instrument. But Shonen Knife received more attention from overseas than they could have ever anticipated. Such American indie rock bands as Sonic Youth, L7, and Lunachicks covered their songs for a 1989 tribute album.30 Their biggest fan turned out to be Kurt Cobain of Nirvana. In 1992, Nirvana invited Shonen Knife to play the opening act on the band’s 1992 European tour and later at the U.K.’s famed Reading Festival.31 When Nirvana broke big, Shonen Knife rode its coattails, and their single “Space Christmas” went on to top the British indie singles chart. In 1993, the group was the first Japanese act to sign an international deal. Its best-selling album to date, Rock Animals, sold about 100,000 copies outside Japan, although sales at home were half of that.32 Since then the band had played all over the world, including touring the U.S. 10 times—most recently in late 2007. Unfortunately, most of the early attention was patronizing, in the “so-bad-they’re-good” vein, with an unsettling racist or sexist undertone.33 But another part of the group’s charm, as the New York Times wrote, “[lay] in the cultural gap between the records it [emulated] and the music it actually [played],”34 and “the cultural anomalies that resulted when a foreign band [taught] itself how to play American rock-and-roll with the innocence of a child reading the fairy tales of the Brothers Grimm.”35 China also recently produced a major international hit. The Twelve Girls Band was a 2001 creation with 12 young women (actually 13 members, with one alternate) who played traditional 5 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Chinese instruments and both Chinese and Western music, from Chinese folk songs to J-pop to American Jazz. Members of the group were selected through national auditions from top-notch Chinese conservatories, and their performances fused traditional instruments with modern harmonies. While their reception at home was mixed—some thought it was not real Chinese music— the group was a sensation abroad. In 2003, its first international album, Beautiful Energy, was released in Japan. It topped the charts for 30 weeks, sold more than two million copies, and won several prestigious awards. Tickets for its 32-arena tour were sold out in 10 minutes.36 In North America, the “dozen roses from China,” as Time magazine called them, were very well-received. Their album Eastern Energy debuted at number one on the Top World Albums, number seven on the Internet Sales chart, and number 62 on The Billboard 200. The sales figure was over 19,000 units.37 The band’s producers and music critics attributed the group’s success to solid technical virtuosity, originality, ample investment, and a good marketing and publicity strategy.38 The group received investment from Platia Entertainment of Japan, whose founder believed the band would be huge in a market that was saturated with J-pop. Indeed, outside the group’s homeland, its easy-to-listen-to instrumental style was considered exotic, with just enough Chinese flavors so as not to alienate foreign listeners. On stage, the 12 musicians, as Time magazine described, “were elegantly draped in flowing dresses and sporting flight-attendant smiles that never flickered;” and they had a vibrant and graceful style that was not just to express the music, but also themselves.39 Examples of Failed Cross-Border Flows But these successes were exceptions. For the most part, mainstream Asian pop had moderate success in neighboring Asian countries, but failed miserably in the West. (See Exhibits 5 and 6.) An example was Japan’s top-selling trio Dreams Come True, which broke big in Taiwan in 1996, having sold 200,000 copies of its album Love Unlimited. But in 1998 the trio’s English-language debut album in the U.S., unfortunately named Sing or Die, was not charted on Billboard, and it literally “died.” Seiko Matsuda, an idol-turned pop singer who had a two-decades-long recording career in Japan, attempted the U.S. market three times, releasing three albums in 1990, 1996, and 2002, respectively. The 1990 album did not make the charts, although the single “The Right Combination,” a duet with Donnie Wahlberg of New Kids On The Block, rose to 56th on Billboard’s dance chart. The two albums released later also did not make the charts.40 Taiwan-based CoCo Lee, who was raised in California and was a native speaker of English, released albums in 1999, 2005, and 2006. Thanks to the hype of Ang Lee’s martial arts film Crouching Tiger Hidden Dragon in the U.S., CoCo Lee performed the nominated theme song “A Love Before Time” at the 73rd Academy Awards and was introduced to the U.S. mass audience. But her album Just No Other Way still only sold 40,000 copies in the U.S., whereas sales throughout Asia were half a million copies.41 Her 2005 and 2006 releases also failed and were not charted on Billboard. In 2004, Utada Hikaru, a pop diva in Japan and throughout East Asia since 2000, made her U.S. debut. Utada was born and raised in New York City, was a native speaker of English, and both of her parents were in the music industry. Her tunes were unlike the ordinary Jpop and more like R&B. More than 1.3 million copies of her English-language album Exodus were shipped to the U.S., but the album only sold 40,000 copies and barely made number 160 on The Billboard 200.42 Potential Reasons for Failure There were various reasons why Asian acts failed in the Western music market. One obvious reason was the language barrier, but there were others. In many cases, there was the preconception that Asian pop was not original enough and was merely a copycat of American pop. CoCo Lee, for instance, was packaged as an Asian Mariah Carey. Utada— although a smash in East Asia because her R&B style was refreshing to the J-pop market—did not impress American listeners. Moreover, the music style that was popular in Asia was no longer popular in the West, making some of these overseas debuts sound old-fashioned.43 Inadequate 6 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 investment and poor marketing was another reason. Asia itself was a huge market, and for the most part, the music industry did not feel compelled to promote its products beyond national borders. The domestic markets accounted for 78% of revenue in China, 75% in Japan, 56% in South Korea, and 91% in India.44 For instance, Japan was the world’s second-largest music market. It was a fast-paced market in an isolated island country. Time spent trying to promote an act in the geographically diverse U.S. market would mean time lost on the all-important domestic market.45 Utada was signed under the label of Toshiba-EMI, which was reluctant to support her ventures abroad; thus, Utada had to sign a separate deal with Island Def Jam to release English-language albums in the U.S., while Utada continued to sing in Japanese under Toshiba-EMI.46 The album flopped most likely because of a combination of factors: executive changes at Island Def Jam, the fact that it was released in the very competitive fourth-quarter, and the fact that there were no live performances to promote her album.47 South Korean music since the turn of the century had also become popular at home and throughout much of East Asia. JYP Entertainment’s Rain was arguably the biggest star since 2003. Full House, the 2004 TV drama in which he starred, was one of the highest-rated South Korean drama series and was broadcast throughout East and Southeast Asia, as well as the United States. Dubbed South Korea’s Justin Timberlake and Usher, Rain received the 2005 MTV Asia Aid Male Performer Award and performed in sold-out concerts throughout East Asia. One of his albums It’s Raining sold over one million copies in Asia and topped the charts in December 2005 in Japan, China, Taiwan, Thailand, Indonesia, and South Korea.48 In 2006 alone, Rain had $20 million in sales in 2006 and had sold more than three million albums. He was even voted online one of the 100 most influential people by Time magazine, as well as one of People magazine’s 2007 “Most Beautiful People” in the world. Rain’s next destination was the United States. In 2006, he had two sold-out shows in New York City’s Madison Square Garden, attracting reviews from such Western publications as the New York Times. The media also reported that Rain was preparing for his English-language debut in fall 2007. But the hype fell apart in June after the cancellation of several concerts in Shanghai, Toronto, San Francisco, and Honolulu, with poor sales cited as one reason in Honolulu.49 At the end of the tour, Rain also ended his five-year contract with JYP Entertainment without a renewal. The plan of a U.S. debut was subsequently suspended. However, several of South Korea’s biggest stars were also making their U.S. debut in 2007, including Se7en, YG Entertainment’s R&B singer who had had three concerts in Washington DC, New York City, and Los Angeles, as well as BoA of SM Entertainment, who had performed in Sydney, Australia, and in Los Angeles. Reportedly BoA had suspended her domestic recording activities in order to prepare for a U.S. debut. According to Steve McClure, in Japan, “Sometimes Japanese acts perform and/or release their music overseas less to make inroads into foreign markets than to make them look cool to fans in their home market.”50 In the case of the South Korean case, it was uncertain whether such news was true or mere publicity. Like critics of other Japanese and Chinese acts to enter the U.S. market, critics of Rain’s performance in New York City noted that Rain’s use of unrefined English often failed to connect to a more mature audience. The New York Times scorned Rain’s gesture of standing up between songs and saying things like, “I’m lonely and I need a girlfriend,” and his tendency to shout “I love you” when he was at a loss for other words.51 Amidst South Korean singers’ new interest in breaking into the U.S., music critics stated that in the end, the West expected originality—i.e., that performers be true to their own sound. The fact that current Korean stars seemed to have mastered seemingly Western R&B, hip hop, and rap was, according to these critics, not appealing enough to the West.52 7 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Cross-Border Partnerships Because of the above-noted challenges, Asian music companies were increasingly forming partnerships and cooperating to tap into each other’s markets. Partnership initiatives were both project-based and company-based, and sometimes their strategies could be completely divergent. The major distinction, however, was whether to focus on Asia, i.e., regionalization, or go westward, i.e., globalization. Some of the most notable examples are described below. Regional Partnerships in Asia Avex Group Holdings Founded in 1988, Avex was initially a wholesaler of imported records. Thanks to the popularity of dance music in Japan, Avex gradually became a household name in Japan. In the 1990s, some Avex-affiliated singers gained explosive popularity in Japan, including TRF, Namie Amuro, and Ayumi Hamasaki (Ayu)—with Ayu alone accounting for roughly 10% of the company’s total revenue.53 By the early 2000s, Avex had become an important player in the Japanese music market as well as the world’s largest independent record label. The company had also set up subsidiaries in Taiwan, Hong Kong, as well as in the U.S. and U.K. In addition to recording albums, Avex trained its own artists, published visual and audio contents, and managed its own concert and merchandising businesses. In 2007, the company‘s annual sales reached $869 million, and its market value as of January 2008 reached $535.3 million.54 In terms of foreign operations, Avex had previously explored the U.S. and European markets by setting up branch offices in 1993 and 1994. But in 2007, the company finally decided to close the New York and London operations because it believed it was hard for Asian singers to break through cultural barriers in Western countries. 55 On the other hand, demand for music in Asia was continuously growing. Buddy Marini, managing director of Avex Asia, believed that Asia was going to become a “big pie.” He noted, “We have developed an Asian strategy to identify quality artists within Asia and to build a business platform for the entire region…our plan is to become a major player in Asia for artist management and to compete with those in Europe.”56 In 2006, Avex announced its expansion strategy in East Asia, targeting primarily China. “It’s highly possible that the entire East Asian area shares the same values in terms of entertainment,” said Takashi Araki, senior executive director of Avex, “and we want to move our focus to that market as a whole. This shift to China is our big strategy at the moment.”57 The company set up a joint venture with a Beijing-based talent agency, Chengtian Entertainment.58 But Avex’s involvement in the greater China region had already started some years earlier. It had produced popular singers Cyndi Wang and Vivian Hsu through Avex Taiwan in 2003. In 2005, Avex partnered with Beijing Celestial Film & TV Production to release a CD for Chinese actress Chen Hao, who was contracted with the Beijing company. But as of late 2007, no news had been released about her Japanese-language album.59 SM Entertainment Arguably the South Korean counterpart of Avex Group, SM Entertainment was a recording company and talent agency founded in 1995 by former popular singer Lee Soo-man. In a decade, the company had grown from a five-person operation to a multi-faceted entertainment conglomerate with $31.3 million in annual sales.60 SM Entertainment was also involved in the development and supply of mobile and online contents, the export of licenses, and the management of an entertainment academy. The company had cultivated icons such as H.O.T., BoA, TVXQ, and Kang Ta (former H.O.T. member) and helped them rise to stardom in Asia, and it also promoted many lesser R&B and hip hop groups. SM Entertainment’s stars were so popular beyond the South Korean border that Lee Soo-man had become an icon of hallyu, or hanryu, which meant “Korean wave,” 61 a widespread phenomenon of South Korean cultural products’ rising popularity in neighboring Asian countries. 8 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 Since its founding, the company had always positioned itself for the entire Asian market, instead of just South Korea. Founder Lee Soo-man explained: When I founded this company in 1995, my goal was to succeed in Asia. I think I did succeed in setting up an initial pop network in Asia, but this is only the beginning. The public and the media think hanryu is only about exporting Korean television dramas and making Korean stars popular abroad. But hanryu should evolve […] we need to establish a company in China with a Chinese CEO who knows a potential Chinese star when he sees one. Korea should then pass on its cultural contents and producing skills. By the time an Asian version of Hollywood is created in China, at least one-third of it should naturally belong to Korean companies. My goal for the next 10 years is to build the number one entertainment business in China.62 Behind this founding mission was the belief that South Korea, with its nearly 50 million people, was not big enough to sustain the growth of a serious entertainment conglomerate. China, with a 1.3 billion population size and hence huge market potential, was the future of company growth.63 Lee’s belief was reinforced when the band H.O.T. broke big throughout East Asia in 1998. SM Entertainment held a meeting for long-term strategy, in which the company decided to go into the foreign markets. In a special documentary program broadcast by the Seoul Broadcasting System (SBS), SM’s strategy was revealed as follows: • • • • • It was necessary to focus on the teenage market as it grew; Advancing into the foreign market should be based on a successful domestic market; It was difficult to approach either domestic or foreign markets with a male singer; It needed to find a new female face with dance skill; She had to be less than 13 years old when debuting in the domestic and foreign markets.64 This less-than-13-years-old female dancer-singer turned out to be BoA, who was scouted in 1998 when she was only 11. BoA had two years of training in singing, dancing, and Japanese and English language courses. She debuted in South Korea when she was 13.65 Her debut album was positively reviewed in South Korea and climbed to the top 10 in the South Korean charts. Partnership between Avex and SM SM Entertainment invested $3 million in BoA’s debut, financed by H.O.T.’s success, providing the new singer with the best dance teachers from Japan to choreograph her video for her debut album, ID: Peace B.66 BoA’s successful debut attracted Avex’s attention. In 2001, SM Entertainment and Avex Group joined hands. SM Entertainment had hoped to explore the neighboring Asian markets and build a regional entertainment empire. Avex shared SM’s vision and also wanted to tap into the newfound market of Korea, which had previously banned Japanese cultural contents since the end of the Second World War due to ongoing negative sentiments (shared by many Chinese) toward Japan for Japanese colonialism and military conduct in the first half of the 20th century. But the ban was lifted by the South Korean government in 2002 in the wake of growing trade ties with Japan. The two companies, SM and Avex, signed a licensing deal in which they would distribute music for each other in their respective countries. With the help of Avex’s marketing power, BoA became immensely successful in Japan. Although Japan had seen singers of various national origins, none had explicitly stated their origins publicly for fear of discrimination. But BoA’s “made-in-Korea” identity and her fluent Japanese apparently had a new appeal to the market, and she was known as a chart-topping singer. Released in 2002, BoA’s first Japanese album Listen to My Heart caught some of the frenzy during the 2002 FIFA World Cup hosted by both South Korea and Japan. It reached 12th on the top 50 album sales in Japan, stayed on the Oricon Charts for 91 weeks, and sold 932,000 copies.67 BoA’s second Japanese album, Valenti, also sold 1,249,000 copies. Her Japanese career was so successful that she became one of the Japanese tarento (talents) with endless media appearances and merchandise endorsements.68 9 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Inspired by BoA’s success, a new wave of hybrid stars was born. With the goal of replicating H.O.T.’s success, SM Entertainment produced the five-member boy band TVXQ in South Korea in 2004. Two years later, the group went overseas. In Japan, they were also signed under Avex. Between 2004 and 2007, the group alternated its career between Korea and Japan, in addition to touring around Asia to promote its albums. TVXQ proved to be another chart topper and won awards throughout Asia, becoming especially popular among young women. Another popular SM boy band, Super Junior, was signed simultaneously by SM Entertainment and Avex Asia, an Avex subsidiary that focused its business in the greater China region. Super Junior changed its membership and cultural complexion according to the country where it was performing. The group featured a Chinese member, Han Geng, who sang in Korean and was the first foreigner to become a pop star in the mainstream South Korean entertainment industry. Han Geng also visited China to meet his Chinese fans and appeared on Chinese variety shows. Zhang Liyin, a young Chinese singer who started training with SM Entertainment at the age of 13, followed a similar process. She studied Korean and successfully broke into the South Korean market as a mainstream artist.69 But her Chinese origins also allowed her to sing in Mandarin in the Chinese market. In 2006, SM Entertainment, Japan’s Avex Group Holdings, and Avex China (which itself was a joint venture between Avex Japan, Beijing-based Chengtian Entertainment, and Huayi Music Production Limited) formed a joint venture “SMAC.”70 According to SM Entertainment’s founder Lee Soo-Man, who would also be the director and general manager of the joint venture, the idea was to utilize Japan’s capital investment, managerial, and marketing skills; Korea’s technological innovation in producing cultural content; and China’s market potential and cheap labor costs, to create more international stars.71 Westward Initiatives JYP Entertainment In 1997, Park Jin-young, a Korean composer, star singer, and producer, founded JYP Entertainment. He had a short but successful music career before the founding of his own company. In the following decade, in addition to his own albums, he also produced some household-name entertainers in South Korea, such as pop diva Park Ji-yoon and the five-member boy band G.O.D. Park Ji-yoon debuted when she was 16 and transformed herself into an icon, with her provocative music videos arousing much controversy in conservative South Korea.72 G.O.D.(or Groove OverDose), was a relatively successful boy band and joined the million-seller rank when its third and fourth albums sold more than 1.7 million copies in 2000 and 2001.73 The group disbanded in 2005 when band members were required to fulfill the mandatory South Korean military service. The most recent popular entertainers were the Wonder Girls, a 2007 creation that was parallel to SM Entertainment’s Girl’s Generation. The Wonder Girls enjoyed success with their first single called “Tell me,” featuring catchy melodies and highly choreographed dance moves.74 But the biggest star that Park Jin-young ever produced was Rain. Since his debut in 2002, Rain had been riding hallyu. Through soap dramas and hit songs, Rain had become a household name not only in South Korea, but throughout Asia. In 2005, he sold out arenas across South Korea, China, and Japan, performing for more than 40,000 in Beijing and 20,000 in Tokyo.75 In many ways, JYP’s strategies of localization, hybridization, talent recruitment, and diversification were similar to those of SM Entertainment. The strategies differed fundamentally, however, in that they were going in divergent directions geographically: JYP aimed to explore the European and U.S. markets. JYP made it clear on its company website that it was “reaching for globalization and expansion within the entertainment industry.”76 Park believed that “three types of people can be global stars: Chinese who speak English, Americans who speak Chinese and Koreans who speak Chinese and English.”77 Jimmy Jeong, chief operating officer of JYP, also noted that “the 10 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 U.S. market was waiting for a new wave to come after Latin artists such as Jennifer Lopez and Ricky Martin hit the big stage 10 years ago,” and said that for Asian artists, “it’s not a dream anymore.”78 While some pessimists believed that the problems with Asian pop music entering the U.S. market were due to differences in musical taste, as well as to the question of “authenticity”—producing something distinctly Asian—Park saw building “a consistent image” as a key to developing universally appealing stars. Park argued, “A consistent image can create stars with high added value. Physical appearance, hairstyle, costume, dance, music, marketing, music video and even interviews should be closely related under a single image.”79 Park also considered it a problem that in the U.S. music market, “music companies, management companies and performance planning companies work individually. It’s hard to create added value with music only, so companies are likely to [suffer] a loss.” JYP aimed to do all these three things at the same time, centering on the celebrities. Park further boasted that JYP’s stable of artists would break big in the U.S. “in two years.”80 And Park was the first Asian producer to produce music for Will Smith, R. Kelly, R&B singer Cassie, and rapper MASE.81 The company’s best bet came close in early 2006 when Rain held two performances in New York City’s prestigious Madison Square Garden. JYP branched out from South Korea, and purchased a $4 million townhouse in Manhattan to set up the first music factory in North America with a goal to “find and nurture the next world star.”82 In May 2007, Rain was chosen by Warner Brothers to join the cast of the Hollywood film Speed Racer (2008). He starred as a rookie racer named Taejo Togokhan.83 But by June 2007, Rain had ended his five-year contract with JYP. It was reported that although Park offered a renewal, the 24-year-old star decided to start his own entertainment company, “Rainy Entertainment” (which was later re-named “J Tune Entertainment.”) Rain’s father was named chairman of the new company and was to oversee Rain’s entertainment business.84 But JYP had a pool of artists lined up for an American debut: Lim Jeon-hee (J Lim), Kim Ji-hyun (G-Soul), and Lee Young-min (Min) were introduced in JYP’s 2007 inauguration party in Manhattan. Park’s preparation of an American debut was thorough. To find young and talented singers, JYP held open auditions each year throughout Asian countries. The chosen few from more than 1,000 celebrity hopefuls would be sent to a JYP training facility, where they would spend the next several months, or even years, training. At the end, only one in 10 made it through the training process to a debut. To fully adapt his stars into the American environment, JYP sent Min, for instance, to live in New York City for several years. In July 2007, it was reported that Min, a 16-year-old trainee, would make her official debut in the U.S. after four years of training as a JYP trainee. JYP also signed with Jonathan Smith, an American rapper and producer better known as Lil Jon, to take on Min as his new protégé.85 In an interview with Chosun Ilbo, the largest circulating newspaper in South Korea, describing Min’s American debut as “black music with a K-pop feel,” Park said Min had finished recording eight songs and that her album would be released in October 2007.86 But as of late 2007 only a single titled “Go Ahead” was circulating online. The song was sung in fluent English, was distinctly hip hop, and had a simple but catchy tune. As for the other JYP trainees, Kim Jeong-hee and G-Soul, they were expected to meet with some hip hop heavyweights such as R Kelly, the Neptunes, and Outkast to help with their debuts.87 For a few months around the summer of 2007, the industry news focused repeatedly on JYP’s American incorporation. But the news was soon replaced by Park’s comeback album in October. After six years of working as a producer for his trainees, Park released his seventh album, this time named Back to Stage. Park’s album featured hip hop dance songs as well as accomplished South Korean singers such as Dynamic Duo, T, Bobby Kim, and Sun Ye of Wonder Girls, and it was positively received at home in a market then dominated by teenage pop.88 As of January 2008, Park himself, together with Wonder Girls, G-Soul, J-Lim, and Min, were all scheduled for a concert tour in Los Angeles and New York City to prepare for their American debuts.89 11 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music YG Entertainment YG Entertainment’s founder and CEO was Yang Hyun-suk, also known as Yang Goon, who was a member of the legendary boy band Seo Taiji and Boys. After the group disbanded in 1996, Yang became a producer and founded YG Entertainment in 1998. Its businesses included music production, artist management, and album recording and sales. It sought to differentiate itself in a competitive music market by focusing on the genre of hip hop and R&B.90 Since 2003–2004, YG Entertainment had approximately 18%–25% market share of the recording industry in South Korea.91 Like the others, it had its own stable of artists: Jinusean and 1TYM, a hip hop duo and boy band active since the late 1990s; Stony Skunk, a hip hop and reggae duo; Se7en, YG’s biggest R&B star popular throughout East and Southeast Asia; and a newly introduced boy band called Big Bang. Big Bang made a splash in South Korea in 2007 with their chart-topping singles and sold-out concerts. The group also started off 2008 with an English-language mini album titled For the World in Japan, following the footsteps of a rush of South Korean celebrities who made headlines in Japan.92 Se7en was the first male singer under YG Entertainment to break into the Japanese market in 2004, and he won enormous popularity in Thailand as well. Starting in 2005, YG Entertainment had partnered with Unlimited Group of Japan, 21 East Entertainment in China, and RS Promotion in Thailand to promote Se7en in those countries. On the other side of the globe, to prepare for Se7en’s debut in the U.S., YG Entertainment had signed a contract with the producer of Usher, Mark Shimmel, who in turn designated Grammy-award winner Rich Harrison as a producer for the South Korean star.93 In spring 2007, YG Entertainment announced that Se7en’s U.S. debut would be an album called Fabulous. However, in April 2007, a video featuring Se7en singing the debut song “This Is My Year” was leaked on YouTube. Subsequently, YG Entertainment announced that Se7en’s American debut would be postponed until 2008.94 It was speculated that Se7en’s inability to speak good English was one of the reasons for the delay of his debut.95 To date the company had not announced a new release date. In August 2007, Cho Sung-jin, or Skull, a member of reggae duo Stony Skunk, made a solo debut in the U.S. with an English-language single “Boomdi Boomdi.” Skull produced the single and cowrote it with Mighty Mystic. His manager was Morgan Carey, superstar Mariah Carey’s brother. The Korea Times described Skull’s entry into the U.S. market as “unconventional,” because he used new media such as cell phones and the Internet to spread his music. He released an animated ring tone in the U.S. in January 2007, and also created a webpage on MySpace.com.96 His single was positively received and his songs reportedly got airplay on many college and satellite radio stations. It also ranked 16th on Billboard’s hot R&B/hip hop sales chart and gradually climbed to number five on the same chart, as well as number 11 on the Hot Singles sales chart.97 Skull’s success surprised the YG management: “The top ten ranking is surprising even to us. The past two years’ effort to penetrate the U.S. underground music world is beginning to show. But it’s only the beginning.”98 Skull’s success, unfortunately, could not be sustained, once he was recalled by the South Korean government to fulfill his mandatory two-and-a-half-year military service.99 Other Project-Based Initiatives and New Trends Hybridization 100 Many more cross-border initiatives were project-based, and did not necessarily involve a formal joint venture between two companies. They reflected the larger industry environment: a constant demand for new faces and creative products. Such initiatives had given birth to new trends, such as “hybridization”—music and films that drew inspiration and human resources from various origins. The popular boy group F4 was created in 2003 to play leading roles in Meteor Shower, an idol TV drama from Chinese Television System. Interestingly, the drama was a visual adaptation of a popular Japanese comic series, Boys Over Flowers, except that the setting was in 12 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 Taiwan. The group also sang the theme song of the drama, which was composed by Japanese singer Ken Hirai. The drama became hugely popular throughout China, Taiwan, Hong Kong, and Southeast Asia, and F4’s debut album containing the theme song sold more than one million copies throughout the region. In 2005, the drama entered Japan, reviving the popularity of the comic series that was originally from Japan.101 In 2006, former boy band H.O.T. member Kang Ta (of SM Entertainment) from South Korea partnered with Taiwan’s F4 member Vanness Wu (of Sony Music Entertainment) to form Kangta & Vanness. The duo debuted in Thailand for the 2006 MTV Asia awards and released their single “Scandal.” No album was recorded yet, and after Kang Ta’s announcement that he would fulfill his military service in South Korea in 2008, their activities were put on hold. Battle of Wits was among a recent trend of Chinese films that were produced to tap into the international markets. This genre of films were typically multinational productions that merged expertise from different regions, with a pan-Asian cast, a story that featured martial arts (wuxia) or imperial power struggles, and fancy visual effects. Other film examples included Yimou Zhang’s Hero (2002) and House of Flying Daggers (2004). These early successes spun off a few more epic martial art films such as The Promise (2005) by Chen Kaige, The Banquet (2006) by Feng Xiaogang, and Curse of the Golden Flower (2006) by Zhang Yimou. The later series, despite larger production budgets, did not perform as well in box offices. Criticism at home was that this genre of films had catered to foreign investors and audiences, twisting Chinese history to be centered on formulaic power struggles and kung fu fighting, but neglecting real contemporary Chinese life.102 In Korea, these films were not necessarily successful compared with Hollywood and even some domestic movies, but as Ju Ik-lee (CEO of Boram Production and producer of A Battle of Wits) said: “movies like A Battle of Wits have big production costs to be borne by just one country, like China, Hong Kong, Japan or Korea. So we can share the risk by working together.”103 In other words, a loss from one country could potentially be covered over with a gain from another country. Glocalization104 Another trend of tapping into the international market was the so-called “glocalization” strategy—“localizing” stars or training local stars to cater to each country’s needs. When entering a foreign market, these stars sang and greeted their fans in local languages. BoA, TVXQ, and Super Junior from SM Entertainment were all successful examples of this trend. Shinhwa, a six-member boy band also debuted in Japan in 2006 , and released a Japanese single “This is the Sun in Our Hearts” in June 2007. Their August album Inspiration debuted at number four, selling more than 100,000 copies. Most recently, Avex became a key investor in John Woo’s production Red Cliff, the most expensive Asian film ever ($75 million), which featured Avex stars (including Shido Nakamura) in supporting roles, although the leading roles went to Tony Leung and Chow Yun-fat of Hong Kong, Zhang Fengyi from mainland China, and Chiling Lin from Taiwan. Similar to other martial art films, the story was based on an historical event during the Three Kingdom period in China. Thus, in Asia, one saw two diverging trends: One was going East to tap the Asian market, with a particular focus on China, such as SM Entertainment and Avex Group. The other was to go West and challenge the U.S. market, exemplified by JYP Entertainment and YG Entertainment. Some in the industry believed that it was only by “conquering” the U.S. market that one could declare global excellence. Other observers predicted that cross-border joint ventures for market sharing would become the market trend in East Asia; and that with further innovations in artist development, marketing, and concert business management, Asia would become the epicenter of the global music industry, as Detroit or New York or Los Angeles had once been. The pressing question for East Asian music companies was, which approach (East vs. West, hybridization vs. glocalization) held the most promise in the years ahead. 13 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 12,762 6.1 13,319 -3.0 7,387 2.4 1,203 21.8 820 -2.3 35,491 2.0 2004 12,270 -3.9 13338 0.1 8,077 9.3 1,360 13.1 814 -0.7 35,859 1.0 2005 11,511 -6.2 13,065 -2.0 9,341 15.6 1,409 3.6 752 -7.6 36,078 0.6 2006 10,482 -8.9 12,927 -1.1 10,023 7.3 1,456 3.3 729 -3.1 35,617 -1.3 2007 10,427 -0.5 13,087 1.2 10,650 6.3 1,532 5.2 736 1.0 36,432 2.3 2008 n/a n/a 7,212 19.0 n/a n/a 7,614 21.1 n/a n/a 7,387 22.2 323 36.3 81 -12.9 5,041 0.6 242 5.2 151 2.0 2004 n/a n/a 8,077 12.6 646 100.0 79 -2.5 5,142 2.0 384 58.7 129 -14.6 2005 2 n/a 9,341 16.5 1,090 68.7 71 -10.1 5,462 6.2 503 31.0 109 -15.5 2006 6 200.0 10,023 18.7 1,478 35.6 64 -9.9 5,399 -1.2 610 21.3 92 -15.6 2007 12 100.0 10,650 19.3 1,804 22.1 57 -10.9 5,372 -0.5 692 13.4 80 -13.0 2008 PricewaterhouseCoopers, Global Entertainment and Media Outlook, 2007–2011, pp. 293–294. Figures for 2007 onward are estimates.. 237 30.2 93 -7.0 5,013 -7.6 230 -22.3 148 -14.0 2003 182 36.8 100 2.0 5,423 -3.5 296 -16.4 172 -3.4 2002 Asia Recorded Music Market by Country: Market Value and Growth, 2002–2011 (in US$ millions) China % change Hong Kong % change Japan % change South Korea % change Taiwan % change Internet Distribution Not Included in Country Totals % change Regional Total % change Source: 12,025 -4.9 13,729 -6.9 7,212 -5.3 988 -11.5 839 -2.4 34,793 -5.9 2003 10,603 1.7 13,457 2.8 11,248 5.6 1,634 6.7 751 2.0 37,693 3.5 2009 10,926 3.0 13,901 3.3 11,760 4.6 1,741 6.5 770 2.5 39,098 3.7 2010 11,308 3.5 14,330 3.1 12,177 3.5 1,831 5.2 791 2.7 40,437 3.4 2011 n/a -0.4 n/a 1.9 n/a 5.4 n/a 5.4 n/a 1.0 n/a 2.3 2007–11 CAGR -14- 19 58.3 11,248 16.0 2,039 13.0 51 -10.5 5,415 0.8 763 10.3 71 -11.3 2009 26 36.8 11,760 16.1 2,214 8.6 46 -9.8 5,458 0.8 819 7.3 65 -8.5 2010 31 19.2 12,177 12.5 2,356 6.4 41 -10.9 5,502 0.8 859 4.9 60 -7.7 2011 n/a 73.0 n/a 16.5 n/a 16.7 n/a -10.4 n/a 0.1 n/a 11.3 n/a -11.3 2007–11 CAGR PricewaterhouseCoopers, Global Entertainment and Media Outlook, 2007–2011, published 2007, data compiled by PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates, p. 265. Figures for 2007 onward are estimates. Exhibit 2 Source: 12,643 -8.0 14,750 -2.6 7,614 -3.3 1,116 -5.3 860 -8.3 36,983 -4.9 2002 Global Music Industry: Market Value, Growth and Forecast, 2002–2011 (in US$ millions) United States % change Europe, Middle East and Africa % change Asia Pacific % change Latin America % change Canada % change Total % change Exhibit 1 708-479 The Globalization of East Asian Pop Music Exhibit 3 708-479 South Korean and Japanese Music Exports and Imports, 2003–2006 (in US$1000) Region/Country Year South Korea Export Import Japan Export Import Europe 2003 2004 2005 2006 44 129 1,600 549 5,173 8,325 5,203 2,253 51 42 33 33 1,241 133 1,110 1,110 North America 2003 2004 2005 2006 88 106 78 49 9,276 9,863 2,653 576 98 79 77 77 1,389 149 980 980 Latin America 2003 2004 2005 2006 0 0 0 0 0 0 0 0 0 0 0 0 35 4 20 20 Japan 2003 2004 2005 2006 11,635 32,096 17,865 14,309 507 665 378 67 n/a n/a n/a n/a n/a n/a n/a n/a China 2003 2004 2005 2006 264 790 1,923 850 1,046 1,642 72 0 77 89 78 78 373 40 229 229 South Korea 2003 2004 2005 2006 n/a n/a n/a n/a n/a n/a n/a n/a 16 17 13 13 77 8 105 105 South East Asia 2003 2004 2005 2006 1,245 921 782 621 33 42 0 0 40 30 16 16 95 10 55 55 Others 2003 2004 2005 2006 36 176 30 288 0 43 0 0 11 18 24 24 64 7 82 82 Total 2003 2004 2005 2006 13,312 34,218 22,278 16,666 16,035 20,580 8,306 2,896 294 275 241 241 3,275 352 2,582 2,582 Source: Korean Ministry of Culture and Tourism and Recording Industry Association of Japan, http://www.riaj.or.jp/e/ data/others/disk.html. Note: Because of rampant piracy and lack of industry organization, there were no systematic statistical studies of Chinese music’s exports and imports. The above figures for China include those of Hong Kong and Taiwan. 15 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Exhibit 4 Arrival of Non-Resident Visitors at Selected National Borders (by continent) Year Visitors Origin Destination Africa China Japan South Korea China Japan South Korea China Japan South Korea China Japan South Korea China Japan South Korea China Japan South Korea Americas East Asia and Pacific Europe Middle East South Asia Source: 2001 2002 62,827 14,640 15,511 1,278,383 866,137 506,787 84,610,214 3,189,259 3,787,356 2,732,112 630,128 454,777 37,202 3,062 7,850 277,288 66,120 88,338 84,541 16,698 16,322 1,509,574 927,598 556,440 92,865,905 3,528,489 3,829,548 3,007,483 688,250 536,261 52,122 3,394 10,715 380,512 72,580 81,648 2003 91,949 16,434 14,834 1,132,937 824,345 505,067 87,214,341 3,625,013 3,334,633 2,789,888 665,187 514,403 45,856 3,166 8,045 383,121 76,217 86,000 2004 154,223 16,946 14,649 1,789,500 951,074 610,562 102,393,763 4,337,788 4,252,976 4,096,999 744,142 531,257 84,376 3,285 11,155 514,163 83,856 95,398 2005 210,533 20,583 14,464 2,145,758 1,032,140 640,050 112,053,459 4,761,395 4,441,757 5,165,588 817,092 540,694 110,966 3,072 13,050 599,435 92,676 92,189 Yearbook of Tourism Statistics Data 2001–2005, 2007 Edition, World Tourism Organization (Madrid, Spain), pp. 164– 167, 399–401, 417–421. Exhibit 5 East Asian Singers’ Historical Sales Record in the United States Type Title Artist Year Name of Hit Chart Ranking Single Single Single Single Album Album Album Album Album Album Album Single Sukiyaki Sukiyaki China Night Kiss in the Dark Silk Road My Best My Best My Best Tenku Kojiki Kojiki You Do Me 1963 1963 1963 1979 1985 1986 1986 1986 1987 1990 1990 Hot 100 Top Singles Hot 100 Hot 100 Top Jazz Albums The Billboard 200 Top Jazz Albums Top Jazz Albums Billboard 200 Top New Age Albums Billboard 200 Album Album Album Single The Right Combination Live in America Dream Heartbeat 1990 1990 1991 1992 Hot Dance Music Single Sales Hot 100 Top New Age Albums Top New Age Albums 42 17 3 3 Album Album Album Album Let’s Knife Rock Animals Mandala Made in USA (US Compilation) Kyu Sakamoto Kyu Sakamoto Kyu Sakamoto Pink Lady KITARO KITARO KITARO KITARO KITARO KITARO KITARO Ryuichi Sakamoto Seiko Matsuda KITARO KITARO Ryuichi Sakamoto Shonen Knife Shonen Knife KITARO Pizzicato Five 1992 1993 1994 1994 1994 Hot Dance Club Play n/a n/a Top New Age Albums n/a 41 n/a n/a 3 n/a 1 13 58 37 20 141 17 38 183 1 159 16 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music Type Album Album Album Album Album Album Album Album Single Album Album Album Album Album Title The Sound of Music by Pizzicato Five An Enchanted Evening An Enchanted Evening An Enchanted Evening An Enchanted Evening An Enchanted Evening An Enchanted Evening An Enchanted Evening Let’s Talk About It Peace on Earth Peace on Earth Peace on Earth Peace on Earth Peace on Earth Album Album Single Album Album Album Peace on Earth Peace on Earth Good For You Dream Walk Happy End of the World Sing or Die Album Album Album Album Album Album Album Album Album Album Album Album Single Single Album Album Brand New Knife Gaia Onbashira Full Moon and the Shrine Happy End of You Playboy & Playgirl Best of KITARO Vol.2 Thinking of You Just No Other Way The Fifth Release from Pizzicato Five Ancient Ancient Deep Blue All to You Just for Tonight Heavy Songs Eastern Energy Single Single Single Single Single Single Album Album Album Album Album Album Album 708-479 Artist Year Name of Hit Chart Pizzicato Five KITARO KITARO KITARO KITARO KITARO KITARO KITARO Seiko Matsuda KITARO KITARO KITARO KITARO KITARO 1995 1995 1995 1995 1995 1995 1995 1996 1996 1996 1996 1996 1996 1996 n/a 16 4 5 199 6 15 16 16 8 185 4 3 KITARO KITARO Seiko Matsuda Keiko Matsui Pizzicato Five Dreams Come True Shonen Knife KITARO Keiko Matsui Pizzicato Five Pizzicato Five KITARO KITARO CoCo Lee 1997 1997 1997 1997 1997 n/a HEATSEEKERS Top New Age Albums HEATSEEKERS (Pacific) Billboard 200 HEATSEEKERS (Mountain) Top New Age Albums Top New Age Albums Budding Under R&B/Hip-Hop HEATSEEKERS Billboard 200 Top New Age Albums HEATSEEKERS (Mountain) HEATSEEKERS (East North Central) HEATSEEKERS (Middle Atlantic) Top New Age Albums Hot Dance Club Play Top Contemporary Jazz Album n/a 1997 1997 1998 1998 1998 1998 1999 1999 1999 n/a n/a Top New Age Albums Top Contemporary Jazz Album n/a n/a Top New Age Albums Top New Age Albums n/a n/a n/a 9 9 n/a n/a 16 21 n/a 2000 2001 2001 2001 2002 2003 2003 2004 n/a Top New Age Albums Top New Age Albums Top Contemporary Jazz Album Hot Dance Club Play Hot Dance Club Play n/a Billboard Top 200 / Billboard World Music Hot Dance Club Play Hot Dance Club Play Hot Dance Air Play Hot Single Sale Hot Dance Club Play Hot Dance Single Sale HEATSEEKERS Billboard 200 HEATSEEKERS(Pacific) Billboard Comprehensive Album HEATSEEKERS(Middle Atlantic) HEATSEEKERS(East North Central) HEATSEEKERS (Pacific) Exodus ‘04 Davil Inside Davil Inside Davil Inside Davil Inside (Re-mix) Davil Inside (Re-mix) Exodus Exodus Exodus Exodus Exodus Exodus Pizzicato Five KITARO KITARO Keiko Matsui Seiko Matsuda Seiko Matsuda Shonen Knife Twelve Girls Band Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 Peace on Earth KITARO 2005 Ranking 9 8 15 38 16 n/a n/a 10 10 19 19 17 none 62 / 1 24 30 9 66 1 5 5 160 2 167 6 10 4 17 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Type Single Single Title Exodus ‘04 I Wanna Be Down Album Album Album Album Album Album Single Sacred Journey of Ku-Kai Vol.2 Exposed Genki Shock Just Want You Spiritual Garden Splurge Boom Di Boom Di Artist Hikaru Utada Ryuichi Sakamoto KITARO CoCo Lee Shonen Knife CoCo Lee KITARO Puffy Skull Year 2005 Name of Hit Chart Hot Dance Single Sale Ranking 9 2005 2005 2005 2006 2006 2006 2006 2007 Hot Dance Club Play Top New Age Albums n/a n/a n/a Top New Age Albums Top World Albums Billboard Hot Singles 41 11 n/a n/a n/a 7 9 14 Source: Japan External Trade Organization, “Hokubei ni okeru kontentsu shijyo no jittai (The contents market in the U.S.),” March 2007, p. 45, http://www.jetro.go.jp/biz/world/n_america/reports/05001438, created by Wowmax Media with original data from Billboard. Sales figure for CoCo Lee’s album Just No Other Way was retrieved from Billboard.com, http://www.billboard.com/bbcom/search/google/article_display.jsp?vnu_content_id=1945050. Sales figures for the Twelve Girls Band album Eastern Energy was retrieved from PR Newswire, “Twelve Girls Band Highest Debut by an Asian Artist in History of Billboard 200,” August 30, 2004. And sales figure for Skull’s Single “Boom Di Boom Di” was retrieved from Chosun Ilbo, “Korean Reggae Artist Making Buzz in U.S.” August 6, 2007, http://english.chosun.com/w21data/html/news/200708/200708060007.html. Note: In the above table, “n/a” in both the Name of Hit Chart column and Sales column indicates that there were not enough sales in the U.S. in one week to appear on any chart. Exhibit 6 Discography of Prominent K-pop and J-pop Singers, 1998–2007 Artist Name Date BoA BoA 2000 2001 BoA BoA BoA 2002 2002 2002 BoA BoA BoA BoA BoA BoA BoA BoA BoA Rain Rain Rain Rain Rain Rain 2003 2003 2003 2003 2004 2004 2005 2005 2006 2002 2003 2004 2005 2005 2006 Album Title ID; Peace B (Korean) Jump into the World (Korean/Chinese/English) Listen to My Heart (Japanese) No. 1 (Korean) Miracle (Korean) Peace B REMIXES (Japanese) Valenti (Japanese) Atlantis Princes (Korean) Shine We Are! (Korean) Next World (Japanese) Love and Honesty (Japanese) My Name (Korean) Girls on Top (Korean) Best of Soul (Japanese) Outgrow (Japanese) Bad Guy (Korean) How to Avoid the Sun It’s Raining (Korean) It’s Raining (Japanese) a Early Works (for sales in Japan) Eternal Rain (Japanese with King Records) Chart Position South Japan Korea Sales Japan South Korea 30 59 12,980 156,354 n/a 1 21 n/a 18 1 n/a n/a 4 1 n/a n/a 1 1 n/a n/a n/a 15 35 74 n/a 4 17 n/a n/a 5 52 n/a n/a 11 14 n/a n/a n/a 19 17 n/a n/a 13,000 931,742 14,260 n/a 62,470 1,249,197 n/a n/a 193,695 653,630 n/a n/a 1,099,720 427,871 n/a n/a n/a 26,246 9,013 90,586 n/a 544,853 265,360 n/a n/a 345,313 58,091 n/a n/a 191,699 112,954 n/a n/a n/a 166,731 195,571 n/a n/a 14 n/a 18,569 n/a 18 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music Artist Name Rain Se7en Se7en Se7en Se7en Se7en TVXQ TVXQ TVXQ TVXQ TVXQ TVXQ TVXQ Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Ayumi Hamasaki Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Utada Hikaru Date 2006 2003 2004 2006 2006 2006 2004 2004 2005 2006 2006 2007 2008 1999 1999 2000 2001 2002 2002 2003 2003 2004 2006 2006 2007 2007 2008 1998 1999 2001 2002 2004 2004 2006 2008 Album Title Rain’s World (Korean) Just Listen (Korean) Must Listen (Korean) First Seven (Japanese) 24/Se7en (Korean) Se7olution (Korean) Tri-angle (Korean) Christmas Gift from TVXQ (Korean) Rising Sun (Korean) Heart, Mind and Soul (Japanese) “O” Jung. Ban. Hap. (Korean) Five in Black (Japanese) T (Japanese) A song for XX (Japanese) Loveppears Duty A Best (Compilation Album) I am Rainbow A Ballads (Compilation Album) Memorial Address My Story (miss)understood Secret A Best 2-BlackA Best 2-White Guilty Cubic U First Love Distance Deep River Exodus (English) Utada Hikaru Single Collection Vol.1 Ultra Blue b HEART STATION 708-479 Chart Position South Japan Korea 57 9 n/a 10 n/a 16 15 n/a n/a 8 n/a 23 93 8 n/a 35 n/a 4 25 n/a n/a 1 10 n/a 4 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 2 n/a 1 n/a 2 n/a 4 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a 1 n/a Sales Japan 5,649 n/a n/a 28,659 n/a n/a 4,647 n/a n/a 13,802 n/a 37,686 80,061 1,451,910 2,562,130 2,904,420 4,294,179 2,308,112 1,856,919 924,242 1,062,288 1,131,776 877,433 666,396 702,895 721,839 568,288 702,060 7,650,215 4,469,135 3,604,588 1,074,393 2,582,901 909,113 818,335 South Korea 121,357 212,317 161,880 n/a 108,381 52,362 287,534 68,888 275,438 n/a 409,020 26,210 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Source: Oricon Ranking Information Service (You-Taiju), Oricon Nenkan (Oricon Yearbook) (Oricon Entertainment; Tokyo) 1998–2007, The Recording Industry Association of Korea. Note: Sales in Japan were cumulative as of May 2007; sales in South Korea were cumulative sales between 2000 and 2007. Where both the chart and sales rankings are noted as “n/a,” it means that sales were likely too small to have registered on the industry charts. a The album “Early Works” by Rain contains songs from his previous Korean albums. bReleased on March 19, 2008 and still on the Oricon ranking. 19 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Appendix. Industry Structure of the Major East Asian Markets in 2007 South Korea Industry at a glance Over the previous decade, an increasing amount of South Korean popular cultural content—including television dramas, movies, pop songs and their associated celebrities—had gained immense popularity in East and Southeast Asian countries. When SM Entertainment’s boy band H.O.T. held its first concert in Beijing in 2000, the Chinese media was the first to recognize the rise of South Korean popular culture and called it hallyu. Subsequently trade revenues of South Korean recorded music sales went up by 84.1% to $152.9 million.105 Initially because of their cheap prices relative to Japanese and Hong Kong soap dramas, South Korean TV dramas (the South Korean version of soap operas) began appearing on television channels throughout East and Southeast Asia. They could go as low as $800 per episode in 2000, whereas Japanese dramas cost four times as much, and those from Hollywood and Hong Kong cost 10 times more. But the popularity of South Korean dramas had driven up the price 10 to 20 times over.106 In 2005, South Korean dramas lured more than one million foreign viewers of such TV series as Jewel in the Palace and Winter Sonata to visit South Korea on so-called hallyu tours. These tourists visited places where South Korean movies or dramas were shot, spending $1.5 billion in total.107 Following the strength of hallyu at the turn of the century, South Korean films, music, and drama all went abroad. Cultural products were exported primarily to other East and Southeast Asian countries. But some producers also tried to tap the European and North American markets. Power of suppliers The South Korean entertainment industry was based on the training and creation of stars. The hallyu phenomenon meant that South Korean stars became popular not only in South Korea, but also in Japan, China, Taiwan, Hong Kong, and Southeast Asia. Stars became the bridgehead of South Korean films amid hallyu. Similarly, few recording labels would want to make risky bets on unproven independent singers, but often opted for pop stars that had been trained and had the financial backing from major management agencies. Subsequently, star management agencies became powerful in the entertainment industry. In the music industry, these agencies also had bargaining power relative to its stars. Management companies provided the necessary financial support in order to make stars big; in return, they earned commissions through stars’ music sales, performances in dramas and movies, or advertisements. High investment yielded high returns. There were only a handful of talent agencies, but each audition easily brought out between 1,000 and 5,000 young people, who were quickly whittled down to only 10 to 12, and who then started training at the facilities provided by the company. After months or even years, only one in 10 would make it through the process and successfully debut as a star.108 The contract system in the entertainment industry reflected this power disparity. Among other provisions, the terms and conditions commonly included: (1) a liquidated damage clause favorable to agents, (2) a constraint on early termination by the artists, (3) a long-lasting noncompetition clause, (4) a termination without cause clause only for the agents, or (5) free transferability of contract only by the agent.109 In 2002 the South Korean government’s Fair Trade Commission announced its disapproval of several contractual provisions.110 Power of buyers TV and radio stations played a significant role in promoting new songs and artists. Traditionally, the broadcasting network controlled the music industry. There was no authoritative record sales chart, and the only measure of songs’ and singers’ popularity was the weekly chart shown on TV. In addition, musicians were required to perform with the TV networks’ resident studio bands and dancers, limiting the variety of music presented to TV viewers.111 It was 20 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 not until 1992, when South Korea’s first rap band “Seo Taiji and Boys” gained immense popularity, that the group was allowed to use its own band.112 But appearances on television—such as participation in variety shows, having one’s music videos broadcast on music channels, and acting in TV dramas—remained one of the most important ways to gain exposure. However, because of fierce competition, companies sometimes made bribes to gain more exposure for their stars—something they called “PR fees.”113 In the past, TV program producers had been found guilty of manipulating charts on the popularity standings of songs in return for bribes.114 The threat of substitutes Watching DVDs, reading comic books, and playing video or online games were some of the most popular home entertainment options. But online gaming was by far the largest market. In 2005, the industry grossed $1.5 billion, which accounted for almost half of the worldwide online game industry.115 Rivalry The industry had attracted significant investment since the mid-1990s, turning local producers into owners of their own diversified business groups. During the dotcom boom, some, such as SM entertainment and YBM Seoul, took advantage of high share valuations and went public. Venture capitalists also poured money into the industry. Some had become huge conglomerates that were horizontally and vertically integrated. Savannah Hahn, deputy managing director of Sony Music Korea, was quoted as saying “we can’t compete.” Over 70% of annual music sales, or $290 million, were local acts. Going local was the only way for the foreign companies to compete.116 Key challenges In recent years there was concern over whether hallyu could be sustained. The success of hallyu had drawn local resistance in some places. China, for instance, was so concerned about the increasing cultural influence of hallyu that the government reduced the amount of airtime during which foreign programs could be broadcasted—implicitly targeting South Korean TV dramas because they consisted of the largest segment among all foreign programs. The Japanese media corporations had also reduced or abolished airtime for South Korean dramas, claiming that they were no longer commercially viable.117 All these had curtailed South Korean singers’ exposure in foreign markets. Also, the success of the South Korean music industry had inspired other countries to create their own substitutes. Increasingly more export destinations witnessed the creation of their own idolbased music markets, local auditions, and talent management companies. To combat these problems and sustain industry growth, the South Korean government got actively involved. The Ministry of Culture and Tourism was committed to “pour around 90 billion won ($95.4 million) by 2010 to set up a digital-friendly market environment and help the market size rise to one trillion won ($1.06 billion) five years later.”118 In 2006, the government also established a 400 billion won ($424 million) fund devoted to screening non-mainstream productions, establishing offices abroad, providing financial assistance to multinational joint-production projects, helping local distributors find overseas buyers, and training film staffers.119 Japan Industry at a glance Long before hallyu became a regional phenomenon, Japanese cultural products had been capturing the hearts of fans around the world. From consumers’ interest in the minimalist household-product chain “Muji” to the cutesy “Hello Kitty,” from people’s affinity for the video game “Pokemon” to the ubiquitous ramen food products, there was a steady flow of consumers who were fascinated by, and in some cases obsessed with, things “made in Japan.” Japanese pop music, or J-pop, had historically been popular throughout East Asia. In fact, the Japanese music market was the second-largest in the world, with $5.3 billion in retail revenue in 2006.120 It was reported that pirated copies of Japanese content accounted for 17% and 32% of the music software markets in Hong Kong and Taiwan, respectively. Namie Amuro and Ayumi 21 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Hamasaki (Ayu), both pop divas from Avex Group Holdings, had built a large following in East Asia.121 But the market at home had experienced a downturn in recent years. From 2000 to 2004, Japan’s domestic music industry experienced sluggish growth due to an economic recession, with the sharpest decline of 9.3% recorded in 2002. The emergence of the mobile music business sector helped the industry rebound remarkably starting in 2005. The mobile music business generated revenue primarily through downloads of ringtone melodies, and later, through ringtone songs, as well as through a full-track music download service. The high penetration rate of mobile phones in Japan was the driving force for the sector’s success. In 2007, there were 98 million mobile phone subscriptions—a penetration rate of 81% of the population (120 million); 85.6 million of them also had mobile Internet service. The estimated market size of mobile-phone content was $300 million in 2006. The market for short ring-tone melodies had shrunk significantly, whereas sales of complete ringtone songs and full-track music downloads had taken off by 139% in 2005.122 The Japanese music market also had the largest singles market (for sound recordings) in the world, in part due to the growth in the mobile music market. In 2004, 81.3 million units of singles were sold, whereas total album sales were 201.3 million units.123 The ratio was remarkable: for every 2.5 albums that Japanese consumers purchased, they also bought a single song. Singles were popular in Japan in part because of the Japanese love of karaoke. The Japanese saw karaoke as a major form of entertainment, as well as a way to improve relations with business partners. Power of suppliers In Japan, just like in South Korea, there was no clear distinction among the TV, film, and pop music industries. Celebrities were trained and promoted by talent agencies, and then went on to act in dramas, endorse advertisements, and if proven popular, to release albums and hold concert tours. Just as in the other East Asian markets, Japanese companies often integrated across sectors so as to assert more market power. For instance, TV networks would usually compose their own music for a drama series. NHK, a broadcasting company, produced it own music and even had its own orchestra. Avex, a Japanese record label, also had its own talent management business, which enabled the company to avoid paying commission fees to other talent agencies. These factors made the industry dynamic in Japan quite similar to that of South Korea. In fact, South Korea’s SM Entertainment developed its talent scouting and training business based in part on the Japanese talent management system. Founded by Johnny Kitagawa in 1963, Johnny & Associates (“Johnny’s”) scouted and trained young boys, and had dominated the boy-band market in Japan ever since. All the top male groups currently on Japanese TV were members of Johnny’s stable, including SMAP, Tokio, Kinki Kids, and V6. Johnny’s training was systematic. It scouted young boys when they were 12 to 14 and then provided training in singing, dancing, and acting. Because of its ability to dominate the boy-band market, Johnny’s had become a hugely powerful industry player.124 Japan maintained a unique price maintenance system for music under antitrust law, which meant that albums were not allowed to be sold anywhere at a discounted price. The stated intention behind this policy was to ensure that less well-known singers or less popular genres of music could exist in the market under fair competition, and that people in rural areas could still buy albums at independent retail stores, whose livelihood would be destroyed if they had to sell albums at discounted prices.125 The law was set up by the Recording Industry Association of Japan (RIAJ) and had been controversial. According to Steve McClure, Asia bureau chief of the New York-based music-industry magazine Billboard, the majors welcomed this system, as it maintained the current status quo and preserved their market influence. Smaller companies and content aggregators did not like the system because they were opposed to the current oligopolistic system in which the majors basically set the price because they had more market influence.126 McClure believed that the system would eventually be abolished. Others such as industry analyst Naoki Sekine begged to differ, 22 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 arguing that the system helped to preserve product variety and actually opened up opportunities for domestic competition.127 Power of buyers Traditionally, consumers of J-Pop, drama, and films were young people. But as the under-25 demographic shrunk relative to the rest of the population, the middle-aged or 25-plus group was increasingly more important to companies’ growth. The IFPI showed that in 2006, 22% of music buyers were between the ages of 30 and 39, whereas the 20 to 29 group accounted for only 15% of total music sales.128 In an effort to tap the 25-plus market, some Japanese companies released numerous thematic compilation and greatest-hits albums. The emergence of mobile music added complexity to the industry dynamic. For the ringtone melody business, most of the revenue went to the Japanese record companies, thanks in part to the Japanese Society for Rights of Authors, Composers, and Publishers (JASRAC). The JASRAC established a specific copyright rule for ringtone melodies and ruled that for each download, 5 cents was to be charged for melodies shorter than 45 seconds, and 7.7 cents for melodies longer than 45 seconds. The 21 major record companies established a joint venture called “Label Mobile” to provide ringtone songs; thus, they did not have to share profits with other third-party content providers.129 Content providers were, however, attempting to share the profits of mobile music. For instance, a major mobile company, NTT DoCoMo, had become a major shareholder of Tower Records Japan since November 2005. It announced that it would start a new business using Tower Records’ retail network to distribute mobile music. Not long after, record companies and telecommunication companies became competitors in the mobile music sector. Threat of substitutes Japan had a vibrant pop culture scene. What was considered merely “cool” abroad played perhaps a more integral part in Japanese daily life. The Japanese had a wide array of options when it came to entertainment: manga (Japanese comics and print cartoons), anime (Japanese animation), video games, computer games, Internet social networking, cable TV, fashion, etc. Manga was a big market in Japan, generating $6 billion revenue every year. Japanese animation represented 60% of world animation. There was also a $12 billion market for video, arcade, and console games. Cell phones were a $130 billion business, and toys and character goods brought $5 billion.130 Japanese consumers were also very trend conscious, and Tokyo had become a testing ground for whether or not a product was popular. The nature of the entertainment business in Japan was that different segments supplemented one another. One example was Doraemon, a manga series about a robotic cat of the same name from the 22nd century. The series became so popular that related TV anime, amine films, and character goods were developed. Another example was Avex’s Ayu and “Hello Kitty,” by far the best-selling character good of Sanrio Company Limited. Avex and Sanrio collaborated to produce jewelry, as well as other consumer products such as cameras. Rivalry As of April 2004, there were 41 major companies that produced and sold music under contract, there were independent (indie) music companies, and some artists who were independent without recording company contracts. As the world’s second-largest music market, the Japanese market was dominated by the Big Four, with Universal Music Group, Sony BMG, Warner Music and EMI accounting for a large majority of the market share. But indie music was gaining more market share year by year. Traditionally, indie music was mainly heard only at live venues. But in 2007, indie labels asserted a market share of 18.1% in Japan. This trend was further reflected in the decline of the number of albums achieving gold album status or becoming major hits.131 The appearance of individualistic artists and the diversification in consumer preferences were cited as reasons for the growth of the indie music sector. By 2003, Avex Group Holdings, an independent label that initially focused on the distribution of dance music, had already become the world’s biggest indie label, accounting for about 15% of Japan’s market.132 23 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Key challenges Japan’s music industry faced some of the same problems that the rest of the world’s music market faced. For one, there were fewer stars being created in overseas markets like the U.S. and UK, leading to a drop in imported music sales in Japan as of 2007. Second, despite a recently increase in sales of domestically produced music, especially due to mobile music downloads, the Japanese music companies continued to be worried about piracy.133 Yet these music companies were aided by the fact that intellectual property rights were more strictly protected in Japan compared to even the U.S. Copyright was automatically given to those who created the content without the procedural registration, and any public use of the copyrighted material required the creators’ consent. Those involved in delivering the content, such as singers, dancers, actors and actresses, recording and broadcast companies, also had the so-called “neighboring copyright.” Technically, Japan had been selling copy-controlled CDs (CCCDs) since 2002. Yet CCCDs proved unpopular in the market. One industry source said, “Retailers had to start tracking which albums were copy-controlled, because when the Japanese version was controlled and the import wasn’t, there was often a heavier [demand for] imports….Ultimately, [CCCDs] were hard to hold together unless all the labels were doing the same thing, and it has become clear that wasn’t likely to happen.”134 By October 2004, major labels had scaled back CCCDs. In 2007, music downloads from illegal Japanese mobile sites increased dramatically, equaling the total value of legal annual mobile music downloads.135 In cooperation with the RIAJ, all three major Japanese mobile carriers installed a filtering system to limit access to unauthorized sites starting April 2008. BMG Japan’s president Daniel DiCicco stated, “While this new system is not expected to completely eradicate the problem, early signs are optimistic that the majority of illegal mobile downloads can be curtailed.”136 The existence of album rental shops was another unique feature of the Japanese music market. First opened in 1980, rental shops let consumers listen to the entire album before they decided if they wanted to buy it. With an average rental fee of $3 per album and $1 per single, the 3,300 rental shops had a market size of $550 million—equivalent of 12% of all audio record sales in Japan.137 But the rental system was not accepted by the industry as consumers tend to duplicate albums themselves. There were a few legal disputes between rental shops and record companies, until the former finally agreed to pay a fixed fee to record companies.138 In 2007, music rental had taken on new meaning with the growth of portable MP3 players. New rental fees were negotiated between the RIAJ and the rental association to help compensate for additional lost sales, and these were distributed in kind to the RIAJ member record companies.139 Japan was a forerunner in experimenting with digital and mobile music, but these new revenue sources had not accounted for a large share of revenue, at 11% in 2006. Some were skeptical about whether digital and mobile music would be the future for the Japanese music industry, since they targeted the under-25 young consumers, whereas Japan’s population had been aging. When the industry was at its prior peak, 57.5% of CD buyers were younger than 30. In 2006, this group of people accounted for 34% of all CD sales.140 Among the mature music consumers, a 2004 survey conducted by the RIAJ showed that although a significant number of people were enjoying music in new media, the majority of them did not necessarily know how the new media functioned. Of those responding to the survey, 56.9% were aware of paid music download services online, but only 29.3% clearly understood the services available, while 27.6% indicated that they were somewhat aware, and 42.5% were completely unaware of Internet-based music download services. Despite the above challenges, Daniel DiCicco, the president of BMG Japan, stated: “Japan’s music market remains one of the healthiest in the world. Price control has limited the loss-leading that ravaged markets like the US, a cultural preference for quality packaged product has helped to sustain 24 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 the CD, and the use of the mobile phone as the primary connection to the internet (verses a computer) has enabled a digital music landscape where all stakeholders are equitably compensated.”141 China Industry at a glance According to PricewaterhouseCoopers’ industry research, in 2005 China’s entertainment industry recorded the world’s fastest growth rate, with a 26% CAGR. While Japan had the largest entertainment market in Asia—totaling $104 billion in 2005—it would likely be surpassed by China in 2009. It was forecasted that China’s entertainment industry would grow at an 18% CAGR to $137.4 billion in 2011, the biggest increase in the world during the forecasted period.142 Despite concerns about piracy, the music industry also had recently seen a boom in sales. In 2006, trade revenue from music sales grew by 24.5% to $74 million. Much of the market’s growth came from the emerging sector of digital music—including music obtained online or downloaded onto mobile phones—whereas sales of music in physical units such as CDs and DVDs did not grow but continued to decline by more than 30% over the prior two years. The mobile phone was expected to be the biggest platform for the future recording industry in China. According to the IFPI, in 2005 there were 417 million mobile phone subscriptions in China, as opposed to 41 million broadband lines. Figures for digital or mobile downloads were not available in China, but most industry analysts believed that the mobile platform would be a key element in the mainland's music business. For a country that had been reopened to foreign investment less than 30 years ago, the Chinese entertainment industry was still at an early stage of development. In the 1990s, there were still some 300 state-owned companies, which were poorly equipped and lacked funding.143 They lacked incentives and experience to promote products in a market economy, and were widely acknowledged as a hindrance for the industry to shape into a coherent body. As a result, the government ordered consolidation of the industry, and the number of state-owned enterprises was diminishing every year. 144 Furthermore, the government identified the “cultural industries” for “accelerated development” during the so-called “Eleventh Five-Year Plan” period from 2006 to 2010.145 Power of suppliers There were primarily two types of suppliers in the Chinese music industry. One was the talent agencies that developed and represented the singers. Another was the production companies that recorded albums, and produced dramas and films. Just like the entertainment industry in other countries, the Chinese entertainment industry depended on the popularity of stars. Inspired partly by popular reality TV shows (such as American Idol), and partly by successful foreign agencies (such as SM Entertainment of South Korea and Johnny’s & Associates of Japan), Chinese talent agencies and broadcasting companies had collaborated to host widely publicized singing contests and auditions. These contests were broadcast on television—in a country where television infiltration rate was higher than 90%, contest winners could rise to stardom almost overnight. Agencies then offered contracts, usually from five to eight years, to these new stars.146 Throughout the contracts, management companies provided marketing support and negotiated performance deals for their stars. Over time, the companies regained their investments through CD sales, and commissions of stars’ appearance on commercials, TV dramas, and movies. The competitive dynamic between agencies and stars in China was significantly different from that in Japan and South Korea. First, the Chinese industry was highly fragmented; with many smallscale companies; none had come to exert a significant market share.147 In some cases, if stars were not satisfied with the contract details, they could refuse to sign the contracts, and still keep themselves open for other agencies and performance opportunities. This was almost unheard-of in South Korea 25 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music or Japan, where agencies were influential enough to prohibit disgruntled stars from participating in other programs.148 In comparison, Chinese stars had more bargaining power with their agencies. Power of buyers Buyers in China could be divided into two groups: consumers of music, and intermediate buyers such as record stores, karaoke lounges, and TV networks. In recent years, with rising disposable income, Chinese consumers seemed increasingly willing to pay more for higherquality, legal copies. In some more prosperous coastal cities, such as in Beijing and Shanghai, a significant number of consumers were even willing to pay high prices to attend live concerts. In 2006, Linkin Park held a concert in the Shanghai Stadium. Tickets for the concert were priced at $50, but still attracted a sold-out crowd of 25,000. According to Shen Li-hui, founder and CEO of Modern Sky (an independent record label that was exploring the realm of multimedia entertainment), “The Chinese were hungry for different kinds of entertainment. The market in China was huge and people were getting more willing to spend.”149 Piracy had forced record labels to sell CDs at discounted prices. Back in 2003, a legal CD cost from $6 to $18; in a country with a per capita income of about $2000 per year, this price was considered too high and was linked to the public’s appetite for pirated products.150 Moreover, most local CD shop owners, especially those in remote rural villages, were unable to distinguish between legal and pirated copies. The cheaper pirated copies easily found their way into local markets.151 The IFPI estimated that about 85% of recordings in China were illegal, representing a total value loss of $410 million in 2006.152 Threat of substitutes Well-off Chinese consumers had a growing number of alternative entertainment options in 2007. Young people in China were, for example, avid game players—for both online and video games. Game industry experts estimated that China had 27 million gamers, and 29% of them played games more than 60 hours per month, which contributed to a 23.6% growth rate in China’s video game market. It was further forecasted that the gaming market in China would hit $2.1 billion by 2010.153 Another entertainment alternative that the Chinese loved was theme parks. China started to develop a “theme park fever” in the 1990s when Chinese leaders and developers visited international theme parks such as Disneyland, Universal, and Las Vegas. By 2006, it was estimated that there were at least 200 theme parks, and more were being developed. Rivalry In China, there were literally hundreds of talent agencies, film and TV production companies emerging every year and competing vigorously. Consolidation was slowly occurring, and diversified business groups with financial wealth and management experience found themselves in a position to set the terms of industry consolidation going forward. Key challenge The Chinese entertainment market was large, new, and rapidly changing. Piracy remained the single most important challenge to the industry. To compete with the pirates, recording companies such as the Big Four and film distributors such as Time Warner Twentieth Century Fox Film Corp. had been experimenting with DVD release dates—to release DVDs earlier so as to shorten the time customers needed to wait for the legitimate copies to come out on the market. But curtailing piracy involved understanding piracy’s root cause in China, which was affordability. Even in the coastal cities, there was a disconnect between supply and demand, as many film and music consumers were teenagers or young people who did not have much disposable income. The music market seemed willing to compromise on price. Several companies willingly lowered their CD prices. EMI released the popular Hong Kong singer Hacken Lee’s CD in the Pearl River Delta area at a discounted price. Warner Music China also received permission from Warner Bros (Linkin Park’s home label) and from the band’s management, to offer Linkin Park’s album Meteora at what it called an “entry-level” price.154 Legitimate music CDs sold for around $2, which was still roughly double the price of pirated unit. 155 In live performances, although some famous 26 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 international bands still asked for high prices (from $30 to almost $100), small venue performances were usually cheaper. Modern Sky organized a series of music festivals in China, and tickets were priced at 60 yuan (about $8) for a full day of performances. As general manager Michael LoJudice of Modern Sky said, tickets were priced to “get the kids out.”156 The lack of intellectual property rights (IPR) protection was responsible for revenue loss in most areas but some, such as Modern Sky, believed it was also a golden opportunity to explore new revenue sources. Modern Sky, for one, believed that precisely because China did not have a reliable legal system to protect IPR, it forced companies to be even more innovative to replace the traditional model of album sales.157 Shen Li-hui of Modern Sky believed that the future business model in the Chinese music market would center on the merchandise and concert business. The company had released about 100 albums—mostly money losers, but it had a host of supplementary businesses, producing children’s books, videos and film production, design, animation production, commercial licensing, and art and fashion retail.158 Although Linkin Park’s latest CD was not released in China, its concert grossed $750,000, which on a per-ticket basis was roughly equivalent to the band’s take on recent American tours.159 To capitalize on this emerging market, international touring companies had established regional offices in China. Ticketmaster bought a majority stake in Emma Entertainment, a Chinese promoter and ticketing service that presented the Linkin Park show. The emergence of the digital and mobile music market presented new business opportunities in China. In 2006, while sales of physical albums declined 34.3% to 26.1 million units, overall recordedmusic sales rose on a value basis, because of the increasing popularity of digital music products such as ringback tones and master ringtones.160 According to William Bao Bean, partner in Hong Kongbased venture capital firm Softbank China and India Holdings, Chinese consumers spent $1.5 billion in 2006 on mobile and digital music. But the music industry received only about 4.5% of that amount.161 As of 2007, there were still hundreds of illegal music websites. But 2007 could prove to be a turning point for the music industry in China. In 2006, a group of music companies sued Baidu, a prominent search engine in China, for “deep linking”—a practice that linked Web searchers to unauthorized downloads hosted by unaffiliated illegal sites.162 The music companies lost the case, despite the fact that the music industry had won similar cases against deep linking in the Netherlands, Norway, and Australia.163 In April 2007, led by the IFPI, 11 music companies filed another lawsuit against Yahoo! China for deep linking. They won the case, although compensation was a minimal 210,000 yuan ($28,455). The move was symbolic, nonetheless. Inspired by the Yahoo! lawsuit, Entertainment Base, a legal, membership-based music download website, appealed a previously lost case, for the fifth time, against Baidu’s deep linking practice and asked for a compensation of 100 million yuan ($13.5 million). The case was still going on, but as Tony Hotung, director of business development at Music Copyright Solutions’ Asian office, said, “[the Chinese legal environment was] improving in terms of enforcement, thresholds [were] being lowered, and there [was] a sense that the authorities [were] determined to get a grip on the piracy issue.”164 27 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music Endnotes 1 Data on population and nominal GDP in U.S. dollars are from the Economist Intelligence Unit Country database, accessed February 18, 2008. 2 International Federation of Phonographic Industry, The Recording Industry 2006 Piracy Report: Protecting Creativity in Music, London, 2006, p. 11, http://www.ifpi.org/content/library/piracy-report2006.pdf, accessed February 22, 2008. 3 Nyay Bhushan, Steve McClure, Mark Russell, “Meet the Miracle Markets: A Dozen Nations Where Recorded-Music Revenue Actually Increased in 2006,” Billboard Biz, August 25, 2007, p. 15. 4 PricewaterhouseCoopers, Global Entertainment and Media Outlook, 2007–2011, published 2007, data compiled by PricewaterhouseCoopers LLP and Wilofsky Gruen Associates, p. 294. 5 Hiromi Lorraine Sakata, Asian and Asian-American Music, Portland Public Schools Geocultural baseline Essay Series, December 22, 1999, p. 7, http://www.pps.k12.or.us/depts-c/mc-me/be-as-mu.pdf, accessed December 22, 2007. 6 During the Han Dynasty, Han Wudi (141BC–86BC) first adopted Confucianism as an official state philosophy. But Confucius (551BC–479BC) firs started teaching during his lifetime, although his teachings were not popular among feudal lords at that time. 7 Hiromi Lorraine Sakata, Asian and Asian-American Music, p. 11. 8 Hiromi Lorraine Sakata, Asian and Asian-American Music, p. 16. 9 Hannah Beech Naha, “Great Expectations: An Unconventional Academy in Okinawa Is Grooming Promising Young Performers for the World Stage,” Time Asia Magazine, May 3, 1999, http://www.time.com/ time/asia/asia/magazine/1999/990503/actors1.html, accessed August 25, 2008. 10 Hiromi Lorraine Sakata, Asian and Asian-American Music, p. 18. 11 Steve McClure, “Shokichi Kina,” http://nippop.com/artist/artist_id-11/artist_name-shokichi_kina/, accessed June 13, 2008. 12 Cliff Furnald, “Shokichi Kina and Champloose: A Collection of Reviews Written Between 1987 and 1996,” http://www.rootsworld.com/rw/feature/kina.html, accessed June 13, 2008. 13 Laboratory of Image Culture Okinawa, “The Heart of Japan, the Heart of Okinawa,” http://www.asiadocumentary.com/works/okinawa-submit.html, accessed June 13, 2008. 14 Cliff Furnald, “Shokichi Kina and Champloose.” 15 Farsidemusic.com, “Shokichi Kina & Champloose,” originally from Japan Times, http://www.farsidemusic.com/acatalog/shokichi_kina.html/, accessed August 25, 2008. 16 Laboratory of Image Culture Okinawa, “The Heart of Japan, the Heart of Okinawa.” 17 Steve McClure, “Shokichi Kina.” 18 Steve McClure, Nipponpop, Tokyo, Japan: Tuttle Publishing, 1998, p. 17. 19 Naoki Sekine, “The Music Business in Asia,” in The Global Music Industry: Three Perspectives, by Arthur Bernstein, Naoki Sekine, Dick Weissman, New York: Routledge (2007), p. 253. 20 Naoki Sekine, “The Music Business in Asia,” p. 254. 21 People.com.cn, “Korean Drama Touched Foreign Audiences through Its Sincerity,” October 31, 2005, http://world.people.com.cn/BIG5/1031/3813835.html, accessed November 21, 2007. 22 Naoki Sekine, “The Music Business in Asia,” p. 253. 23 Deborah Sontag, “The Ambassador,” New York Times, January 29, 2006. 24 Arthur Bernstein, Naoki Sekine, and Dick Weissman, “Conclusion: Loose Ends, Final Thoughts, and the Future,” in The Global Music Industry, p. 267. 25 Steve McClure, “Japanese Star Hopes to Rock the U.S.,” International Herald Tribune, April 7, 2004, http://www.iht.com/articles/2004/04/07/uta_ed3_.php, accessed December 23, 2007. 26 Bryan Reesman, “Kabuki Rock,” Grammy.com, November 30, 2006, http://www.grammy.com/GRAMMY_Awards/News/Default.aspx?newsID=2278&newsCategoryID=3, accessed December 22, 2007. 27 Ibid. 28 Steve McClure, “Why Japanese Singers Fail to Crack U.S. Market,” Japan Today, May 18, 2001, http://www.japantoday.com/jp/comment/40, December 28, 2007. 28 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 29 Steve McClure, Nipponpop, p. 67. Alex Mar, “Shonen Knife Brings Sweets: Japanese Pop-punks Launch Spring Tour Behind Reissues,” Rolling Stone, March 1, 2005, http://www.rollingstone.com/news/story/7069216/shonen_knife_bring_sweets, accessed January 3, 2008. 31 Keith Cahoon, “Catching Up with Shonen Knife,” Nippon.com, February 26, 2005, http://nippop.com/ features/feature_id-11/, accessed January 3, 2008. 32 Steve McClure, Nipponpop, p. 104. 33 Steve McClure, Nipponpop, p. 153. 34 Karen Schoemer, “Pop/Jazz; Japanese Trio with Songs of Animals and Oysters,” New York Times, August 16, 1991. 35 Neil Strauss, “Review/Music; Rebuilding Rock-and-Roll from the 50’s Up,” New York Times, May 10, 1994. 36 Ilya Garger, “A Dozen Roses,” Time Magazine, May 24, 2004, http://www.time.com/ time/magazine/article/0,9171,501040531-641204,00.html, accessed December 22, 2007. 37 PR Newswire, “Twelve Girls Band Highest Debut by an Asian Artist in History of Billboard 200,” August 30, 2004. 38 Author’s interview with Steve McClure, December 21, 2007, and Twelve Girls Band Official website, “About Us,” http://www.12girls.org/gywm-yfjj.asp, accessed December 22, 2007. 39 Ilya Garger, “A Dozen Roses.” 40 Steve McClure, Nipponpop, p. 19. 41 Billboard.com, “Ask Billboard,” July 30, 2003, http://www.billboard.com/bbcom/search/google/ article_display.jsp?vnu_content_id=1945050, accessed January 3, 2008. 42 Steve McClure, “Import-Export Issues Mark J-pop Year,” The Daily Yomiuri, December 23, 2004. 43 Casewriter’s Interview with Steve McClure, December 21, 2007. 44 International Federation of Phonographic Industry, IFPI 2007 Recording Industry in Numbers, pp. 43, 45, 47, 51. 45 Steve McClure, Nipponpop, p. 151. 46 Casewriter’s interview with Steve McClure, December 21, 2007. 47 Steve McClure, “Import-Export Issues Mark J-pop Year.” 48 KBS Global, “Rain’s Album Records Sales of over One Million Copies in Asia,” http://english.kbs.co.kr/ entertainment/ news/1375194_11858.html, accessed January 6, 2008. 49 The Honolulu Advertiser, “Rain Concert VIP Ticket Refund Start Today,” June 20, 2007. 50 Casewriter’s correspondence with Steve McClure, August 26, 2008. 51 Park Soo-mee, “Making It in the Big Time: K-Pop Wants U.S. Air Play,” Joins.com, February 16, 2006, via Factiva, and Jon Pareles, “Korean Superstar Who Smiles and Says, ‘I’m Lonely’,” New York Times, February 4, 2006. 52 Park Soo-mee, “Making It in the Big Time: K-Pop Wants U.S. Air Play.” 53 Peter Serafin, “Shakeup at Japan’s Avex Claims Yoda,” Billboardbiz, August 9, 2004, http://www.allbusiness.com/retail-trade/miscellaneous-retail-retail-stores-not/4369664-1.html, accessed January 18, 2008. 54 OneSource, Avex Group Holdings, accessed via OneSource Information Services, Inc., accessed January 18, 2008. 55 The Nation (Thailand), “Breaking Cultural Barriers in Artist Management,” July 10, 2007, accessed via Factiva. 56 The Nation (Thailand), “Breaking Cultural Barriers in Artist Management.” 57 Steve McClure, “Avex Targets China,” Billboard, April 8, 2006. 58 Avex Company press release, “Announcement Concerning the Establishment of a Joint Venture in China,” November 16, 2006, http://www.avex.co.jp/e_site/press/2007/061116.pdf, accessed January 4, 2008. 59 Avex Company press release, “Famous Chinese Actress Chen Hao CD Debut in Japan,” June 21, 2005, http://www.avex.co.jp/e_site/press/2005/050621.pdf, accessed January 4, 2008. 60 OneSource, SM Entertainment, accessed via OneSource Information Services, Inc., January 18, 2008. 30 29 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music 61 SBS Special, “Asia Showbiz Three Way Battle: Soo-man Lee’s CT Theory and the Future of Hanryu,” Seoul, South Korea: Seoul Broadcasting System, Special #33, March 12, 2006. 62 Lee Kyong-hee, “Promoter of Korean Wave Wants Part in Chinese Hollywood,” Joins.com, February 23, 2006. 63 SBS Korean Broadcasting Special Documentary, “Asia Showbiz Three Way Battle?” 64 SBS Korean Broadcasting Special Documentary, “Asia Showbiz Three Way Battle?” 65 CNN Talk Asia, “BoA Talk Asia Transcript with Anjali Rao,” December 15, 2006, http://edition.cnn.com/ 2006/WORLD/asiapcf/12/15/talkasia.boa.script/index.html, accessed November 16, 2007. 66 CNN Talk Asia, “BoA Talk Asia Transcript with Anjali Rao.” 67 Recording Industry Association of Japan, Related Data, http://www.riaj.or.jp/e/data/index.html, accessed January 18, 2008. 68 Steve McClure, “BoA Profile,” Nippop.com, http://nippop.com/artist/artist_id-86/artist_name-boa/, accessed January 4, 2008. 69 David Watts, “Steely Showman Sets His Sights on Global Domination: Interview Lee Soo-Man,” The Times, October 18, 2006. 70 Avex Group Holdings Press Release, “Announcement Regarding the Establishment of a Joint Venture in China.” 71 SBS Korean Broadcasting Special Documentary, “Asia Showbiz Three Way Battle?” 72 Korea Times, “Pop Chameleon Takes on Acting,” March 22, 2004, accessed via Factiva 73 Kpopmusic.com, “Top K-Pop News for January,” January 25, 2001, http://www.kpopmusic.com/news/ january.shtml, accessed January 28, 2008. 74 Chosun Ilbo, “New Trends in the Music Industry in 2007,” December 21, 2007, accessed via Factiva. 75 Deborah Sontag, “The Ambassador.” 76 JYP Entertainment Company website, “JYPE Introduce,” http://www.jype.com/main/about_eng/ company/company01.htm, accessed January 28, 2008. 77 Chosun Ilbo, “Park Jin-young Has Ambitions to Conquer the World,” July 3, 2007, http://english.chosun.com/w21data/html/news/200707/200707030017.html, accessed January 28, 2008. 78 Bangkok Post, “Firms Debate Next Destination for Rain: Grammy to Market More Artists Overseas,” July 10, 2007. 79 “Park Jin-young has ambitions to conquer the world,” Chosun Ilbo, July 4, 2007. 80 Ibid. 81 Chloe A. 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Hilliard, “Seoul Train,” The Village Voice, July 17, 2007. 86 Chosun Ilbo, “Park Jin Young Has Ambitions to Conquer the World.” 87 Chosun Ilbo, “Park Jin Young Has Ambitions to Conquer the World.” 88 Soompi.com, “Album Review—Park Jin Young (JYP) Vol. 7 Back to Stage,” December 23, 2007, http://www.soompi.com/music/reviews/park_jin_young_jyp_vol_7, accessed January 28, 2008. 89 KBS Global, “Wonder Girls to Enter U.S. Market,” http://world.kbs.co.kr/english/entertainment/ enter_chart_detail.htm?No=6827, accessed January 29, 2008. 90 YG Entertainment Company website, “Vision,” http://ygfamily.com/, accessed January 29, 2008 91 YG Entertainment Company website, “Scope of Business,” http://ygfamily.com/, accessed January 29, 2008. 92 Han Sang-hee, “Big Bang Will Knock on Japan,” Korea Times, January 3, 2008, http://www.koreatimes.co.kr/ www/news/special/special_view.asp?newsIdx=16685&categoryCode=178, accessed January 29, 2008. 30 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 93 KBS Global, “Se7en Set to Make U.S. Debut,” http://english.kbs.co.kr/entertainment/news/ 1420372_11858.html, accessed January 3, 2008. 94 PopSeoul.com, “Se7en’s US Debut Song Leaked on YouTube,” April 6, 2007, http://popseoul.com/ 2007/04/06/se7ens-us-debut-song-leaked-on-youtube/, accessed January 18, 2008. 95 Allpop.com, “2007 Celebrity Superlatives: The Best, the Worst, the Plastic,” December 16, 2007, http://www.allkpop.com/index.phparticles_full/2007_celebrity_superlatives_the_best_the_worst_the_plastic/, accessed January 29, 2008. 96 Cathy Rose A. Garcia, “Skull Tries Unconventional Way to Win US Fans,” Korea Times, January 4, 2007, accessed via Factiva 97 Chosun Ilbo, “Korean Reggae Artist Making Buzz in U.S.,” August 6, 2007, http://english.chosun.com/ w21data/html/news/200708/200708060007.html, accessed January 29, 2008. 98 KBS Global, “Skull Makes Billboard Top 10,” http://english.kbs.co.kr/entertainment/news/ 1469415_11858.html, accessed January 29, 2008. 99 Music Industry News Network,” Skull: A Powerful Voice for Korea May Soon Be Silenced by Mandatory Military Service,” September 17, 2007, http://mi2n.com/press.php3?press_nb=103378, accessed January 29, 2008. 100 Robert Holton, “Globalization’s Cultural Consequences,” Annal of the American Academy of Political and Social Science, Vol. 570, Dimensions of Globalization (Jul7 2000), pp. 140—152. According to the author, “hybridization” is considered one of the cultural consequences of globalization, that “cultures borrow and incorporate elements from each other, creating hybrid, or syncretic, forms. Evidence of hybridization mainly comes from popular music and religious relief. 101 Naoki Sekine, “The Music Business in Asia,” p. 260. 102 Antoaneta Bezlova, “Perpetuating A Skewed View of Chinese History,” Asia Times Online, January 24, 2007, http://www.atimes.com/atimes/China/IA24Ad01.html, accessed January 3, 2008. 103 SBS Korean Broadcasting Special Documentary, “Asia Showbiz Three Way Battle?” 104 Roland Robertson, “Glocalization, Time-Space, and Homogeniety-Heterogeneity,” in Global Modernities, edited by M. Featherstone, S. Lash, and R. Robertson, Thousand Oaks, California: Sage, 2005. The term “glocalization” combines “globalization” and “localization” first appeared in the late 1980s in articles printed in Harvard Business Review. But sociologist Roland Robertson was credited for popularizing the term in 1997. 105 International Federation of Phonographic Industry, IFPI 2007 Recording Industry in Numbers, p. 51. 106 Samuel Lee, “Seoul Survivor,” The Straits Times, April 8, 2003. 107 Korean Ministry of Culture and Tourism, “Seoul to Make Hallyu Map to Entice Tourists,” Issue Link, January 14, 2007. http://www.mct.go.kr/english/issue/issuelink_view.jsp, accessed September 24, 2007. 108 Chloe A. Hilliard, “Seoul Train.” 109 Jae-Hoon Cheong, “Regulation on Agent Business in Korean Entertainment Industry,” Thesis from Harvard Law School, pp. 9–10. 110 AFX Asia, “South Korea FTC Penalises SM Entertainment, 7 others for collusion/unfair practices,” July 28, 2002. 111 Keith Howard, “Exploding ballads: The Transformation of Korean Pop Music,” in Global Goes Local: Popular Culture in Asia, edited by Timothy J. Craig and Richard King, Vancouver: UBC Press, 2002, p. 81. 112 Doobo Shim, “Hybridity and the Rise of Korean Popular Culture in Asia,” 37. 113 AFX Asia, “South Korea FTC Penalises SM Entertainment.” 114 Agence France Presse, “South Korean Show Business Accused of Corruption,” July 28, 2002. 115 BusinessWeek, “Online Gaming: Korea’s Gotta Have it,” September 11, 2006, http://www.businessweek .com/magazine/content/06_37/b4000070.htm, accessed December 22, 2007. 116 Suh-kyung Yoon, “South Korea—Swept Up on a Wave: What’s Hipper than Japanese Rock and Cooler than Canto-pop?” Far Eastern Economic Review, October 18, 2001. 117 The Korea Herald, “Korean Pop Culture Spreads beyond Asia (2): Hallyu has multiple elements that could cater to diverse local needs and contexts,” August 2, 2007. 118 Korean Ministry of Culture and Tourism, “Seoul to Make Hallyu Map to Entice Tourists,” Issue Link, January 14, 2007, http://www.mct.go.kr/english/issue/issuelink_view.jsp, accessed September 24, 2007. 31 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. 708-479 The Globalization of East Asian Pop Music 119 Korean Ministry of Culture and Tourism, “Korea to Pour Massive Funds into Film Industry,” Issue Link, January 27, 2006, http://www.mct.go.kr/english/issue/issuelink_view.jsp, accessed September 24, 2007. 120 International Federation of Phonographic Industry, IFPI 2007 Recording Industry in Numbers, p. 51. 121 Japanese Economy Division, “‘Cool Japan’s Economy Warms Up,” Japan External Trade Organization (JETRO), Tokyo, March 2005, p. 5. 122 Mobile Content Forum, “The Market Size of Mobile-Related Contents 2006,” July 24, 2007, http://www.jasrac.or.jp/profile/copyright/index.html, accessed October 17, 2007. 123 Naoki Sekine, “The Music Business in Asia,” p. 217. 124 Ren Yanli, “Secrets of Japanese Drama Production: The Trend Setter of Popular Culture,” September 11, 2007, http://enjoy.eastday.com/e/20070911/u1a3101138.html, accessed October 18, 2007. 125 Naoki Sekine, “The Music Business in Asia,” pp. 215–216. 126 Casewriter’s interview with Steve McClure, Asia bureau chief of the New York-based music-industry magazine Billboard, December 21, 2007 127 Naoki Sekine, “The Music Business in Asia,” pp. 215–216. 128 International Federation of Phonographic Industry, IFPI 2007 Recording Industry in Numbers, p. 51. 129 Akira Takeishi and Kyoung-Joo Lee, “Divergent Paths of Mobile Innovation: Development of Mobile Music Business in Japan and Korea,” April 28, 2005, Institute of Innovation Research, Hitotsubashi University, Tokyo, Japan, pp. 5-6. 130 Leslie Evans, “The Battle for the Global Entertainment Industry: Japan’s Growing Strength in Digital culture,” University of California in Los Angeles International Institute, January 17, 2003, http://www.international.ucla.edu/article.asp? parentid=2931, accessed October 14, 2007. 131 Japanese Economy Division, “Japan’s Music Industry,” Japan External Trade Organization, Tokyo, April 2004, p. 3. www.jetro.go.jp/en/market/report/pdf/2004_28_r.pdf, accessed October 18, 2007. 132 Casewriter’s calculation, based on the company’s annual sales $869 million for the fiscal year ended march 2007, and the industry’s total sales at $5,463 million, from PricewaterhouseCoopers. 133 Casewriter’s correspondence with Daniel DiCicco, president of BMG Japan, August 26, 2008. 134 Steve McClure, “Copy Control Fades in Japan,” Billboard 116, no. 42, October 16, 2004, p. 41. 135 Casewriter’s correspondence with Daniel DiCicco. 136 Casewriter’s correspondence with Daniel DiCicco. 137 Naoki Sekine, “The Music Business in Asia,” p. 216. 138 Naoki Sekine, “The Music Business in Asia,” p. 216. 139 Casewriter’s correspondence with Daniel DiCicco. 140 International Federation of Phonographic Industry, IFPI 2007 Recording Industry in Numbers, p. 47. 141 Casewriter correspondence with Daniel DiCicco, president of BMG Japan, August 26, 2008. 142 Kevin Zimmerman, “Entertainment and Media Outlook: Gaining Momentum,” report summary of Global Entertainment and Media Outlook: 2006–2010, PricewaterhouseCoopers. http://www.pwc.com/extweb/ pwcpublications.nsf/docid/C987CEB2D179131F852572090083B4B3/$FILE/GlobalOverview_kz2.pdf, accessed October 15, 2007. 143 The SARFT revealed that by 2005, there were still 36 state-own film production units in China. http://gdtj.chinasarft.gov.cn/Tiaomu.aspx?DocId=531, accessed October 5, 2007. 144 Michael Primont, “One Exec's View from Beijing,” Billboard 112, no. 48; p. 70, Nov 25, 2000. For instance, up until 1998, there were more than 230 state-owned record labels. But by 2000, after a government ordered consolidation, the number was down to 30 and counting. 145 SinoCast China Business Daily News, “China to Push Development of Cultural Industries,” September 15, 2006, p. 1, via ProQuest, ABI/Inform. 146 Ren Yanli, “Stars and Their Agencies, Complementors or Competitors?” East Day News, May 11, 2007, http://enjoy.eastday.com/e/20070511/u1a2823245.html, accessed October 2, 2007. 147 Michael Primont, “One Exec's View from Beijing.” 148 Ren Yanli, “Stars and Their Agencies.” 149 Casewriter’s interview with Shen Li-hui, Founder and CEO of Modern Sky, December 17, 2007. 150 Chen Jie, “Chinese Pop Finds Its Voice,” China Daily (North American Edition), October 9, 2003. 32 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017. The Globalization of East Asian Pop Music 708-479 151 Michael Primont, “One Exec's View from Beijing.” International Federation of Phonographic Industry, The Recording Industry 2006 Piracy Report, p. 11. 153 Game Daily Biz, “Report: China’s Video Game market to Reach $2.1 Billion in 2010,” April 25, 2006, http://biz.gamedaily.com/industry/feature/?id=12513, accessed October 12, 2007. 154 Steven Schwankert, “Fighting Fire with Fire,” Billboard 115, no. 31, August 2, 2003. 155 Susan Butler, “China Breaking Through,” Billboard 118, no. 21, May 27, 2006. 156 Casewriter’s interview with Michael LoJudice, General Manager of Modern Sky’s U.S. Operation, December 17, 2007. 157 Casewriter’s interview with Shen Li-hui, Founder and CEO of Modern Sky, December 17, 2007. 158 Ben Sisario, “For All the Rock in China,” and casewriter’s Interview with Michael LoJudice. 159 Ben Sisario, “For All the Rock in China.” 160 Nyay Bhushan, Steve McClure, Mark Russell, “Meet the Miracle Markets,” p. 15. 161 Nyay Bhushan, Steve McClure, Mark Russell, “Meet the Miracle Markets.” 162 Tim Culpan, “Yahoo’s China Problem,” Billboard 118, no. 10, March 11, 2006, p. 5. 163 Geoffrey A. Fowler and Andrew Batson, “Music Companies Lose Suit Against Baidu.com in Beijing,” Wall Street Journal (Eastern edition), Nov 18, 2006. p. A7. In January 2007, EMI surprised many in the Asian music business by announcing that it was joining forces with Baidu to launch an advertising-supported online music streaming service in China. EMI subsequently dropped out of the suit. 164 Steve McClure, “Deep Cover,” Billboard, Vol. 119, no. 19, May 12, 2007, p. 21. 152 33 This document is authorized for use only in Markus Taussig's Asia Pacific Business Environment (MT) course at NATIONAL UNIVERSITY OF SINGAPORE, from January 2017 to July 2017.
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