Music Biz Rising In The East.

Dateline: HONG KONG

The music industry's rebirth will happen in Asia.

That was the prediction made by Warner Music Group chairman/CEO Edgar Bronfman Jr. in a keynote speech at the inaugural Music Matters conference in Hong Kong.

"Asia is where the music industry's growth will be most explosive," Bronfman said. "Everything is up for grabs, and nothing is sacred."

Bronfman used his speech to announce that WMG was setting up a joint venture with leading South Korean telecom operator SK Telecom that will take over Warner Music Korea's stable of domestic acts (Billboard, May 27).

Conference attendees' reaction to that initiative was mixedâ€"some saw it as bold and forward-looking, others wondered if such deals can work to the music industry's advantage.

Much like Bronfman's speech, the conference focused on the potential for digital and mobile applications to power the region's growth, and the need for the music business to forge alliances outside the industry.

In a presentation titled "The State of the Union," Marcel Fenez, Asia-Pacific media and entertainment team leader at PricewaterhouseCoopers, predicted that strong growth in digital deliveryâ€"including subscription-based, mobile content delivery business modelsâ€"during the next two to three years would raise the Asia Pacific region's share of global music sales from 23% to 25%.

"As [third-generation mobile phone technology] comes on in many markets, we get a real explosion of opportunity," Fenez said. "Mobile will be the biggest component [of Asian music sales] by 2010."

Mobile-based music sales totaled about $2.1 billion in Asia in 2005â€"five times larger than in the United States, Fenez noted.

Another theme that emerged during the conference was that, besides the digital and mobile sectors, music companies need to work with the advertising industry in order to reap the potential rewards of doing business in Asia.

"Life would be boring without music and so would advertising," TBWA Asia Pacific regional chairman Keith Smith told delegates. Speaking during a panel discussion titled "Music, Brands, Media and Marketing: Working With Music," Smith noted that the region's advertising industry is "getting much more proactive about music."

Plans for the conference were initiated by Amsterdam-based music industry consultant Richard Denekamp in 2005, when he was IFPI Asia Pacific chairman and Sony BMG Music Entertainment Asia president. He left Sony BMG in July 2005.

Organization of the event was handled by Hong Kong-based ad agency Branded and it was supported by the four major record companies and the IFPI.

"We deliberately set out to create a nontraditional gathering," says IFPI Asia Pacific chairman Lachie Rutherford, who is also president of Warner Music Asia Pacific.

Branded says more than 500 people attended Music Matters daily, along with 74 speakers and 60 media representatives.

"I didn't expect so many people to attend a first-time conference," admitted Ashley Whitfield, managing director of Hong Kong-based entertainment company Evolution.

Denekamp said his main reason for floating the conference idea was that "a lot had changed over the last couple of years in the music industry in Asia."

Asia was taking a cutting-edge role in mobile entertainment, he said, and "China was leap-frogging the development of a traditional physical market going straight to digital."

The conference was intended "to bring all those new players together for an exchange of ideas," Denekamp said, "studying the tea leaves and some valuable networking."

The result, Denekamp said, "was beyond my expectations." He conceded that there remains room for improvement, but added: "The organizers have laid a solid foundation for this conference to become a yearly event."

Delegates were generally enthusiastic about the event. Massy Hayashi, president of Tokyo-based concert promotion company Hayashi International Promotion, said: "It was a good opportunity to exchange information in a convenient location."

PHOTO (COLOR): BRONFMAN

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By Steve McClure

The two-day Music Matters conference opened at the Four Seasons Hotel in Hong Kong on May 10â€"an unusually bright and sunny day with spectacular views of the harbor and the mountains of the New Territories across the water.

Inside, the outlook was also bright at this inaugural event for the Asian music industry. Here are notes from in and around the conference sessions.

• Two key Asian entertainment biz players were conspicuously absent from Music Matters: Norman Cheng, chairman/CEO of EMI Music Asia, and Michael Smellie, Bertelsmann's new Beijing-based president of Asia Pacific media development.

Sources say Cheng is busy developing his own business interests in mainland China, apparently with EMI's blessing. But exactly what Smellieâ€"previously Sony BMG's New York-based COOâ€"will be doing for Bertelsmann in Beijing remains unclear.

• "Hip-hop is beginning to become a potential force in china," said P. Duane Kennedy, CEO of Shanghai-based hip-hop entertainment company Dai-Biao.

Until recently, Kennedy said, hip-hop consumers were not being served in China because major labels believed the genre would never catch on there. But, he explained, the "little emperors"â€"the spoiled offspring of China's single-child familiesâ€"in urban centers have embraced rap in a big way.

Kennedy said China's government went out of its way to crush punk, but "happy rap" has its tacit approval. "As long as you stay away from things the government doesn't likeâ€"like freedom of speech and democracy, then it's OK," he said.

• Locally based pop vocalist and film actor Edison Chen reckoned there are "six people who control music in Hong Kongâ€"and they're all over 50."

Chen was signed until 2005 to the local Emperor Entertainment Group, enjoying a string of hits. But speaking during a session titled "New Model Army: The Artist & Label in a Digital World," he echoed past statements by international superstar Prince, declaring himself "tired of being a slaveâ€"disrespected and not able to record the kind of music I want to record."

According to Chen, "At the beginning of an artist's career you need help, but after a while, you need space." So he does not want a new dealâ€"unless he controls his own "mastersâ€"and everything."

• Sony BMG Thailand regional star Tata Young does not want fans to think she slugs brandy from the bottle, her manager Doug Banker said.

During the session "Music, Brands, Media & Marketing" the VP of Los Angeles-based McGhee Entertainment said most Asian artists have no problem doing product endorsements, although balancing their interests with those of the brands can be trick.

Vocalist Young already has endorsement deals with Colgate and Pepsi. But Banker recalled recently spending nearly three weeks trying to establish with Hennessy Cognac exactly how close she should be to a bottle and glass of the spirit in an ad linked to its sponsorship of Young's first tour of China.

"[Finally] I saw a picture that I liked," Banker said, "and said, 'OK, it doesn't look like Tata is drinking out of the glass.' [But] they'd just as soon have had her chugging the bottle."

• Legendary British concert promoter Harvey Goldsmith was typically outspoken in his May 11 keynote speech, characterizing some corporate concert sponsors as "starfuckers" desperate to hang out backstage.

Goldsmith also took a shot at certain "fly by night" promoters in Asia. "Artists demand as much as the market will pay," he said. "There's always an idiot who's prepared to overpay. What good is it to secure the act, gain the prestige and then lose a fortune?"

• The closing session, titled "The Future of the Music Business," included Warner Music Asia Pacific president Lachie Rutherford, who was asked where he sees the business going to by 2010. "If legal download sites become easier to use, then I see [worldwide sales of] $50 billionâ€"and the [Warner] share price will go to $39," he declared, drawing more than a few guffaws.

PHOTO (COLOR): YOUNG

PHOTO (COLOR): KENNEDY

PHOTO (COLOR): CHEN

PHOTO (COLOR): BANKER