Joi Ito writes on the Chinese recording industry:
He explained that the legal music CD business in China is about 5%. In other words, 95% of the CDs on the market are pirate copies. He said that it was the teenagers who were passionate about the artists and liked to hang out in the record shops that tended to buy the legal CDs. Even in the top artists, CD sales only represented 30% or so of their income, while less known musicians actually lost money on CDs. The CDs are important, however, as a marketing and promotion vehicle.
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My “take-away” was that in a market where the record industry basically doesn’t function, artists and agents are going to be pushing the cutting edge of music business models and might in fact discover the post DRM/RIAA business model before Hollywood does. Obviously, it helps to have a huge growing market such as China, but I think it would make sense for artists and music industry people to keep an eye on China for breakthroughs in the music business.
And the RIAA thinks they have it bad.