A modern revival

Record company survives industry slump to become music festival visionary

At a time when the nation's music industry is foundering, rock singer-turned-entrepreneur Shen Lihui is celebrating the 15th anniversary of Modern Sky Entertainment Co in style.

Although record sales, nationally and for Modern Sky, are mired in a deep slump, the record label's founder and general manager is full of confidence that the company will thrive. But instead of pumping out more CDs, Shen is banking on the growing market for concerts and music festivals.

"Live music has become part of people's life in Beijing and Shanghai, which are trendsetters for other Chinese cities. Once you get the audience, you get the possibilities," Shen says.

Modern Sky has so far issued more than 160 CDs and operates two of the largest music festivals in China: the Modern Sky and Strawberry music festivals. It has offices in Beijing, Shanghai, Xi'an and New York City, and has more than 40 employees.

The company organized six music festivals last year, attracting an audience of almost 300,000 people. Shen expects a total of eight festivals to be held this year with a goal of drawing 400,000.

The company also organizes theater performances and small-scale concerts each year as part of its live music business.

Shen's ambition to create more live music venues comes at a time when the record industry is being plagued by low margins because of rampant piracy and poor copyright protection standards.

The drop in revenue from the sale of CDs in China last year, which totaled about 100 million yuan ($15.7 million, 12.6 million euros), was almost 95 percent lower than revenue figures a decade ago, says Lu Jian, president of Ocean Butterflies International and secretary-general of the Recording Works Council.

Live music, however, has grown more popular. There were four music festivals in 2007. Last year, there were 100. Zhang Zhiyuan, an industry consultant at iResearch, an online market research company, says that the income from those music festivals amounted to 300 million yuan in 2011.

As one of the largest music festivals in China in terms of the number of concertgoers, the Strawberry Music Festival expanded to Shanghai for the first time this year. It opened in Beijing and Shanghai simultaneously for three days during the Labor Day period.

More than 240 bands and musicians of many genres, including rockers Blonde Redhead from the United States, indie pop band Tahiti 80 from France and Chinese rock veteran Xie Tianxiao.

For the Modern Sky Festival in October, Shen is taking a different approach. While the Strawberry Music Festival has so far expanded to five cities, Modern Sky has remained in Beijing because it targets a different audience.

Founded in 1997, Modern Sky started out as a personal pursuit of Shen, who was then the lead singer for rock band Qingxing, or Sober.

Catching the last leg of the flourishing CD market in China, business for Modern Sky started smoothly as Qingxing's first album sold more than 200,000 copies, one of the best-selling rock albums in 1997 in China.

But the situation soon deteriorated in the late 1990s as more and more people began to pirate the songs.

For Modern Sky, sales fell. The company hit rock bottom in 2000 and 2003, when the CD market declined and live music was not as popular as it is today.

While his peers switched to other businesses or genres of music, Shen stayed the course.

In 2003, he went out on a limb and co-organized a concert for the British rock band Suede, one of Shen's personal favorites. The event, one of the first for a Western band in China, lost money but prompted Shen to get deeper in the live music market.

"Music for me at that time was largely for fun. I loved Suede - I got to do it. Now we plan everything. We've learned the hard way," Shen says.

The Modern Sky Music Festival was created in 2007 and Shen added the Strawberry Music Festival two years later. It soon became a hit among young music lovers because of the diverse lineup of bands and musicians.

The company expanded to more genres with the launching of the Zoo Electronic Music Festival in 2009.

The festivals sold tickets at 100 yuan per day. Sixty percent, Shen says, of revenue came from ticket sales, with the rest coming from sponsors.

"The live music market in China is just taking off. Many of the Western bands have yet to be introduced (in China)," Shen says.

Shen says organizing concerts and festivals garners more than 60 percent of the company's revenue, with 25 percent from royalties on licensed music and another 15 percent through managing artists and acquiring sponsorships.

He points out that the ownership of copyright has had an indirect but positive effect on the live music market.

"The better the music we produce, the more influential our music festivals will be. The bigger the music festival, the more sponsorship and support for our artists and their music," Shen says.

Contact the writers at sunyuanqing@chinadaily.com.cn and yangyangs@chinadaily.com.cn

(China Daily 06/29/2012 page11)