R2G starts online music subscription service

Wawawa aims to be an alternative to piracy

NEW YORK -- In an effort to provide an alternative to pirated music, Beijing-based digital distribution service R2G is launching an online music subscription service in China that will feature songs from U.S.-based independent digital distributor Independent Online Distribution Alliance.

The service, Wawawa (w3.net), will charge a monthly fee of 20 yuan ($2.93) that will entitle subscribers to up to 88 song downloads per month. All tracks will be sold as digital rights management-free MP3 files. Customers also will be able to stream their purchased songs over the Internet -- a useful feature in a society where 40% of consumers access the Web from Internet cafes.

Wawawa, which launched Friday, is entering a market where, the IFPI estimates, nearly all music downloads are pirated. And despite China's massive population, the country's legitimate music sales totaled only about $69 million in 2007, accounting for less than 1% of global recorded-music sales, the IFPI said.

Still, a recent study by Music 2.0 Group, a digital-music advocacy organization in Beijing, found that up to one-third of Chinese consumers surveyed are willing to pay for music, R2G vp Matthew Daniel said. Those surveyed by Music 2.0 were interested in having greater access to classical, trance and new age music, as well as editorial content and recommendations, he said.

"One of the biggest complaints about services like Baidu is that the music supplied by the pirates is not the music that consumers want," Daniel said. R2G CEO Wu Jun said that music knowledge among Chinese consumers is defined to a large degree by what they find through piracy.

"This leaves music discovery to chance, providing no guide for fans to connect with one another and share their passion for the artists they love," he saaid. "R2G's partnership with IODA will change all that."

Wawawa is the latest chapter in R2G's fight against online piracy in China. In March, the company sued China's leading search engine, Baidu, for alleged copyright infringement.

Daniel said R2G has been in talks with major labels about getting their music on Wawawa. Representatives from Universal Music Group, Sony BMG Music Entertainment, Warner Music Group and EMI Group either didn't return messages by press time or declined to comment.

For IODA, the partnership represents a chance to enter an emerging market, one that CEO Kevin Arnold believes will grow rapidly. "With the Olympics and the Shanghai World's Fair in 2010, all eyes are on China," he said. "We think there is an exploding interest from the Chinese audience, and it benefits us to help China emerge."

Wawawa will have access to more than 1 million tracks in IODA's catalog, which includes recordings by Broken Social Scene, Cat Power, Sonic Youth guitarist Thurston Moore, Aventura, Willie Nelson and the London Symphony Orchestra.

The venture faces a number of limitations. Aside from the piracy issue, much of IODA's catalog comprises Western acts, very few of which are known in China. But on a recent trip, Arnold said he noticed a shift in the knowledge base. "The underground music scene over there is almost like New York in 1978," he said. "The kids that are interested know who bands like Sonic Youth are, and it all spreads via word-of-mouth."

Given Wawawa's low monthly subscription fee, the per-song return for the site could be just pennies per track -- and even less for the artists whose music is featured.

"We realize this will not be an immediate gold rush," Arnold said. "Right now, the goal is to create availability and build demand. This is a great opportunity to build awareness about our bands in China, too. This is a long-term play, and we think this is an important first step."

Despite the challenges, Paper Bag Records co-founder Trevor Larocque, whose catalog will be sold via Wawawa, said the China market offers the opportunity to reach new fans.

"China is really the wild, wild East," Larocque said. "When we took bands over there in May, we were skeptical, but we discovered there was a huge market that a lot of people didn't really understand."