Asian music sales are expected to fall by between 10 percent to 15 percent in 2002 due to rampant piracy and a weak regional economy, an official at Universal Music Group said on Monday. Harry Hui, president for south-east Asia at Universal Music, the world's No 1 music firm and an arm of Vivendi Universal, told reporters the $1.3 billion industry, not including sales from Japan, was coming up with innovative ways to battle the downturn.
"Our industry has really been attacked. Piracy rates, both digital and physical, have really been increasing," Hui said on the sidelines of a business gathering.
"I think the economic downturn has really affected the consumption of audio, video products, and consumers these days are faced with a range of choices. They have more things to do with their dollars."
Universal has a 19 percent share of the Asian music market.
Asian piracy levels, as high as 90 percent in China, are eating into profits of the music companies, which expect sales to contract by 10-15 percent in 2002 after a 25 percent plunge in the previous year, Hui said.
Universal, Sony Music, EMI Group Plc (news - web sites), BMG, which is owned by German media group Bertelsmann, and Warner Music are the major music firms in Asia. Together they accounted for 50 percent of music sales in 2001.
The $34 billion global music industry has also been hit by stuttering economies and rising competition from interactive video games, forcing CD sales to drop by seven percent in the first six months of 2002.
This has pushed the top five players, who account for 75 percent of global sales, to slash costs and rethink strategies.
"Music companies need to really reinvent themselves," Hui said. "I think we're moving more toward revenue diversification models."
But he said Universal, which sells music from performers such as Shaggy, Sheryl Crow (news) and Limp Bizkit, would continue to invest in new talent even as it found other revenue streams.
"We're selling our music not only over fixed-line telephones but also on wireless mobile phones, and we're also doing a lot of partnership marketing," Hui said. "We're breaking a (music) album like the way we break a movie."
"We think the market has bottomed out, and next year the likely scenario is that it would remain flat," Hui added.