South Korean Music Retailers Dying
Posted: Mon Oct 11, 2004 6:05 am
South Korean Downloaders Push Music Stores to Brink
Sun Oct 10, 2004 10:33 PM ET
linky
By Ally Hawon Jung
SEOUL (Reuters) - It was two years ago when Seoul music store owner Jang Kyung-hee began to notice something was going gravely wrong for his Mihwadang Records franchise.
"Before then, if our customers liked the songs from our sound system, they used to buy the CDs here," Jang told Reuters.
"Since about two years ago, most of them just ask the title of the song and walk out, then download it later on the Internet."
Jang's troubles are part of an industry-wide downturn that has pushed South Korean music retailers to the brink of extinction. About 95 percent of music retail businesses in the country have failed in the last five years.
While South Korea is not alone in seeing a downturn, the drop has been greatly accentuated and particularly deep because of the country's high-speed Internet access and a youth culture that uses some of the most sophisticated gadgets available.
South Korea's broadband access per 100 residents is 23.17, almost triple that of the United States and five times that of EU members states.
World broadband leader South Korea has become a hotbed of free music downloading as fans took advantage of file-sharing services including Soribada -- South Korea's version of Napster.
In a country of 48 million people, Soribada -- "sea of sound" in Korean -- has drawn more than six million users who swap free MP3 files since it launched its service in 2000.
Soribada (www.soribada.net), has been followed by other popular, free Korean-language file-sharing sites, including Donkeyhote (www.donkeyhote.co.kr) and Pruna (www.pruna.com).
Since the launch of these sites, domestic CD sales have nose-dived by nearly 50 percent.
South Korea's music retailers are scrambling to find a way to survive rampant music piracy and cope with the rapid shift to online music distribution.
"There were 8,000 CD stores in South Korea five years ago, but now, we have only 400 left," Jang said.
SELLING MORE GADGETS
CD sales at Jang's Mihwadang Records, once one of the 10 biggest music retail chains in the country, dropped by two-thirds in just two years. Jang now devotes more shelf space to digital appliances, including MP3 players or mobile phones.
"These days, cellphone handset sales are the biggest source of profit for us," Jang said.
Although the advent of free MP3 files has also devastated music publishers and other retailers, the future of music retailers looks particularly bleak since they also face cut-throat competition from online shopping malls.
"Online shopping malls offered totally predatory pricing below cost just to establish their customer base, and they succeeded," Jang said.
"Now many die-hard music fans who were our loyal customers moved to such Web sites where they could buy what they want more easily at a cheaper price."
South Korea's music industry and state prosecutors have filed lawsuits against Soribada and its users since 2002. But with courts still reviewing the cases, most sites are still operating.
Music industry executives' hopes were raised recently when copyright violation lawsuits forced Bugsmusic to stop its free download service. It agreed to do so from November.
But while this cheered the recording industry, music retailers have seen few benefits.
"Now recording companies are trying to make more profit through a streaming service or mobile phones service, and the Internet is a mainstream music market," said Min Soon-sung, president of the Korean Records Retailers' Association.
Indeed, sales of music online -- phone ringtones, MP3 downloads on mobile phones or online music streaming -- have increased by more than 300 percent since 2001.
Sales of music for mobile phones alone have already outpaced traditional CD sales since 2002, according to the Music Industry Association of Korea.
For now, the best remedy for survival may be dedicating more shelf space to cell phones, boomboxes, or anything else that could offset languishing music sales.
But Min said the market for gadgets was competitive, too, and questioned whether music stores could survive.
"It seems like brick-and-wood music stores like us are nearly doomed, unless the government comes up with some financial measures to help us stay alive," Min said.
"It may soon be the end of an era for us."
Park Joon-hum, music columnist and director general of Kasum Music Industry Policy Research Center in South Korea, said the music industry has been slow to respond to downloading.
"The fundamental problem is that the music industry has totally failed to come up with a new marketing strategy to meet the changing demands of music consumers," Park said.
While music fans started sharing music online in the late 1990s, the industry missed those early signs, he said.
"Now they just sit back and complain about those illegal downloading sites, while offering few alternatives for music fans to get music online," said Park.
"If we shut down all file-sharing sites right now, will it be able to revive stagnant music sales? I don't think so," he said.
Archived topic from Anythingforums, old topic ID:1164, old post ID:14722
Sun Oct 10, 2004 10:33 PM ET
linky
By Ally Hawon Jung
SEOUL (Reuters) - It was two years ago when Seoul music store owner Jang Kyung-hee began to notice something was going gravely wrong for his Mihwadang Records franchise.
"Before then, if our customers liked the songs from our sound system, they used to buy the CDs here," Jang told Reuters.
"Since about two years ago, most of them just ask the title of the song and walk out, then download it later on the Internet."
Jang's troubles are part of an industry-wide downturn that has pushed South Korean music retailers to the brink of extinction. About 95 percent of music retail businesses in the country have failed in the last five years.
While South Korea is not alone in seeing a downturn, the drop has been greatly accentuated and particularly deep because of the country's high-speed Internet access and a youth culture that uses some of the most sophisticated gadgets available.
South Korea's broadband access per 100 residents is 23.17, almost triple that of the United States and five times that of EU members states.
World broadband leader South Korea has become a hotbed of free music downloading as fans took advantage of file-sharing services including Soribada -- South Korea's version of Napster.
In a country of 48 million people, Soribada -- "sea of sound" in Korean -- has drawn more than six million users who swap free MP3 files since it launched its service in 2000.
Soribada (www.soribada.net), has been followed by other popular, free Korean-language file-sharing sites, including Donkeyhote (www.donkeyhote.co.kr) and Pruna (www.pruna.com).
Since the launch of these sites, domestic CD sales have nose-dived by nearly 50 percent.
South Korea's music retailers are scrambling to find a way to survive rampant music piracy and cope with the rapid shift to online music distribution.
"There were 8,000 CD stores in South Korea five years ago, but now, we have only 400 left," Jang said.
SELLING MORE GADGETS
CD sales at Jang's Mihwadang Records, once one of the 10 biggest music retail chains in the country, dropped by two-thirds in just two years. Jang now devotes more shelf space to digital appliances, including MP3 players or mobile phones.
"These days, cellphone handset sales are the biggest source of profit for us," Jang said.
Although the advent of free MP3 files has also devastated music publishers and other retailers, the future of music retailers looks particularly bleak since they also face cut-throat competition from online shopping malls.
"Online shopping malls offered totally predatory pricing below cost just to establish their customer base, and they succeeded," Jang said.
"Now many die-hard music fans who were our loyal customers moved to such Web sites where they could buy what they want more easily at a cheaper price."
South Korea's music industry and state prosecutors have filed lawsuits against Soribada and its users since 2002. But with courts still reviewing the cases, most sites are still operating.
Music industry executives' hopes were raised recently when copyright violation lawsuits forced Bugsmusic to stop its free download service. It agreed to do so from November.
But while this cheered the recording industry, music retailers have seen few benefits.
"Now recording companies are trying to make more profit through a streaming service or mobile phones service, and the Internet is a mainstream music market," said Min Soon-sung, president of the Korean Records Retailers' Association.
Indeed, sales of music online -- phone ringtones, MP3 downloads on mobile phones or online music streaming -- have increased by more than 300 percent since 2001.
Sales of music for mobile phones alone have already outpaced traditional CD sales since 2002, according to the Music Industry Association of Korea.
For now, the best remedy for survival may be dedicating more shelf space to cell phones, boomboxes, or anything else that could offset languishing music sales.
But Min said the market for gadgets was competitive, too, and questioned whether music stores could survive.
"It seems like brick-and-wood music stores like us are nearly doomed, unless the government comes up with some financial measures to help us stay alive," Min said.
"It may soon be the end of an era for us."
Park Joon-hum, music columnist and director general of Kasum Music Industry Policy Research Center in South Korea, said the music industry has been slow to respond to downloading.
"The fundamental problem is that the music industry has totally failed to come up with a new marketing strategy to meet the changing demands of music consumers," Park said.
While music fans started sharing music online in the late 1990s, the industry missed those early signs, he said.
"Now they just sit back and complain about those illegal downloading sites, while offering few alternatives for music fans to get music online," said Park.
"If we shut down all file-sharing sites right now, will it be able to revive stagnant music sales? I don't think so," he said.
Archived topic from Anythingforums, old topic ID:1164, old post ID:14722