If you think you’re going to make money off music in China — think again my friend. Talk about beating your head against a wall.

This piece comes from a UK source, The Register, and is written by Ed Peto. It’a fascinating look at the music industry in China, a country with 1.3 billion people, but a yearly revenue of just $86 million due mostly to piracy, but also attributable to the market itself.

Why? Well, during the 1990s major record companies were fond of dropping “saw-gnashed” CDs, otherwise known as cutouts or promos, in China. Most of these were “excess stock and deleted titles from western majors attempting to avoid taxation and disposal costs.”

A standard pirate CD retails for about 60p, whereas the legitimate product goes for around two to three times that - £1.50 to £2. This obviously makes piracy a big business with plenty of people profiting, plenty of vested interests and not a whole lot of will to change. There is the occasional very public haul of counterfeit CDs, but realistically this is already a lost battle when you consider the impending end of the CD format.

I’m a little biased here as I love seeing the major music industry destroy itself as it’s been doing over the past decade or so. This would certainly qualify as something I enjoy even though I think the Chinese government’s own role in piracy of all kinds is roundly despicable.

CD manufacturing plants are mainly state run but this does not deter rampant ‘third shift piracy’ in which, once the two normal daily factory shifts are completed, a third one goes on through the night to make the same product for the pirate market. That’s right, state-run piracy.

I’ve often wondered what the music industry in Korea is like. CD stores barely exist and I never see anyone inside them. Most music is available for free on the Internet and I’m not talking torrent download or anything like that. I’m talking about major Web portals offering unlimited music for a minor subscription fee. I’ve often wondered how anyone makes money. Yet, someone is obviously making money or the industry itself would collapse.

But Korea is nothing compared to China in this sense. The article also gets into censorship issues toward the end. Well worth reading.

(HT to Danwei)