GigaMedia, EMI to form online music venture


By Billy Chamberlin and Karen Huang, The China Post

Taiwan’s GigaMedia Limited and EMI Music Asia, a division of EMI Recorded Music, announced plans yesterday to form a strategic alliance in the development of the island’s online music market. The teaming of one of Taiwan’s leaders in broadband Internet access with a division of the world’s third largest music company, in one of the most extensive partnerships between a music company and a new media company, illustrates the music’s industry’s strong desire to find ways of generating revenue online. Peer-to-peer song swapping, as done by Internet sites such as Napster, have caused many record companies to quickly pursue online music ventures before the market becomes completely dominated by pirated music sites, eating into artists’ and record companies’ profits alike. Taiwan, itself, has been actively battling music piracy in recent days. Raids at local universities resulted in the confiscation of student’s computers as many collegians use the unlimited broadband access on campus to trade music. Record executives argue that the ease of pirating music has already begun to hurt artists. They claim that the lackluster sales of new albums by local singers, such as A-mei’s recent release, is a direct result of the abundance of pirated music on the Web. The agreement between GigaMedia and EMI places heavy emphasis on the development of a secure online music system. As part of the deal, GigaMedia will spin-off its popular music site, www.Juice.com.tw, in order to revamp and rename the site www.GigaMusic.com, offering subscription services including the secure downloading of music. EMI will own a minority stake in the venture. GigaMedia expects the addition of branded content from EMI to help build on www.Juice.com.tw’s success of 50,000 members and over 130,000 page views a day, as well as secure a leading position in Taiwan’s online music market. Executives familiar with the deal said that consumers will be able to either sample or purchase music online and payment can be either on a monthly subscription basis or pay-on-demand.

Chester Koo, GigaMedia’s chairman of the board, also said that through cooperation with KG Telecommunications and Koos Group, Gigamedia intends to further expand the online music market to the wireless platform.

The two companies stressed that the use of Digital Rights Managements tools will ensure that royalties are paid to the right sources and will help to support the government’s anti-piracy efforts. “[This] alliance supports our goal of creating new platforms to promote our artists and distribute their music in a secure, protected and commercially viable manner,” said Matthew Allison, president and CEO of EMI Music Asia. For GigaMedia’s part, the alliance underscores the company’s focus on integrating online gaming, entertainment and e-learning content with it broadband access. Earlier this year, GigaMedia took a stake in the online gaming company Gamania Digital Entertainment Co. and is bundling Gamania’s popular software with ADSL and cable services. As a strategic partner, GigaMedia will have access to music from EMI’s artists and will include EMI’s music in its new music products and services as well as being involved in the hosting of Web sites of some of EMI’s Chinese artists. The agreement will give GigaMedia preferential access to information on EMI’s artists including sneak previews, interviews, chat rooms and fan club membership and events. “EMI’s strong brand recognition, industry expertise and attractive artist portfolio will help ensure the success of GigaMusic.com and assist us to better penetrate the large and rapidly growing number of Internet and music enthusiasts enjoying online music in Taiwan,” said Koo. By focusing on entertainment, online gaming and e-learning, GigaMedia is seeking to improve the quality of its subscribers, in terms of loyalty and usage rates, while differentiating the company’s premium broadband services. This approach, combined with strong cost rationalization, is expected to improve the performance of the company’s core broadband access business, and add new revenue channels as subscription services are rolled out.