"We do want to take care of the copyright on the melodies and lyrics," he said. "But we don't know whom to deal with. It's very confusing. Sometimes we have three different companies claiming the copyright on the melody and lyrics of one song."

Foreign publishing companies' operations remain in a regulatory grey area on the mainland, Chen said. The Music Copyright Society of China (MCSC) used to handle licensing of overseas music works. Now many music companies have stopped authorizing MCSC as an agent, but the new dealing method is yet to be established, he said.

"How do we pay them?" he said. "We need permits from foreign exchange administration to wire US dollars. But the administration won't issue permit if the music publishing companies are not allowed to operate on the mainland."

But Susanna Ng, regional managing director of EMI Music Publishing (Asia) in Hong Kong, rejects Chen's argument as "absurd," asserting that "EMI Music Publishing registered its China branch in 2004, and we are doing business with all kinds of companies. If Sohu and Tom can pay us, why can't they?"

Sohu.com and Tom.com are websites offering mobile ring tone downloads.

Ng concedes that the mainland needs more time to develop a system to protect music copyright, saying: "Many people don't know what a copyright on melodies and lyrics is. Raising awareness will continue to be the task of music publishing companies."

Silver lining

Industry insiders say that the thorny issues will take another couple of years to iron out. But a breakthrough could come earlier with mounting pressure to stop Internet music piracy.

An increasing number of copyright lawsuits have already made many dot.com companies adjust their business models. The Regulations on the Protection of the Right of Communication through Information Network, to be enforced from July 1, is expected to bring about a change in Internet search engines, whose MP3 search function has often been blamed for easy access to pirated music.

The new regulation will make it mandatory for search engines to delete the links to piracy websites once copyright owners notify them, or face a fine of up to 100,000 yuan (US$12,500).

The beauty of the "notify and delete" system is that it is "easy to enforce," said ChinaLabs' Wang. Though the search engine operators would not be driven out of business, their maintenance cost would increase significantly if they choose to attract traffic through free music searches.

But "the law will create the biggest impact on IPR awareness," he said. "Chinese netizens are used to an Internet where everything is free. Now there are rules to follow. The law will greatly help the integration of the Internet and traditional publishing businesses."

After all, in the mainland's massive market, a minor change in law could mean a big difference for business. Even if a fraction of the mainland's 100 million netizens start paying for copyright music, online music stores will make a killing.

"Since its launch in March, top100.cn has registered 650,000 users, and the number is increasing by 15,000 a day," Orca Music's Chen Ge said. "If 10 per cent of them buy music from us, we're making money."

(China Daily 06/21/2006 page1)