Nickel music downloads fight file sharing in Vietnam

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  Music by American artists available for streaming and download on a popular Vietnamese website

Vietnam's biggest music websites will begin charging users to download songs, signaling progress in intellectual property protection in a country with one of Southeast Asia's highest piracy rates for digital content.

Six sites that serve an estimated 23 million users, or about a quarter of the population, will charge VND1,000 (5 US cents) per song starting November 1, according to the Hanoi-based MVCorp. The fees will initially apply to about half of all Vietnamese recordings, and talks are underway with Sony Corp. and Universal Music Group Inc. to make more music available for download, according to MVCorp. and one of the website operators.

"Changing the mindset of twenty-something million people does not happen overnight," Phung Tien Cong, deputy general director of MVCorp., which helps the Recording Industry Association of Vietnam manage recording rights online, said Monday in an interview. "As long as we ensure good quality and services, people will pay."

The successful implementation of the agreement would be welcomed by foreign investors in a market where the flouting of intellectual-property laws is seen as a barrier to trade development, said Adam Sitkoff, executive director of the American Chamber of Commerce in Vietnam.

"It's a step in the right direction," Sitkoff said. "In order to create a knowledge economy, Vietnam has to do better in enforcing intellectual property rights. It's not just digital media that's at question here. It's the whole mindset of whether it's OK to buy counterfeit goods, be it videos and music or shoes and shirts. It's a mindset and it needs to change."

But not everyone thinks of online "piracy" as piracy.

Guardian contributor Micah White wrote on the Adbusters blog that anti-piracy was often an excuse for governments to monitor their citizens' Internet activities.

"If online piracy is the backdoor by which control of the Internet will come, then we must openly acknowledge what many of us already secretly believe that online culture should be free," he wrote.

In 2001, Canadian-American pop-rock star Alanis Morissette came out in support of Napster, the online file sharing website, when it was criticized: "Though I cannot speak for every artist, my initial resistance to the new services created online was based on the debate having been framed in terms of piracy. Being labeled as such by the record companies, it understandably sent a ripple effect of panic throughout the artistic community. But what I have since come to realize is that for the majority of artists, this so-called 'piracy' may have actually been working in their favor."

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Don Henley, the Eagles front man who wrote the classic rock anthem "Hotel California," testified to Congress with Morrisette in support of Napster. American human rights activist and hip-hop artist Chuck D was also an outspoken advocate of the file sharing platform, saying that file sharing helps artists.

Illegal downloads

Globally, an estimated 95 percent of music downloads are unlicensed and illegal, according to Alex Jacob, a London-based spokesman for the International Federation of the Phonographic Industry.

Vietnam has the second-highest rate of illegal software downloads in Southeast Asia, behind Indonesia, according to a report by the Business Software Alliance, an industry group based in Washington, D.C. About 81 percent of software was pirated in Vietnam in 2011, with a commercial value of $395 million, according to the group.

The piracy rate has declined 4 percentage points from 2009, according to the BSA. By comparison, 86 percent of software was pirated in Indonesia, 72 percent in Thailand and 55 percent in Malaysia.

The new download fees in Vietnam are part of an agreement between MVCorp. and the website operators signed August 15, MVCorp.'s Cong said. The association represented by MVCorp. comprises recording companies, and about half of all music produced in Vietnam would be covered by the agreement, he said.

Sony, Universal

NCT Corp., which says it has a 35 percent share of Vietnam's online music market with two million daily users, is negotiating with Sony Music and Universal to secure download rights for international artists, said Nguyen Minh Kha, the company's vice president.

NCT already has agreements with Sony and Universal to stream songs on its website, Kha said. The company plans to reach an agreement on downloads this year and start charging for international music in early 2013.

Sean Yoneda, a Sony spokesman based in Tokyo, referred questions to the company's New York offices and representatives there were not immediately available to comment. Universal representatives were not immediately available either.

"Foreign songs will be a very complicated issue," said Nguyen Thanh Son, marketing manager of 24h Online Advertising Joint-Stock Co., which operates the Nhac Vui music website. The company would need to reach agreements with other locally-run websites before it could impose fees on international music downloads, Son said.

"This new framework is very civilized, helping the websites, musicians, and those working in the music industry to have more income to produce better-quality products," Son said.

The agreement was spurred by a regulation that took effect this month that holds companies accountable for protecting the copyright of songs on their sites, including content that is uploaded by users.

MVCorp. expects that 5 percent of the country's 25 million online music users will pay for digital downloads by the end of the year. If a user downloads five songs a month, monthly revenue from legal downloads may reach VND6.25 billion, according to Bloomberg calculations.

"˜New habit'

The website operators said download fees may spark an exodus of users to smaller music websites not bound by the agreement. That is one reason why fees are low, Cong said.

"We're starting to get users to form a new habit so we can't push the price up too high," he said. "Young people will change their mindset when they join the workforce and deem time more valuable. They won't mind spending a few thousand dong for the service these websites provide."

Charging fees may help websites that are struggling to cover operating expenses with advertising revenue, Kha said.

Payment methods will include pre-paid cards, text messages, and direct deductions from mobile-phone accounts, MVCorp. said.

The music website operators are concerned that payment fees imposed by mobile-phone service providers may be too high, limiting profit margins on music downloads.

Vu Thi Hai, who uses the Nhac Cua Tui, or My Music, website, said the VND1,000 fee is "not expensive," and says she is willing to pay even more.

"I don't mind paying because that amount of money is not too much for a piece of art," said Hai, a 25-year-old who works for a real estate company in Hanoi. "If payment isn't difficult, it's OK with me."

LOCAL RESPONSE

Tran Chien Thang, head of the Recording Industry Association of Vietnam, said in the past five years, music sales nationwide have dropped by 80 percent due to the free music downloads available on both the Internet and mobile phones.

"As a result, music producers no longer want to invest in new musical projects for they know they will suffer losses," Thang said.

Vu Manh Chu, head of the Copyright Office under the Ministry of Culture, Sports and Tourism, announced that music websites who do not pay royalties and instead provide musical works to their users for free may be fined between VND500 million and VND2 billion.

"Such a severe fine is expected to wake people up and deter these websites from violating," said Chu.

The new plan to charge online music users for downloading songs has the outspoken support of several major artists, but critics say that only distributors will see the profits, not the musicians. According to the agreement, 45 percent of the royalty will be given to the websites and other digital music service providers, and the rest will be paid to recording companies, singers and musicians.

Songwriter Nguyen Ha, director of Nguyen Production, told newswire VnExpress that he is a supporter of the plan.

Ha said his company's profits from album sales have been affected by the outbreak of digital music and Internet.

"Audiences prefer online music, so if we have a way to collect royalty from music downloads, producers are encouraged to make new, better works for the market," he said.

"It is still early to say if the fee of VND1,000 is appropriate or not, but the first thing we should consider is how to promote and carry out the plan on the local market and get the approval of local fans and change their habit of downloading music for free," said the musician.

According to singer Hien Thuc, the project should have been implemented earlier. "In my opinion, it is quite late already," she said, adding that the fee to download music is not too much to pay for valuable works.

"I believe audience will accept the price if the products meet their demand," said the 31-year-old singer, who has been a professional singer since she was in primary school.

Hoang Tuan, manager of Dan Truong, one of Vietnam's most popular artists, said it will take a long time and great effort to implement the project. The websites first have to be entirely reprogrammed.

Tuan said there are two months left, but most producers and singers have no idea about how to work with the five websites to collect royalties and protect the artists' rights and interests.

But doubters of the plan are vocal.

"Let's download [songs] [for free] as much as possible," said a call from blogger Dang Tran Tuyen.

Some even predict that pirated CDs may make a giant comeback after November 1.

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