Company cashes in on business of sounds; China’s first sound property rights exchange, www.vocc.cn, went online officially in Hefei, Anhui, on July 1

Company cashes in on business of sounds

Updated: 2013-10-06 07:07

By Shi Jing in Shanghai ( China Daily)Interest grows in online property rights exchange

When people think of Intel, they first think of the company’s signature four-note jingle ratherthan its computer processing units.

This “sound logo” not only differentiates Intel’s advertisements from its competitor’s, but alsohelps to make the brand more valuable.

Seeing the potential profit looming big from Intel’s example, some Chinese investors areworking to introduce a similar business of sounds to the country.

China’s first sound property rights exchange, www.vocc.cn, went online officially in Hefei, capitalof Anhui province, on July 1. The exchange includes pop music as well as all kinds of everydaysounds including a dolphin’s cry, the sound a sweater makes when its wearer breathes in andout or the whoosh of a swinging golf club.

All transactions for the sounds and music are made online, in the similar way that China’slargest e-commerce site Taobao.com runs its business.

Although the number of registered users has not grown exponentially over the past few months,it has grown steadily. By the beginning of September, the site reached 38,000 account holders,according to Zhang Nan, director of the exchange’s marketing department.

In collaboration with Alipay, China’s largest third-party payment platform, the site offers easypayment, collecting a 20 percent commission per transaction.

“E-commerce has been thriving in recent years and has become the mainstream way to buy forconsumers. Over time, it has become a highly efficient and safe way to make a payment, andit’s widely accepted by the general public. The widespread appeal of e-commerce hascontributed to the birth of this online sound property rights exchange,” said Zhang.

According to the Internet industry research organization iResearch, the trade volume of e-commerce reached 8.1 trillion yuan ($1.3 trillion) in China last year, up about 27.9 percentyear-on-year. Taobao.com, the largest e-commerce platform in China, saw its trade volumeexceed 1 trillion by the end of last year, which was about 2 percent of the country’s GDP in2011.

Database of sounds

There are three kinds of registered users on the exchange: well-known music producers suchas Li Zejian, one of the most popular singers online, manufacturers of musical instruments suchas Yamaha, and grassroots music producers who have uploaded works online in hopes ofbeing discovered or finding work.

The exchange was created based on the materials and experiences of the sound databaseGlobal Sound Valley, which started operation in the early 2000s. Qin Bo, founder of the Valley,put the huge database together with the aim to promote Chinese culture.

“We should come up with a form of culture that is abundant with local characteristics that theinternational market is willing to pay for,” said Qin, adding that his database is a step in theright direction for keeping Chinese traditions relevant in the digital age.

At present, the database has collected over 40,000 sounds and songs, and the ultimate targetis 1 million.

Of course, the online sound exchange will help promote the creation of originally producedmusic in China to some extent. But more importantly, it acts as a means to raise awareness ofintellectual property rights protection, as e-commerce makes online transactions of propertyrights more accessible.

“In the early 2000s, there was little awareness of intellectual property rights protection in China.The phenomenon was even more rampant on the Internet, in terms of music downloading. Butover time, as there is more communication between China and other countries on the subject,Chinese consumers have come to realize that property rights and ideas have a price,” saidZhang.

He also added that the growing popularity of the Twitter-like Sina Weibo and other socialnetwork services have helped to popularize the concept of intellectual property rightsprotection, especially among celebrities urging for more protection of copyrighted music andmovies.

To make sure there is no intellectual property rights infringement on the exchange, the site’sadministrator came up with a special procedure.

Once a customer completes an order, the work is shown on the website for three days to thepublic, who then can report the work to an administrator if they find evidence of copying. If theadministrator finds the report is true, the customer does not need to pay for the submitted work.

But luckily, there has not been such a case so far.

It is partly a result of the rising awareness of intellectual property rights. On the other hand, itcan be largely attributed to the rich archive of music and sounds stored in the Global SoundValley, which allows the administrator to quickly check a claim of trademark or copyright breach.

Broader protection

Most of the orders that the exchange has seen over the past few months have come fromcompanies and organizations.

In late August, the State Council passed a new regulation on sound trademarks, and ordershave been increasing rapidly.

“The new trademark law is of course a milestone in further protecting intellectual propertyrights. Similar laws and regulations can be found in other developed countries, such as theUnited States,” said Xu Lyu, a lawyer at Anhui Yuantai Law Firm.

Before the new Trademark Law was implemented, people had to refer to copyright law, which isnot totally relevant to trademarks.

The new law provides broader intellectual property rights protection and specific guidelines fortrademark laws.

Xu has been working as a lawyer specializing in intellectual property rights for more than sevenyears. After a recent move from Shanghai to Hefei, he has seen much fewer of these types ofcases than in first-tier cities.

“But I am quite sure that awareness of intellectual property rights protection will increase insecond- and third-tier cities,” he said.

“A trademark brands a product. That is why people rush to register them. But soundtrademarks have their own characteristics. As there is no material object to be seen, it is veryhard to tell one from another unless there is a reference database,” said Xu.

Regarding this difficulty, the Global Sound Valley is ahead of the curve in building up itsdatabase of music and sounds.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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