He who calls the tune pays the piper

The federation says that the value of online music sales in China last year was 9.76 billion yuan ($1.57 billion), 5.6 per cent higher than in the previous year, helped by an increase in revenue from streaming music services. The hope is for further growth in coming years as companies establish models in which consumers pay for what they listen to.

One of the first Internet companies to offer an online streaming service was QQ Music, a division of the Internet giant Tencent. Since it was set up 10 years ago, it has worked with major recording companies and built a new musical industry service model, which includes Green Diamonds, a membership subscription plan.

Andy Ng, general manager of QQ Music, says the company has more than 800 million users and more than 15 million songs with copyright obtained from more than 200 record companies, among which about 25 companies, including Warner Music and Sony Music, offer music content exclusively to QQ.

"Streaming is a pretty good deal because a monthly subscription costs little more than buying an album," Ng says. "With membership, fans can also watch recordings of their idols' live performances."

Musical streaming has also accelerated the trend of record companies and artists working with Internet companies to release digital albums and netcasting shows live.

Pop artists such as the Taiwan singer-songwriter Jay Chou, the mainland singer Zhou Bichang, the Hong Kong singer Jacky Cheung and the South Korean boy band Big Bang have released digital albums via QQ Music, priced at between 5 yuan and 20 yuan, and a total of more than 2.5 million copies.

Liu Xin, chief operating officer of the company Beijing Taihe Music Culture Development, says record companies used to rely on producing stars and physical records, cassettes and CDs to make money.

When those profit streams dried up, the companies turned to selling other products and services such as live shows.

His newly founded company aims to build a comprehensive platform, not just release new music for artists and holding live shows, but also offer services for independent artists and protect copyright.

"The challenge is not just to get people to pay for music again. It's also about creating a healthy business model for the industry," Liu says.