Chinese company cashes in on business of sounds

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

This "sound logo" not only differentiates Intel's advertisements from its competitor's, but also helps to make the brand more valuable.

Seeing the potential profit looming big from Intel's example, some Chinese investors are working 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, capital of Anhui province, on July 1. The exchange includes pop music as well as all kinds of everyday sounds including a dolphin's cry, the sound a sweater makes when its wearer breathes in and out or the whoosh of a swinging golf club.

All transactions for the sounds and music are made online, in the similar way that China's largest 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 easy payment, collecting a 20 per cent commission per transaction.

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

According to the Internet industry research organisation iResearch, the trade volume of e-commerce reached 8.1 trillion yuan ($1.3 trillion) in China last year, up about 27.9 per cent year-on-year. Taobao.com, the largest e-commerce platform in China, saw its trade volume exceed 1 trillion by the end of last year, which was about 2 per cent of the country's GDP in 2011.

Database of sounds

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

The exchange was created based on the materials and experiences of the sound database Global 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 the international market is willing to pay for," said Qin, adding that his database is a step in the right 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 target is 1 million.

Of course, the online sound exchange will help promote the creation of originally produced music in China to some extent. But more importantly, it acts as a means to raise awareness of intellectual property rights protection, as e-commerce makes online transactions of property rights 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. But over time, as there is more communication between China and other countries on the subject, Chinese consumers have come to realise that property rights and ideas have a price," said Zhang.

He also added that the growing popularity of the Twitter-like Sina Weibo and other social network services have helped to popularise the concept of intellectual property rights protection, especially among celebrities urging for more protection of copyrighted music and movies.

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

Once a customer completes an order, the work is shown on the website for three days to the public, who then can report the work to an administrator if they find evidence of copying. If the administrator 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, it can be largely attributed to the rich archive of music and sounds stored in the Global Sound Valley, 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 from companies and organisations.

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

"The new trademark law is of course a milestone in further protecting intellectual property rights. Similar laws and regulations can be found in other developed countries, such as the United 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 is not totally relevant to trademarks.

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

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

"But I am quite sure that awareness of intellectual property rights protection will increase in second- and third-tier cities," he said.

"A trademark brands a product. That is why people rush to register them. But sound trademarks have their own characteristics. As there is no material object to be seen, it is very hard 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 its database of music and sounds.

Although the company is still short of its ultimate goal of 1 million sounds, it has seized the opportunity to enter the market, Xu said.