|The Singapore Butterfly effect|
By Favian Ng
"We just wanted to sing our songs," Mr Billy Koh said of what eventually led to Ocean Butterflies.
Koh and his four friends pioneered Xinyao – Singapore Mandarin folk – back in the eighties when they were still pursuing their studies at Singapore Polytechnic.
"At that age, we do not want to go through the hassle... We just wanted to be happy."
And being happy was singing songs like 'Chasing Clouds', 'Where Are Our Songs' they composed.
"To be frank, we didn’t know what we were doing then. Looking back, it was a process of looking for self-identity. We were doing it more for fun," said Mr Billy Koh, one of the co-founders of Ocean Butterflies and currently the Artistic and Repertoire Director in the company.
This search for self-identity led to the emergence of Xinyao, which became a cultural-pop phenomenon across junior colleges and polytechnics where tertiary students were caught in a fever of composing and performing Singapore Mandarin folk songs.
The turning point came in September 1985 when Koh was selected to be part of a Singapore contingent to perform in Taiwan. It served as an eye-opener and inspiration.
"We heard from their producers and composers stories on how the Taiwan campus movement started in the late 1970s. We were very encouraged. What was happening in the late 1970s was very similar to what we were then," said Koh.
The five friends who shared a common passion for music had been toying with the idea of setting up a production house to preserve this unique culture that had taken Singapore by storm.
The trip helped them realise that more should be done to promote Xinyao in Singapore.
"What we saw then in Taiwan may be our future," said Koh of the eye-opener. "But if no one was going to start doing Xinyao seriously, then maybe Xinyao will just stop... You need someone to start a music business and really push it full-time."
The friends were wary as few were in the music business in Singapore back in the eighties, especially in the Chinese music industry.
But the sense of duty to protect the legacy of Xinyao proved too strong.
In 1986, after some deliberation, Ocean Butterflies Productions was set up.
Koh, along with Colin Goh, Sunkist Ng, Koh Nam Seng and Teo Kay Kiong pitched in S$2,000 each in capital and never looked back.
Today, the home-grown company, known as Ocean Butterflies International Pte Ltd, is a leading independent music power in Asia with operations in China, Hong Kong, Taiwan, Singapore and Malaysia.
Changing music tracks
Over the last 25 years, Ocean Butterflies has ventured into a gamut of music-related business genres, from productions to commercial jingles, and launching new acts.
Later, the business came to also become a leading content provider for mobile and digital platforms.
It was an evolution from revolution and the reason was simple - to keep up with a rapidly evolving industry.
The CD which was once THE music format which eased out cassette tapes and records have now also gone down the road of redundancy.
Sales have eroded as much as 30 per cent with the emergence of new platforms while distribution networks that were exclusive to major recording companies are now a thing of the past.
"In the past, the big companies acquired the small companies, accumulated catalogues, built up a distribution network and became very big. But because of technology, the invention of MP3, mobile phones and internet has changed the carrier of music.
"Overnight, you realize that the infrastructure of major distributor network has lost their forte. Their strength is now their burden. People don't buy CD anymore," said Koh of the digital shift in music consumption.
With the emergence of new platforms, recording companies especially those in Asia, must start looking at new business models to generate revenue, Koh stressed.
"We are now at a junction, transiting from the old system to a future system... For the first time, Asians will be involved in the negotiations of the new business model. This is an interesting era."
In a 2010 report carried out by research firm euromonitor.com, the Asia Pacific region appears headed to be the largest regional mobile phone market, with 3.9 billion subscriptions in 2020, up from 2.4 billion in 2010.
China will continue to see the world's largest number of mobile phone subscriptions, with 1.3 billion subscribers in 2010 alone.
The anticipated boom is in tempo with Ocean Butterflies' plans, which saw the group in a tie-up with venture capitalists IDG, Accel Partners and Susquehanna International Group some five years ago.
The arrangement inked in 2006 and 2007 yielded a US$16 million investment for the Singapore firm that allowed them to focus on the online and mobile entertainment platform.
"They (venture capitalists) have been already around for more than 10 years and invested mostly in IT companies. We are the first music production company they invested to provide content. They saw China, in due time, was going to expand and after acquiring so many platform, they needed content and someone to continuously create good content. This is the reason they invested in us."
In 2010, Ocean Butterflies recorded a turnover of 18 million euros (S$36 million) of which 50 per cent came from ringback tone services. Still, that is small change for the Singapore company in terms of royalties.
"In most countries, it will be 50-50 split among the telco and the content provider. Now, the telco is only paying us five per cent. Could you imagine the upside?" pointed out Koh.
The skewed distribution is primarily due to China's lack of emphasis towards intellectual property, but as manufacturing continues to dominate China's economic growth, Koh is convinced that the next five years will see a transformation in the world's second largest economy.
"China economy will not stay like this forever. They will move on. The challenge now for China, is to move towards a better position and eventually towards intellectual exports."
In April 2011, China's Culture Ministry took punitive action against 14 websites that provided illegal music downloads. In the same month, major Chinese portal, Baidu announced that it will begin paying royalties for every piece of music downloaded.
But that may not be enough for some.
Still, Koh remains confident.
"Every nation has its pace to build their economy.
"There will come a time where the China government will have to enforce the copyright to protect their own product. When the day comes, the music industry will also be affected."
When these changes start to take place, Koh believes that the rules and details of copyright will also shift towards mobile platforms and digital music.
When that time comes, Ocean Butterflies will be in a good position having operations and deals already in place in China with some major players to receive royalties based on the advertising revenues of the internet portal.
"Internet has become more like a media in China. It is not the ultimate ideal way to paying royalties but at least we have to start somewhere," said Koh.
While Ocean Butterflies builds up its presence in the virtual world, over in the real world its portfolio has grown from a bunch of Xinyao singers to regional chart-toppers.
Home – the secret to success
In the late 1980s, due to financial constraints, Ocean Butterflies operated solely as a production house.
Its business strategy was simple, to attract labels that would invest in their artistic talent list while the company put its focus only on music production.
In time, Ocean Butterflies emerged as a popular choice among music labels and began working even with overseas artistes.
But it was home that gave Ocean Butterflies its first breakthrough.
In 1989, Koh was asked to produce the Sing Singapore album and one of the requests was to re-make national song 'Count on Me Singapore with a female vocalist.
The job went to Singapore singer Kit Chan, who went on to become the country's first successful export into the Mandarin pop industry in 1994.
"Kit's success is significant because she is the first Singaporean artiste who has a Singaporean team to back her up, the entire production," said Koh.
"After her success, Ocean Butterflies was very encouraged. We felt that we have the know-how to make a star".
And what a star she became, with albums, concerts and fans in Taiwan and across the region.
Inspired by Kit's success, Ocean Butterflies began to make concrete plans to unearth the next generation of Singapore stars. It also opened a new chapter for the music house.
1996 kicked off with courses to groom professional artistes with the first batch of Shirley Yee, Joi Chua and Two Girls going on to be signed on by Sony, Warner and EMI.
The future looked promising. But 12 months down the road, the picture changed.
Being brave and ingenious
Ocean Butterflies went into a downward spiral in 1997 with the Asian financial crisis and a major restructure in the Taiwan music industry.
"We had endless meeting and we kept changing songs after songs," Koh recalled.
"When the album is complete, a new team comes in and changes everything again. If the album does not get released, we will not get any royalties."
They were caught in a dilemma, with dwindling funds with the market downturn and the need to spend a lot of money on productions without any guarantee of returns.
"We don't believe that music will end here and there will be light at the end of the tunnel. Unfortunately, we do not know where the light is," said Koh of the difficult period.
Again, it was home that provided the flicker of light that grew to dazzle. Singapore stars A-Du and JJ Lin appeared on the door step of Ocean Butterflies when it held a second professional singing course in 1998.
Today, both are considered household names in the Chinese music industry.
"When we tried to market A-Du, nobody believed us. Everybody thought, 'this guy is almost 30. He can't dance, or do R&B. Are you sure he can make it?' "recalled Koh of the period when companies preferred teen idols like Jolin Tsai and F4.
After much persuasion, A-Du was signed on by a small company label which was bought over by Sony in 2001.
But when Sony hesitated over A-Du's debut album, Koh and his partners made an unprecedented move despite their precarious financial situation - they bought A-Du's contract and went on to release his debut album.
"We were forced to become a record company because nobody wanted to release his album. It turned out to be blessing in disguise. The company just take off and grow from there," said Koh of the sudden move that saw Ocean Butterflies becoming a recording company in 2002.
Still faced with limited funds, the company decided on a novel approach to promote and sell A-Du's album.
A major Taiwan CD retail chain store was convinced to play songs from the album at their stores instead of buying airplay.
Within a month, A-Du's album climbed to No. 1 in Taiwan, and six months later, it sold more than two million copies across Asia.
The success encouraged Koh to shift his focus to JJ Lin.
"Almost everything (earned) from Ah Du was pumped into JJ's promotion campaign" said Koh of the plans which were hit by another unexpected turn of events.
Two weeks after JJ Lin’s debut album was released in Taiwan, the SARS epidemic broke out.
"All the money which we pumped into promotion went down the drain. Nobody went to CD shops; nobody bought CDs. Nobody was listening to music at that time. By August 2003 when SARS was over, JJ was also over."
The disappointment forced a re-look at the company’s business strategies and eyes turned to China.
The move not only re-launched JJ Lin's career but also allowed Ocean Butterflies to establish a stronghold in the China market.
Currently, Ocean Butterflies has at least 15 regional artistes in their stable and with plans to carry on talent-spotting to groom the next stars of Asia, a training arm - Music Forest, was established in 2003.
It is now one of Ocean Butterflies' core businesses but the Koh maintains a pragmatic outlook on maintaining the company’s biggest assets.
As he sagely muses, "artistes come and go. It is only natural that they come and go. We have to keep on grooming artistes. Now, we also work with not so established artistes and give them a second life."
Life is a one-way traffic
Today, Ocean Butterflies sports an Orchard Road address with offices, studios and classrooms that are spread over two floors, a far cry from its first office 25 years ago, in a small corner of the Jalan Sultan Complex.
Looking back, Koh counts each crisis as being instrumental in shaping Ocean Butterflies' business strategies.
"Life is a one way traffic. One thing leads to another and sometimes you don't have much choice. You just have to face it and solve the problem with your wisdom.
"Whenever we had a downturn, we always looked for solution. Along the way, it is not a smooth path. There were a lot of ups and downs, a lot of challenges."
Looking ahead, Koh said there are plans for Ocean Butterflies to go public in two to three years, to reward the staff who shared the founders' dream to continuously produce good music.
"To me, Ocean Butterflies is no longer a company of five shareholders. The company doesn't belong to any individual anymore. It more like belongs to a family of 150 staff.
"For those who worked so hard and believe in this dream, I felt that I have the responsibility to bring them to a state whereby all the staff will benefit. Eventually, I want all my staff to be a shareholder."
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