Taiwanese celebrities are showcased every year at rousing New Year's Eve bashes, and the final night of 2013 was no different. Chang Hui-mei (A-mei), Aaron Kwok, and Jeannie Hsieh performed in Taipei, Jam Hsiao and girl group S.H.E were on in Taichung, and Mayday rocked Kaohsiung.

For music fans trying to recall their youth or now living it, each song, each concert, performed by the cavalcade of stars seemed to touch just the right chord.

Though music's magic may preserve everlasting youth, the business model of the global music industry is undergoing massive upheaval. In its "Global Entertainment and Media Outlook 2013-2017," international professional services firm PricewaterhouseCoopers noted that as the music industry's business model has changed, live music has emerged as one of the biggest engines of growth, with ticket sales and sponsorships expected to generate revenues of US$30.9 billion in 2017, up from US$26.5 billion in 2012. As a result, record companies are shifting the focus of their operations to concert management and organizing concerts in overseas markets.

In Taiwan alone, concert revenues grew by an average of 39 percent per year in the three years ending 2012, with the more than 2,500 commercial concerts held in 2012 grossing NT$4.08 billion, according to Ministry of Culture figures.

A milestone for the evolving industry in Taiwan came in December 2013, when HIM International Music Inc., the music company that boasts S.H.E and Yoga Lin among the celebrities it represents, listed on the over-the-counter market.

"HIM was able to go public because it successfully transformed itself into a music platform," says PwC Taiwan chairman Dexter Chang.

The company's revenue breakdown paints a telling story. Only 4 percent of its revenues are derived from "physical" sales, while 26 percent come from licensing fees and 70 percent come from talent representation fees. In other words, only a small portion of the income from managing a singer or group's brand is derived from actual album sales. Merchandising and digital music licensing fees account for about a quarter of total revenues and the vast majority comes from concert revenue and endorsements.

The PwC global entertainment survey forecast that "digital music revenues will exceed physical revenues by 2016, demonstrating the importance of digital to the industry."

Apple Inc's iTunes Festival reflects digital music's emergence. The event, which has been held for seven consecutive years, was most recently staged in London in September 2013 and drew such luminaries as Lady Gaga and Elton John during its 30-day run. An app for the festival that fans could download for free was also created, driving sales of the stars' albums and singles.

In China, the world's most vibrant digital music market, digital music revenues totaled more than 40 billion renminbi (or about NT$197 billion) in 2013, according to China Mobile, the country's biggest telecom operator.

In this newly evolving world, what advantages does Taiwan possess and will it be able to maintain its status as the agenda setter in the Chinese-language pop music market?

Mandopop's Most Mature Industrial Chain

In May 2013, China International Entertainment Industry Trading Center Co. and Shenzhen University's Institute for Cultural Studies put together China entertainment box office charts for the first time, ranking ticket sales during 2012.

One of the six categories covered was "Pop Music," and the Top 10 was stacked with artists from Hong Kong and Taiwan such as Jacky Cheung, Mayday, Eason Chan, Wang Leehom, A-mei, Jolin Tsai and Sodagreen, leading Chinese media to comment that "the wolves have really arrived."

The description was illuminating, because outside of the music industry, there are few Taiwanese businesses or sectors capable of sending shivers down the spine of Chinese media.

Taiwan's dominance was even more apparent in the first half of 2013, when Mayday (on its Nowhere World Tour), Jay Chou (on his Opus Jay 2013 World Tour) and Show Lo (on his Over the Limit World Tour) ranked first, second and third on the pop chart list, racking up a combined NT$1.5 billion in ticket sales in China during the six-month period.

As fans' passion for music has extended to concerts, Taiwanese singers and bands have taken their strong songwriting foundation and added creative daring and backstage execution to build the most mature industrial chain in the concert industry in Chinese-speaking markets.

On Chou's Opus Jay 2013 World Tour, for instance, the music company Chou co-founded – JVR Music International Ltd. – hired a special effects team from Hollywood to unite the leading stars of two different generations, touching and amazing audiences.

The team used virtual image reconstruction and projection technology to have the legendary Teresa Teng, who passed away in 1995, appear on stage and perform the song "Faraway" in a duet with Chou.

B'in Live, the production company that has turned Mayday's concerts on its world tour into what seem like sci-fi blockbusters, regularly visits Taiwan's Industrial Technology Research Institute to stay on top of the latest audio-visual technology applications.

The company also has longstanding relationships with visual effects companies in Europe and the United States and works with them to customize LED screens for specific performances.

"Taiwanese pop music has the edge in marketing because we established the common cultural taste of the ethnic-Chinese world," says veteran Taiwanese singer-producer Jerry Huang.

This cultural aesthetic has been so appealing that the entire Chinese-speaking world has tried to follow suit, from songwriting to concert productions.

"Why were the Beatles so popular? People may have been thousands of miles away, but they developed an understanding through the band's songs of the lives of those four Liverpool natives – how they lived, how they loved, how they hated, how they breathed, how they made friends, how they lied and how they cracked jokes," says singer-songwriter-producer Jonathan Lee, known as the "godfather of Taiwan pop."

In the Chinese-speaking world, Mayday, Sodagreen, Jay Chou and A-mei are all playing similar roles.

"It may be hard to believe, but in China's second-, third-, fourth- and fifth-tier cities, people listen to Taiwanese pop music on their mobile phones every day. And if a Taiwanese pop star shows up in the area to perform, to them, it's a once-in-a-lifetime show," says HIM general manager Linda Ho.

Adds Jimmy Cho, the visual effects coordinator for Sodagreen's concerts, "concerts today are increasingly like large-scale Cirque du Soleil productions. You can't just sing anymore because of audience tastes. Just as special effects in movies have gotten progressively extravagant, you always have to serve up something better than others."

Capital Is Key

When thinking about Taiwan's ambition to be the top player in the Chinese-speaking music market, the global "Korean wave" that has swept the world in recent years inevitably comes up.

The raging K-pop phenomenon has exploded on the scene, featuring polished performers backed by big conglomerates that fuse catchy dance tunes with synchronized dance routines and simple English lyrics to create attention-getting – and lucrative – acts.

According to the New York Times, the combined sales of South Korea's top three K-pop agencies – SM Entertainment, YG Entertainment and JYP Entertainment – rose to about US$326 million in 2012, from about US$96 million in 2009. But some in Taiwan are not buying into the K-pop hype.

"I don't think the Korean model is a good one. It's a uniform model that constantly repeats itself and strangles diversity," says B'in Music Co. CEO Ason Chen, describing the Korean approach as using "power and aggression" to penetrate markets.

"But the status that Taiwan's pop music has earned has never been the result of 'going on the attack.' Taiwan's allure 'radiates' out. Taiwanese pop music truly functions as a vehicle for cultural exchange," he says.

That soft power may no longer be enough, however. Taiwan's music industry, which has never been awash in capital, cannot help but begin to feel unnerved by the sudden proliferation of talent shows in China, such as "Sing My Song," "The Voice of China," and "I Am a Singer," that are backed by massive injections of funding.

Of Taiwan's more than 300 venture capital firms, fewer than 10 percent have invested in venture capital funds involving cultural and creative industries over the past five years, according to Taiwan Venture Capital Association figures. At the same time, fewer than 10 venture capital firms have invested in the pop music industry.

To HIM's Ho, going public was about more than simply raising funds. She also wanted to showcase the brand image of Taiwan's domestic music industry while compelling her company to become more transparent and put it on course to operate sustainably.

Taiwan's lack of financial and marketing muscle may be evident in China. Garand Wu, managing director of Universal Music China, observes that nearly 90 percent of the songs performed on China's many popular talent shows originate from Taiwan, but when it comes to the artists in China with the top 100 market shares, about 50 percent are Chinese, 30 percent are from Hong Kong, and only 20 percent are Taiwanese.

"In the future, however, as China's market demands more and more of local music and singers, that ratio of artists from Taiwan, Hong Kong and China will even out," Wu says.

Much as when Taiwan experienced its folk movement and many young intellectuals delved into songwriting in pursuit of "telling your own story and singing your own songs," a similar cultural phenomenon will also arise in China and is just starting to take shape.

The Primacy of Live Performances

"Actually, what both pop culture and the tech industry have always pursued is the 'price-to-dream ratio.' The focus is on how big of a dream you can create for a dollar rather than how much money you can make with a dollar," says Landy Chang, an iconic figure in Taiwan's pop music scene and founder of its biggest music creation platform, StreetVoice.

He believes that once China strengthens its pop music sector with the help of the mainstream media, increasingly professional talent and the infusion of capital, Taiwan's music professionals will not only have to "band together and strike out together" but also harness the country's "industrial power" to stimulate rapid innovation.

Without a doubt, China appears determined to emerge as a major cultural power. If Taiwan's pop music business hopes to face down competition from China, as well as Hong Kong, Japan, South Korea, Europe and the United States, and continue as a key player in Asian and ethnic-Chinese markets, it will have to sustain its musical essence and creative strength and actively play a new game.

"If we start with the concept of live music, we will see a new order and industrial chain," says Ni Chung-hua, a veteran of the music scene who helped pioneer Taiwanese rock and hip hop and discovered rock star Wu Bai and musician, songwriter and actor Lim Giong. Taiwan should imagine a future world in which 100 million people will all pay a dollar to watch a Chinese-language iTunes Festival online, he suggests.

That vision highlights the importance of the Taipei Pop Music Center, located in Nangang District in Taipei. Ground was broken on the project last year, and it is expected to be completed at the end of 2016.

The project calls for a central 6,000-seat concert venue and three other live music spaces with more limited seating.

"The government has already invested NT$4 billion in the Taipei Pop Music Center. If the music community does not participate, it will definitely become a white elephant," says Hsiao-wen Ting, a renowned lyricist and the president of the Music Copyright Society of Chinese Taipei.

Ting is one of a number of music industry veterans invited by the Taipei City government to offer input on the project, and she has eagerly responded to the challenge, going so far as to pour through the project's building plans and electrical drawings out of a sense of mission to make sure everything will come out right.

Even with strong creativity and a good facility, however, top-notch performers and backstage talent are still necessary if Taiwan hopes to continue creating memorable concert experiences.

A Pop Music Academy in the Pipeline

That has not been easy because of the way music education is structured in Taiwan, according to Siva Yuan, the project leader of the Pop Music Project Office under the Ministry of Culture's Bureau of Audiovisual and Music Industry Development.

"The current education system primarily concentrates on classical music talent. It's hard to convince those in positions of authority to commit resources to pop music," Yuan says bluntly.

To fill the gap, three prominent figures from Taiwan's art and music world – Ni Tsai-chin, dean of the College of Fine Arts and Creative Design at Tunghai University, CinCin Lee, a musician who has won Golden Horse and Golden Melody awards, and Ni Chung-hua – have decided to organize a popular music institute in Taiwan.

The new school, which hopes to begin recruiting students by the end of this year, will be patterned after prominent international popular music schools, such as Berklee College of Music, Wang Leehom's alma mater, and the University of Liverpool's Institute of Popular Music, where Mayday guitarist Stone studied.

On stage, what's needed are precocious geniuses endowed with a natural flair for performing. Behind the scenes, meticulous design and technology are essential to bring together art and entertainment. Mandopop fans now wait with bated breath for the two elements to come together again, and for the next legendary music act to arise.

In the meantime, as the Opus Jay World Tour takes off and the Nowhere World Tour sets sail, there is nobody who does not want to jump on board.

Translated from the Chinese by Luke Sabatier