"Payable music downloading will be inevitable in order to support the music industry," Zang says. "Advertisement alone cannot do that."

The China Record Working Committee suggests that 50 percent of income from music downloading go to the music copyright holders, which is lower than in most countries but is more practical for China's environment.

"It feels as if no one is making music in China nowadays," says Zhang Yadong, a music producer who has composed and produced songs for top artists like Faye Wong. "Music makers have to earn their livings otherwise, and all singers perform old songs at talent shows. I believe paid music downloading will encourage music makers to create better works."

On IFPI's chart of global top 10 digital singles of 2012, there are K-Pop star Psy, Brazilian singer-songwriter Michel Telo and Canadian artist Carly Rae Jepsen, showing how the Internet makes it possible for artists to break out of their local markets and achieve global hits.

Although China has the biggest population in the world, the country has not yet produced a singer of global influence.

"Psy's success seems to be a haphazard phenomenon, but it isn't," Zang says. "Behind Gangnam Style are great efforts by the Korean government and music companies to develop and promote Korean pop music. The Chinese government should also try to create better environments for Chinese pop music."

Related: PSY to unveil 'Gangnam Style' follow-up next month

The global music industry has been paying attention to the Chinese environment as well. IFPI, which has 1,400 members in 66 countries, established its Beijing office in 1994.

"China really is a major priority for the whole industry, because we all see huge potential," says Edgar Berger, President and CEO, International, Sony Music Entertainment. "We hope we can unlock it very soon."

[email protected]