Success ingredientLorita Wong

T he music industry is dead. That was the controversial statement Lorita Wong was

hearing constantly just as she was joining the crisis-ridden sector in 2007, but for good reason – digiti-zation and illegal downloads were sending recorded music’s sales and profits plummeting.

“Some of my friends would say to me, ‘No one buys CDs these days. Why would you step into that industry now?’” recalls Wong, Regional Financial Controller of Warner Music Asia Pacific, which is part of the American record company Warner Music Group.

Not much has changed since. In 2014, only 257 million CDs, vinyls or digital albums were sold, an 11 percent drop from 2013’s total of 289 million, according to statistics company Nielson. CDs declined the most with only 140.8 million sold in 2014, after selling 165 million units in 2013.

“It was a challenge but I like challenges. And for me, humans need music like they need food and that will not change,” adds Wong, a

member of the Hong Kong Institute of CPAs. “The problem isn’t music, but how record royalties are not paid to music producers because of music piracy. I’m really looking forward to the day when everyone has respect for artists’ copyrights.”

Despite the global music market declining by half – US$30 billion to US$15 billion – in the last 15 years, Wong notes that the route ahead is promising. “Many illegal suppliers of digital music have been success-fully sued by the record industry. Now, digital sales are picking up, and that’s mainly because of the growth of smartphones and stream-ing,” says Wong. “There’s a grow-ing belief that the future of music is looking positive.” The digital music category mainly comprises of three parts, says Wong: ringtones, down-loads from, for example, Apple’s iTunes, and on-demand music streaming provided by the likes of Spotify and the most recent entrant, Apple Music.

Indeed, streaming has become the primary source of digital rev-enue for the company. Last year,

Warner Music Group is one of the world's leading record companies tackling radical changes brought by free digital music. Its Regional Financial Controller Lorita Wong talks to Jemelyn Yadao about how as a CPA she is helping to unlock the real value of music, and revive the industryPhotography by Juliet Shayne Lui

CHANGE OF TUNE

30 March 2016

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Lorita Wong previously oversaw different functions

at Disneyland Hong Kong as a finance manager

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Success ingredientLorita Wong

32 March 2016

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Warner Music Group announced that its streaming revenues grew 34 percent in 2015, and 47 percent in the fourth quarter, fuelled by services such as Spotify and YouTube.

Spotify, which currently has around 30 million paying subscrib-ers, continues to grow in popular-ity, particularly in Europe, and is considered one of the most popular services globally, observes Wong. “A lot of people may switch the idea of downloading and owning individual songs when they can instead stream a playlist of many different songs. I think there’s room to grow in Hong Kong,” says Wong, who oversees the financial perfor-mances of offices in 12 countries across the region, assisting them in budget and compliance matters. “Of course, the situation varies in every country. Spotify is more pop-ular in the Philippines, where we are seeing exciting strong growth in streaming. And in Malaysia, ringtones are more popular.”

Warner Music is one of the world’s top three music compa-nies, the other two being Universal Music and Sony Music. The Asia office works with artists and labels all over the world – such as Wong’s favourites, Jason Mraz and Ed Sheeran – and also represents Hong Kong and Taiwanese artists.

Developing artists for the long-run is crucial for the company, says Wong. “We are not a music produc-tion line, producing song after song. We see artists as our assets,” she says. “The company’s strong infrastructure evolves around giving

them a long-term career to sustain our talent. We are also involved in concerts, merchandising and direct-to-customer activities.”

Unfinished business Long before being on the road to music, Wong had worked for investment banks, performing accounting tasks in between pursu-ing her accounting degree and MBA in the United Kingdom.

After graduating, she joined a private equity firm as an analyst. “One of the managing directors there suggested that I should work for a CPA firm. He described it as being a Shaolin Kung Fu school where young people learn the basic accounting techniques,” she says. Convinced, Wong applied for the role of an auditor at KPMG and got the job.

At the Big Four firm, a consult-ing partner at the firm and another influential figure saw that with

Wong’s previous experience in investment banking, she would be well suited to join the finan-cial advisory services team, in particular as a financial consultant for the transaction services divi-sion. “After four years, I visited and performed analyses for more than 20 companies in industries from telecom to manufacturing. I saw how to make a soft drink, and I witnessed how a ship was built,” she says.

However, the disconnec-tion after consulting companies involved in M&A deals left Wong unsatisfied. “I would want to know first-hand what happens afterwards, what the chemistry [between the merged companies] was like, but after two or three weeks, I had already left the project.”

From Mickey to musicWong had, therefore, set her sights on joining the commercial world to experience how businesses really operated. At the same time, Disneyland, the world’s most famous theme park was planning to call Hong Kong home. Aware of how large-scale and significant this project was to the city, Wong applied to join Disneyland Hong Kong and went on to become its finance manager for the consolida-tion team in 2004.

Wong oversaw the company’s different functions, including marketing, food and beverages and hotels, and reported and projected spending and expansion plans back to Disneyland’s investor, the Hong Kong government.

“ One of the manag-ing directors there suggested that I should work for a CPA firm. He described it as being a Shaolin Kung Fu school where young people learn the basic accounting techniques.”

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Success ingredientLorita Wong

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From a two-storey construction site building, stood where the park is today, she would witness the whole park taking shape, little by little. “It went from an empty ground to the first few rides and restaurants opening up,” she remembers. “Every month we would look forward to the park opening, and how the public would react. After that, I took the Mickey Mouse train to work everyday and loved starting my day seeing excited kids around me.”

That, combined with random visits by Mickey Mouse at the office, made Wong appear lucky to many. Despite Mickey’s charm, she pursued a different industry. A headhunter came to her with the proposition of joining the regional team at Warner Music, and working directly with the executive board, giving her the opportunity to help lead the strategic decision-making from the front.

The years of working with various industries at KPMG have proven handy in her current role. “I communicate with people in 12 different countries. You need to have very good people skills to get your things done,” she says. She has also developed new skills along the way. “Instead of making it seem as if you’re always asking ques-tions, like a typical head office, you help them. When they see you are genuinely helping, then they will work efficiently because there’s an understanding that we are working as a team.”

Recording and marketing are key costs at the company, says Wong, although she stresses that the priority is not to keep funding

under control but to elevate the artists’ ranking higher up the music charts. “There’s a perception of us accountants always reducing costs. We don’t discourage spending, but then we need to control costs in a way that ensures revenue will be generated in multiples,” says Wong. “Sometimes we even question why spend is too low, or whether the team has an effective marketing plan in mind that can help boost consumer awareness and increase demand for our artists.”

Wong and her team also perform due diligence analyses when the company acquires other music labels. “We buy other labels that already have a lot of music content,” she says. By doing this, among other things, Wong strongly believes that her unique skills as a CPA have helped enrich the business. “You can see how people at the company need your numbers to know whether they’re making a profit margin from different types of streaming or downloads. They need your num-bers to decide whether or not they should pursue a record deal. We are working in a team.”

Ear-opening experiencesGrowing up, Wong was an unlikely fan of rock music. “I loved Beyond, a local Hong Kong rock band. I might look very gentle, but in my heart I like rock,” she laughs.

Unavoidably, working at Warner Music has opened her ears and mind to a vast range of songs from outside of Hong Kong, as well as outside the rock genre. “I now have a wider acceptance of differ-ent music, for example, from the

Philippines or Thailand, because of my regional role. I get a sense of why locals in those countries like it,” she says.

Wong developed a new-found respect for music artists in general, particularly those who appear to be in line with current music tastes and trends. “I think many consum-ers these days are not into singers who are good-looking, but who are actually talented and have a passion for music,” she says. “Some artists would come into our office pantry and play guitar because they want to practise whenever they can. When I’m backstage, I see them differently from how the audience sees them – you see their emotions before they get on stage and after they get off it.”

Since she first joined, she has also been exposed to myriad music genres, the company’s own releases, and an office environment that is not for everyone. “People play music out loud – one person plays rock, the other plays J-pop (Japanese pop), it’s a mix,” says Wong, who admits to finding it difficult to concentrate at first. “Some people can’t survive, and ask for headphones to be used. But I’m OK and enjoy work-ing with background music, that’s often very loud.”

“ They need your numbers to decide whether or not they should pursue a record deal. We are working in a team.”

In 2015, Warner Music Group said

its streaming revenues grew

34 percent in its fiscal year ended

30 September and 40 percent in the

fourth quarter

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