online music industry seems quiet, but in fact it is undercurrent.
said it is quiet because the scripts in this industry were boring in the past, and it has always been "Tencent Music will always win" : Looking around the world, it is the only profitable music streaming media, and even Spotify, which has 350 million users and a payment rate of 45%, has not done this.
Although the domestic NetEase Cloud Music has attracted the support of literary youths through its heart-wrenching hot comments, it has suffered a cumulative loss of 7 billion yuan from 2018 to 2020.
says that undercurrents are surging because Tencent Music gave up its exclusive agent three months ago. The news was quickly sent to the top of the hot search on Weibo . Users shouted " Jay Chou , I'm here", and NetEase Cloud Music , which has been suffering for a long time, actively took off its exclusive logo.
To this day, Jay Chou is still not on NetEase Cloud Music. After Xiami Music was shut down, Alibaba registered the "Xiami Music Entertainment" trademark and held a music festival.
can really be undercurrents, but in places where they are invisible. Jay Chou did not go on NetEase Cloud, but he entered Kuaishou early. ByteDance, behind , Douyin, , intends to make a music player again, and invested 1 billion yuan to buy music copyright. Short videos snatched not only the business of iQiyi , but Tencent Music's stock price fell from more than 30 US dollars half a year ago to single digits.
This article tries to explore three issues:
1. How much impact will the online music market structure be on the lifting of copyright restrictions?
2. Why is Tencent Music the only profitable music platform?
3. Who is Tencent Music’s current rival?
01
3 copyright open, what is the impact?
Conclusion: has an impact, but not much.
Tencent Music released the "Statement on Give Up the Exclusive License Right of Music Copyright", NetEase CEO O Ding Lei responded to this connotation: "I hope this is a sincere and does not contain any decision to disobey."
For a long time, copyright can be said to be the most important and even only moat of the music platform. users are not loyal to the platform. Wherever Jay Chou and Mayday’s songs are, users will go to which music platform. There is such a data that shows the importance of head copyright: "Jay Chou" means a 15% DAU increase for a music player [2].
As for the copyright music library, Tencent Music, which integrates QQ, Kugou and Kuwo, has no rivals. In 2016, China Music Group and QQ Music businesses merged to form Tencent Music. It quickly won more than 90% of the copyrights in the Chinese music market, including top singers such as Jay Chou. During the same period, the copyright of NetEase Cloud Music was about 70%, and Alibaba Music was less than 20% [3]. Even after Tencent Music and NetEase Cloud Music reached 99% of the library authorization, the remaining 1% was still the winner of the user Qunar.
But Tencent Music gave up exclusive agents does not mean that the era of "no need to use multiple apps to listen to music" will come soon. The music platform still needs to negotiate with upstream record companies. Recently, it was reported that NetEase Cloud Music intends to complain to South Korea's SM company, saying that the latter has "choose one of two". But whether the copyright holder is willing to sell it or not is its own business.
What's more, . For music software, copyright is actually an asset with high cost and low returns on . It's too difficult to make money on it.
cost side, there are many examples of platform robbing during the exclusive period that lead to a surge in the water: in 2018, NetEase Cloud Music and Huayan Music ( power train , F.I.R). The authorized amount is 500 million yuan in three years. This price is 8.5 times that of Alibaba Music and Huayan cooperation two years ago.
Even without an exclusive agent, the copyright may not be much cheaper. is still in the hands of record companies because of the bargaining power. On the one hand, users follow music rather than platform, and on the other hand, music platforms do not have economies of scale. Spotify has 350 million users, but as revenue increases, costs continue to rise at a constant pace.
has no scale effect, it is caused by the royalty mechanism of "advance payment + share". Spotify pays record companies a sum of money in advance every year as a minimum living allowance. After that, every time the user plays a song, the record company will draw a sum of money (about 6-8 cents) as royalties. If the record company's commission this year is higher than the minimum living allowance, then Spotify needs to make up for the difference, and on the contrary, the record company does not need to refund the money [4]. The situation in China is similar, and the platform also adopts "advance payment + share". During the exclusive agency period, the price of advance payments is often extremely high because of the need to grab resources. After the advance payment returns to rationality, the platform is more likely to need to make up for the share fee.
Revenue side , there are two ways to monetize copyrights. One is to sublicense copyrights to other music platforms, and the other is to charge users (digital albums + membership payments), but they are not profitable.
According to NetEase Cloud Music's prospectus, from January 2016 to January 2018, the transfer revenue accounted for only 1.74% of the online music business. It is even more difficult to make money by relying on users to buy songs. The 45% payment rate did not make Spotify profitable, while the online music business payment rate of domestic music platforms is only single-digit.
users are not only not bargaining chips for music platforms, but also make the platform pay more share of the share after more playbacks. From this perspective, users make the platform "hate and hate". The lack of income caused by the copyright of
is the norm for music streaming. From 2018 to 2019, NetEase Cloud Music's content service cost (including copyright cost) accounted for more than 100%.
Is it possible to increase the user payment rate? Disaster.
Spotify payment rates are so high, mainly because it has obvious differences between members and non-members. Non-members can only play artist songs randomly, and cannot accurately play on demand, and there are advertisements during playback. If there is a platform in China like this, users may immediately go to another house.
When copyright determines traffic but cannot bring benefits, the music platform's life is not easy. But Tencent Music achieved profitability as early as before its listing in 2018 and is the only profitable streaming platform in the world. How is it done?
02
Music overlord, relying entirely on live broadcast
Tencent Music’s profit formula is written in the financial report.
Tencent Music's business is divided into online music business and social entertainment business . The former can be divided into subscription business (member paid income) and non-subscribe business (copyright sublicense, advertising, digital album revenue). In Tencent Music's business, the social entertainment business that relies on Kuaishou and live broadcast is the majority of revenue, accounting for 60 to 70%.
Although it plays the music sign and name, the key to profit actually comes from karaoke and social entertainment for rewards. This is actually easy to understand: Most people feel pain when paying to listen to concerts, but when rewarding the anchor, they possess the rich. The average monthly ARPPU of social entertainment business is around 150 yuan, which is 15 times that of online music business.
The business structure of NetEase Cloud Music is also "music + social", and the revenue share of social entertainment has increased from 10.6% in 2018 to 46.4% in 2020. But Tencent Music has two unique advantages: one is that the music library is comprehensive, and the other is that it is backed by Tencent’s huge traffic pool.
K songs also require copyright, so Tencent 's huge music library - especially the works of top artists - has a place to work. On NetEase Cloud Music, it is as embarrassing as not being able to order Jay Chou’s singing. At the same time, Tencent Music relies on the social concept of Tencent to encourage people to share their works on WeChat Moments and QQ. Many people enter the online karaoke with the mentality of singing and sharing with acquaintances.
In order to maximize the fan economy, Tencent Music's live broadcast has learned the path of idol variety shows. In addition to the daily list of Kugou, it also requires users to give gifts, and there are additional year-end list activities. The 2018 Kugou Live annual ceremony is divided into Grand Prix, Guild Competition and Album Competition. In each round of competition, users can vote to help their support anchors advance. At the same time, the official will invite fans from the top three to participate in the ceremony (first class round trip + five-star hotel + VIP ticket) [4].
This is equivalent to holding a platform-wide talent show every year. At the 2018 annual ceremony, the top three singers received more than 22 million votes, more than doubled compared to the previous year [5].
music business, the platform is a pipeline, thankless, and the money is earned by the producer. In the live broadcast business, the anchors compete for beauty, the audience is in high spirits, and the platform reaps the benefits of the fisherman. Why can't NetEase Cloud Music do such a good business?
Compared with Tencent Music, NetEase Cloud Music has the advantage of a more cohesive community atmosphere. Although the revenue is not on the same level as Tencent Music, the monthly ARPPU of NetEase Cloud Music's social business in 2020 reached 573.9 yuan, four times that of Tencent Music's same business.
But the "small and beautiful" tone is not only the reason why NetEase Cloud Community is close, but also an obstacle to its expansion. live broadcast is a market dominated by sinking users, which is inconsistent with NetEase Cloud Music's tone of focusing on the first and second-tier markets. Once NetEase Cloud Music expands into the sinking market, it is likely to be contradicted by the original users. In the Zhihu Q&A about NetEase Cloud Music, many enthusiastic netizens expressed their heartbrokenness that they had no interest in live broadcasts of "Internet celebrity faces" and "black stockings".
Tencent Music does not have such a problem. Its music platform is aimed at different markets. QQ Music is aimed at pop music listeners (similar to NetEase Cloud Music), Kugou Music is more long-tail , and is aimed at the sinking market (a cold knowledge: the highest online music MAU data is not QQ Music, but Kugou), and Kuwo Music focuses on vertical fields such as DJ style. It may not be a coincidence that Kugou is used as a platform for the annual live broadcast ceremony.
Tencent Music's products (QQ Music, Kugou Music, Kuwo Music, Quanmin K Song) have completely surpassed the opponents in the content and channel side. Judging from the monthly active users, Tencent Music's online music business has exceeded 600 million, three times that of NetEase Cloud Music.
But Tencent Music, which is the dominant music, has also encountered a "new crisis". In Tencent Music's financial report of 2021Q2, the monthly active users of online music and social entertainment fell by 4.3% and 13.3% respectively. The official explanation is that the pan-entertainment platform has snatched users' attention. In this era when short videos snatch everything away, everyone understands where pan-entertainment platforms refer to.
03
3 used to be in harmony, and now it is a confrontation
In 2018, a hot dance video of Zhang Yixing made the two songs "Can't Guess (DJ Version)" and "SexyLady" popular on Douyin Kuaishou.Short video users quickly found the organization in Kugou’s comments on “Tik Tok/Kuaishou Comes to Gather”. At that time, a popular saying: South Douyin, North Kuaishou, and finally met Kugou.
Two or three years ago, there was no obvious competition between short video platforms and music platforms, and the former often diverted traffic to the latter: , a song, became popular on Douyin, and various cover versions on national karaokes emerged one after another, and the download volume of the original version on QQ music has also continued to rise. In order to adapt to the era of short video production of divine songs, QQ Music and Kugou Music have launched related lists of TikTok divine songs. QQ Music also specially launched "Tik Tok List" .
3 statistics from Guojin Securities show that starting from April 2018, the month-on-month growth of QQ Music's Douyin MAU tends to be synchronized. After September 2018, as the user bases of Douyin and QQ Music reach the same order of magnitude, the MAU growth curves of the two are highly consistent, which can be said to be complementary [4].
music platform regards it as a honeymoon, but in the eyes of short videos, it is a wedding dress for others. After so many divine songs have taken away traffic for music streaming media, short videos inevitably have the mentality of "I do it, I will go on." Therefore, short videos that once only rely on 30 seconds of divine songs and do not manage traditional music copyrights have also set their sights on the music cake.
On May 29, 2020, Kuaishou officially announced Jay Chou's entry. A week later, it was announced that it had reached a copyright license cooperation with his music company Jerwell Music . At midnight on June 12, the new song "Mojito" was released, and 1 million copies were sold on QQ Music in one hour. It is also worth noting that the song MV played more than 40 million in 12 hours on Kuaishou.
Perhaps Jay Chou himself would not have thought that the days when he was closely linked to short videos would come so soon. After all, at the Paris concert a year ago, Jay Chou seemed a little overwhelmed in the face of the song ordering requirements of "Learn to Meow".
short video platform did not suddenly make music-related actions. As early as around 2018, they had already bought copyrights and made efforts to discover original musicians, but at that time, not many people would associate short videos with music. The copyright is bought to make BGM non-infringement, and the original musician may just be a slogan.
But later people gradually discovered that short videos have made many new ideas in the promotion and distribution process. For example, the clip preview was released in the early stage (Kuaishou released Jay Chou's new song 15 seconds ago). After the song is released, the creators of the platform can also use the song as material for secondary fermentation. Under Jay Chou’s page, there are 176 music songs that can be used as creative materials. What makes
More competitive is that ByteDance, behind Douyin, officially announced the news that it has invested 1 billion to buy copyrights to make music players. Although the official said that the acquired copyright tends to be more popular among amateurs and internet celebrities, combined with the loose copyright, the action of short videos and the trend of byte expansion, it is reasonable to believe that the competition in the music industry will not be quiet: short videos with strong financial resources and have made achievements in live broadcasts may become the real disruptor of the music landscape.
Facing the impact, Tencent Music has also increased its investment in videos .
In July 2020, QQ Music was revised and listed the video area separately, making it a first-level entrance and users can quickly enter. National Ka Song has also added "recommended" video streaming, video recording functions and a variety of tools. QQ Music's "gravity" plan is very Douyin at first glance. It recruits the world's authors of original works, , with talents such as dancing, singing, and playing, as well as video editing.
can't beat you, so I will join you, there is no problem.
04
Epilogue
Music is a long-standing need, while short videos are new things that have only risen in recent years. But both sides are in a state of rising and falling.The scenes of listening to songs in
are becoming more and more background and fragmented. People will listen to them for several hours every day when commuting, but they rarely sit down and listen to the full album with peace of mind. Although short videos have emerged in line with the era of fragmentation (even created fragmentation), their presence is getting more and more. Entertainment that kills time is not enough to steal users' attention from other platforms, and even robs users of their sleep time.
According to Aurora Big Data's "2021 Q2 Domestic Mobile Internet Report", the average daily app usage time for domestic netizens is about 5.1 hours. Among them, short video apps rank first among users’ usage time, nearly 30%, compared with 23.6% in the same period last year. In comparison, statistics from Questmobile show that online music app usage time only accounts for about 3-4% of the total Internet time.
In the final analysis, in the second half of the Internet, the traffic dividend gradually disappeared, and has no cake that can be given up. Tencent Music’s challenge has just begun.
Full text is over. Thank you for your patience in reading.
