This article is reproduced from IT Home. The online music industry war has been going on for many years. After the acquisition of platforms such as Qianqianjingting and the shutdown of Xiami Music, the two-strong pattern of Tencent Music and NetEase Cloud Music has finally been formed.
Although the market share has ranked second, compared with the number one profit platform Tencent Music, NetEase Cloud Music is far from basic construction such as copyright or the construction of business models.
For example, Tencent Music has long established a business model for music payment and social entertainment including karaoke and live streaming, while NetEase Cloud did not launch related functions until the end of 2018, and lags behind Tencent Music in the number of copyrights.
This has led to NetEase Cloud’s membership service business based on music copyright and entertainment social services with a wide range of commercial spaces that have not met NetEase Cloud’s expectations. It was late in the report that some NetEase Cloud employees stated that because "revenues have not been able to increase, and innovation has no results", music CEO Zhu Yiwen has been "internally demoted" at the end of 2020, and NetEase CEO Ding Lei has assumed the role of NetEase Cloud CEO Work, in charge of actual business.
So what classes have NetEase Cloud missing in recent years?
The hard-to-fill copyright gap
In 2017, Tencent Music collected the exclusive copyrights of the world’s three major record companies, including Universal Music, Sony Music, and Warner Music. After that, Tencent Music continued to gain ground in the copyright market, the music library continued to expand, and NetEase Cloud’s music copyrights It has been in a state of scarcity.
Tencent Music’s first-quarter financial report shows that as of March 2019, Tencent’s music library had 35 million songs, while NetEase Cloud Music’s public music library at that time was 20 million. Even NetEase cloud users complained about it except for the comment area. Nothing.
The reason for this situation is nothing more than market competition leading to excessive copyright prices. In the 2019 Q4 earnings conference call, Ding Lei said that in the past few years, the exclusive sales model of the three major record companies in China has caused Chinese music operators to pay more than two to three times the cost of reasonable prices. This made NetEase Cloud, which had limited funds at the time, only watched its opponents conquer the city in the music market.
In order to bridge the copyright gap, NetEase Cloud has also conducted several large-scale financings. From 2017 to 2019, NetEase Cloud's financing scale reached RMB 10 billion, the most recent of which was USD 700 million led by Ali in 2019.
The injection of this capital allowed NetEase Cloud to straighten up again. Within two months, it has reached cooperation with Ghibli, Rolling Stone Music, and Warner. At the same time, it won the "Singer·The Year of Dangda", "Please listen to my friends". The music copyrights of music variety shows such as "Our Band" and "China New Rap 2020" have rapidly expanded the copyright library in a short period of time.
Even so, NetEase Cloud still struggles to match Tencent Music, and Tencent Music continues to increase its weight during this period.
In August last year, Tencent Music Entertainment Group announced that it has reached strategic cooperation with Kobalt Music, Cooking Vinyl, Genie Music, GMM Grammy, Mango TV Film and Television Music, etc. The contents of the above labels/record companies and video platforms are fully launched on Tencent Music Entertainment Group, namely It is launched on Tencent Music's QQ Music, Kugou Music, Kuwo Music, Quanmin K Song and other platforms.
Among them, Kobalt provided music publishing, neighboring rights and label services for 25,000 noun song writers, 600 publishers and 20,000 independent artists in 2017. In addition to the above copyrights, Tencent Music also owns core resources such as Jay Chou and SHE.
The data in the Bida report also shows that the richness of Tencent's music copyright library is still higher than that of NetEase Cloud. According to data, among the digital music downloads market share of Chinese music streaming media platforms in the first half of 2020, Tencent music downloads accounted for 66.4% of domestic streaming music platform downloads, and NetEase cloud music downloads accounted for 17.6%.
This makes it difficult for NetEase Cloud to attract users. The Bida data report shows that among the daily active users of major digital music apps in June 2020, QQ Music ranked first with 72.605 million, Kugou Music ranked second with 72.028 million, and Kuwo Music ranked No. with 41.255 million. Third, NetEase Cloud Music ranked fourth with 32.773 million people.
But NetEase Cloud does not want to give up the membership income brought by copyright.
Ding Lei said on the 2020 Q4 earnings conference call, “We will still pay attention to strengthening the construction of cloud music song content in the future, including supporting many excellent works. Therefore, the income of members will still be a more important part, which is our most important part. A direction of development."
This means that NetEase Cloud will also invest more funds in copyright procurement and support independent musicians.
Seize the independent musician market
Supporting independent musicians means that music platforms can obtain more diversified music at lower copyright prices. In addition to enriching the music library, independent musicians' works also contain huge business opportunities.
In 2016, the digital album "Unable to Grow Up" released by Zhao Lei has achieved considerable sales on platforms such as QQ Music, NetEase Cloud Music, Kugou Music, and Xiami Music. The combined sales amount of several major platforms exceeded 3 million yuan. After Zhao Lei participated in the third issue of Hunan Satellite TV's variety show "Singer", the song "Chengdu" was played on the Kugou platform by users in a single loop up to 200 million times, breaking all variety records in the history of Kugou.
This has allowed the head platform to gradually begin to attach importance to independent musicians. In recent years, NetEase Cloud and Tencent Music have invested a lot of resources in attracting talents. They have launched the "Rock Project" and "Tencent Musician Project" respectively. Tencent Music even launched the "Stone Project" and "Tencent Musician Project" in 2017. He expressed his hope to support independent musicians regardless of cost in the next three years.
The works of independent musicians have indeed brought traffic and commercialization to the platform.
Official data show that in 2020, NetEase Cloud Music will add nearly 1 million original works by NetEase musicians, and the total number of original works will be played more than 300 billion times a year. The 2020 annual inventory report of Tencent Musicians released by Tencent Musicians shows that the annual broadcast volume on the entire platform is nearly 300 billion.
Because of the earliest entry, NetEase Cloud has made more achievements in this field. Indie musician Universal Youth Hostel's second album "Jingxi Linlu Xing" released after a lapse of ten years, sold more than 300,000 copies on the first day of NetEase Cloud Music, and sold more than 410,000 copies and sold more than 895 copies a week after it went online. Ten thousand yuan. Li Zhi's exclusive debut on NetEase Cloud Music's digital album "On Every Sad Yingtian Street" broke through 1 million yuan in sales within two days of its launch.
Selling digital albums is just one way to monetize the music platform, and it is also a way to make money by holding offline Live tours for independent musicians.
In order to get their own independent musicians out of the circle, NetEase Cloud and Tencent Music also focused their attention on short video platforms.
The short video platform can be said to be a very efficient place for publicity. Songs such as "Your Tavern Closed to Me" and "Wild Wolf disco" are all popular on Douyin. The musicians Chen Xuening and Gem Gem behind it It was exposed that although the duo’s landlord’s cat had already had a certain audience on NetEase Cloud before, it was still unable to break the circle. It was not until the "clouds into the rain" was put on Douyin, and its music was not well-known to the public.
After seeing the influence of short video music, Tencent Music and NetEase Cloud successively reached cooperation with Douyin in 2019 and 2020, and authorized the copyright of the songs to Douyin. Since then, the two platforms have added an important song distribution channel and hit Song entrance.
However, copyright is only the basis for platform construction. If you want to make yourself sticky and have differentiated competitiveness, social elements are indispensable.
The comparison report shows that among the factors that affect user selection in the first half of 2020, music library resources are the most important factor. 62.3% of users choose "music library richness", 57.4% of users choose "exclusive resources", and social media It also affects users' choices to a certain extent, with 48.6% of users choosing "social" factors. On the other hand, music platforms can also benefit from social services on a large scale.
Missed opportunities for live broadcast and K song entry
Tencent Music has established a two-wheel-drive development model of "online music + social entertainment" very soon, in which social entertainment has gradually become the pillar of revenue.
In 2016, revenue from online music services and social entertainment services were both around 2.2 billion yuan, accounting for half of each; by 2017, revenue from online music services was 3.149 billion yuan, and social entertainment services revenue was 7.832 billion yuan, accounting for 37% . In the latest financial report for the third quarter of 2020, Tencent Music’s total revenue was 7.58 billion yuan, of which revenue from social entertainment services and other businesses was 5.25 billion yuan.
Tencent Music’s entertainment social services mainly include three modules, the live streaming module in K Song, Kugou Music and Kuwo Music, as well as Kugou Live and Kuwo Live.
As early as 2016, Kuwo Music cooperated with Kugou Music to launch a pan-entertainment online live broadcast platform integrating online performing arts and live video, and then launched a "Live Singer" area in 2017 to attract users. In addition to its early entry into the live broadcast field, Tencent Music also launched a national K song in the 2014 live singer live year. Among them, the nationwide K song has long been in a leading position in the market.
According to the "2020 China Mobile Internet Annual Report" released by QuestMobile, the National K Song is once again the only product in the online K song industry to be listed on the TOP50 APP list of the entire network user scale, and it will be ranked in the 2020 online K song track user scale. the first. The third-party data research institution Bida Consulting released the "Post-95 User K Song Insight Report in 2019", which shows that among the more popular K song apps on the market, Sing Bar, Kuwo K Song, Yinyu, and Sing Duck, K song is in The post-95 users are the most, accounting for 54.5%.
These businesses with vast commercial space were launched early by Tencent Music, while NetEase Cloud at that time was obsessed with community construction.
Ding Lei positioned NetEase Cloud Music as a new form of "mobile music community", and his goal is to "become China's largest mobile music community and open platform, forming a unique user-centric music ecosystem", so NetEase Cloud Platform It is filled with a lot of UGC content.
Users contribute content by making playlists and sharing experiences and ideas related to songs. Early NetEase Cloud even allowed users to import original mobile phone communications and SNS relationships, and use LBS to view good music shared by attached users.
At that time, NetEase Cloud focused all its energy on the construction of the community, but ignored the issue of commercialization. Whether it was the comment area, playlist production or the establishment of a "music friend circle" for users, these functions did not take into account the realization problem, which led to NetEase. It is difficult for the cloud to generate revenue for itself.
In order to change the situation, NetEase Cloud began to build live broadcast and K song services like Tencent Music.
At the end of 2018, NetEase Cloud Music finally launched the live music product "LOOK Live", which was more than two years later than Tencent Music. At the end of 2020, the K-song app "Yinjie" was launched, which entered the market 6 years later than the National K-song.
Despite the late entry into the game, live streaming has created a lot of revenue for the platform. Ding Lei once said that NetEase Cloud Music’s current revenue mainly comes from membership, advertising and live streaming services, but its social monetization business wants to be the same as Tencent Music. Competitiveness is still difficult, because the Tencent ecosystem provides a lot of resources for Tencent Music.
Tencent's huge social system and massive copyrights are the key to Tencent Music's “Social Entertainment Service” series products such as Quanmin K Song to quickly occupy the market. Product users use WeChat and QQ to share similar K songs, live broadcasts and other activities, and generate real-time interaction. In contrast, the disadvantages of NetEase cloud channels are prominent.
Whether it is online music or social entertainment, there is a huge gap between NetEase Cloud and Tencent Music. NetEase Cloud’s latest quarterly financial report shows that its innovative business and other businesses have net income of only 3.72 billion yuan, while Tencent Music’s latest quarterly financial report shows that its revenue has reached 7.58 billion yuan.
Since 2013, NetEase Cloud has been established for 8 years, and the total number of users has exceeded 800 million. However, how to quickly grow and give investors a satisfactory explanation seems to be a problem that needs to be solved.