The days of Tencent music are not as good as imagined.
Editor’s note: This article from the micro-channel public number “bullet finance” (ID: wwwhygc), author Yin Taibai, responsible for the egg.
Live platform with music jacket
The prospect of Tencent Music in the music business is not optimistic.
According to the second quarter financial report, Tencent Music’s total revenue for the quarter was RMB 5.988 billion, up 31% from the same period last year of RMB 4.503 billion. In addition, the net profit attributable to shareholders of the company was RMB 927 million. , an increase of 2.5% year-on-year.
Only from the digital point of view, both total revenue and net profit have grown steadily. Tencent Music has indeed produced a satisfactory transcript, but this is far from being able to sit back and relax.
The financial data of the previous quarters has fully exposed Tencent’s music is becoming more and more unsatisfactory. In terms of total revenue and net profit growth, it has shown a gradual slowdown for three consecutive quarters.
In the first quarter of 2019, total revenue increased by 39.4% year-on-year, and in the fourth quarter of 2018, this increase reached 50.5%.
Net profit is also in the same awkward position as total revenue.
In the first quarter of 2019, the net profit attributable to shareholders of the company was 987 million yuan, a year-on-year increase of 17.4%, and these two figures were 916 million yuan and 37.3% in the fourth quarter of 2018.
The financial report shows that Tencent Music’s revenue component is mainly divided into online music service and social entertainment service. According to the information in the previous prospectus, online music service revenue includes subscription service, single and digital albums. Advertising and copyright transfer; entertainment service income includes live rewards, membership fees and smart device sales.
However, one reality that has to be faced is that online music services contribute less and less to total revenue. In the second quarter, online music services and social entertainment services accounted for 26.4% and 73.6% of total revenue, respectively, compared to last year’s ratio.It is 28% and 72%.
The information in the prospectus indicates that Tencent Music is not a pure online music platform. The data shows that since the fourth quarter of 2016, the live broadcast reward income has been rising all the way, and the proportion of total revenue has been stable at around 70%.
Over 70% of the revenue is rewarded by live broadcast, and this proportion is still rising steadily. It can be said that Tencent Music is actually a live broadcast platform that attracts users through music content and ultimately achieves revenue growth through social entertainment.
Copyright advantage becomes a revenue burden
Although it is the money to earn live broadcasts in the name of music, it is undeniable that the online music service sector still plays a pivotal role in Tencent music.
Similar to video sites, the development of online music services has never been able to circumvent copyright issues.
In terms of copyright, Tencent Music has always stood on the shoulders of giants. With the advantage of Tencent Capital, Tencent Music has easily captured the exclusive rights of Warner, Universal and Sony’s three major record companies worldwide.
The price of copyright war is not low. In the copyright war between Tencent Music and Ali Music and Netease Music, the exclusive agency fee has soared from US$30 million to US$350 million plus US$100 million.
However, Tencent Music has always spared no effort in copyright acquisition. The influential Jewel Music, Emperor Entertainment, Fumao Records and other companies in the Chinese music scene, as well as many music variety shows have been awarded Tencent music copyright, in addition, Even SM, YG, and JYP, the three major Korean entertainment head companies, have also reached strategic cooperation with Tencent Music.
A set of public data highlights Tencent’s copyright in copyright: As of March 31, 2019, Tencent’s music library has reached 35 million, compared to Netease’s music library. The amount is only 20 million.
The copyright advantage has brought more users to Tencent Music, and it has also brought a lot of hidden concerns. This kind of hidden worry is particularly evident in the cost of revenue.
According to the second quarter financial report, Tencent Music’s revenue cost was RMB 3.96 billion, compared with RMB 2.71 billion in the same period last year, an increase of 46.1% year-on-year. The increase in revenue cost was 1.48 times of revenue growth.
This is not the first time that the increase in revenue costs has been greater than the increase in revenue. In the first quarter of 2019, Tencent Music’s revenue cost was RMB 3.7 billion, which was only 2.43 billion yuan in the same period in 2018, an increase of 52.2% compared with the same period of last year, compared with only 39.4% of the camp in the first quarter. The increase in revenue, revenue growth still reached 1.3 times the increase in revenue.
However, the fact is that although Tencent Music has 652 million monthly users, it has QQ music, cool dog music, and cool music.Cards, but the willingness of users to pay is not strong. This unwillingness is finally reflected in the financial report: the number of online music paying users is 31 million, and the paying users only account for 4.8% of monthly users.
The online music service’s revenue contribution is less than 30%, and the copyright from burning money has not caused explosive growth for paying users – compared to 4.8% of paying users in the second quarter, paying users in the first quarter The ratio is only 4%, and the growth rate is poor.
The extremely slow growth of paying users has also brought another worry to Tencent Music: user growth has peaked.
According to the financial data of previous quarters, Tencent Music’s monthly users have been hovering between 6.4 and 660 million for five consecutive quarters. Even with the monthly entertainment of social entertainment products, the total monthly activity has been hovering. Between 8.7 and 890 million, this is not far from the upper limit of the domestic Internet’s 1 billion monthly live.
The reality of data mapping is that the growth of online music users has actually touched the ceiling, and the dividend period is coming to an end.
Netease’s differentiated catch-up
The online music service is also regarded as an extremely important business segment. How does Netease do it?
In April 2013, Netease Cloud Music was officially launched. At the beginning of the market, Ding Lei clearly defined Netease Cloud Music as a music community. The early NetEase cloud music was successfully circled through the music comment area and personalized recommendation function. A large number of users.
Compared with professional music critics’ professional comments on song style and melody, Netease Cloud Music’s user music reviews have the power to directly attack people’s hearts. These comments give emotions such as emotions and emotions and emotional resonance to the music itself. .
With user music reviews and emotional resonance, Netease Cloud Music, which emphasizes social attributes, has surpassed competing products such as Domi Music, Baidu Music, and Shrimp Music. In many music apps, NetEase Cloud Music has become the only one that can be Tencent Music Chamber opponents.
However, there is a problem that has to be squarely addressed: user reviews and emotional resonance are based on the sound of listening. The lack of copyright has led to a large loss of Netease cloud music users.
Aware of the inability to struggle on copyright issues, NetEase Cloud Music decided to avoid the edge of Tencent Music and gave two coping strategies.
On the one hand, continue to follow the trend, capture the hearts of the people through deep-rooted commentary and personalized recommendation functions, and on the other hand, extend to the upstream of the industrial chain, such asLaunched a musician support program and a shareholding company.
At present, NetEase Cloud Music has introduced 80,000 musicians and supported more than 1.2 million original works. The logic of doing this is roughly the same as that of iQiyi and other video websites. When the price of external copyright is high. At the time, I made the original at the source by force.
The self-help of Netease Cloud Music has achieved amazing results.
According to the “China Mobile Internet Industry Development Analysis Report for the First Quarter of 2019” released by Trustdata, Netease Cloud Music has more active users per day than Cool Music, ranking third, with cool dog music and QQ music. The gap is gradually narrowing.
This analysis proves that Netease Cloud Music has successfully embarked on a path of differentiation: although it does not have a copyright advantage, Netease Cloud Music claims to be second in terms of user stickiness and user loyalty. No one has Qualification is the first.
NetEase’s second-quarter earnings once again proved that the differentiation strategy helped Netease Music achieve good performance.
According to the financial report, the total number of Netease cloud music users has exceeded 800 million, a year-on-year increase of 50%, and Netease cloud music paying users surged by 135%.
The data from QuestMobile provides evidence for the explosive growth of Netease cloud music users.
According to statistics, the active users of Netease Cloud Music in June was 139 million, a year-on-year growth rate of 20.6%. In contrast, the active users of the four Tencent-based music apps were 569 million, a year-on-year growth rate. 9%.
Although the number of active users of Netease Cloud Music is still not the same as that of Tencent Music, NetEase Cloud Music, which has taken a different approach, has already caused a partial threat to Tencent Music.
Conclusion
Tencent music has been promoted in a very embarrassing situation. On the one hand, the speed of online music burning is fast, while the paying users are growing slowly.
According to the revenue structure of the previous quarters, Tencent Music has formed a unique style of play. The uniqueness of this style of play is that the online music service business represented by QQ music and cool dog music is more Like the “facade”, it is responsible for creating word of mouth and maintaining the brand image, while the social entertainment service business, which is based on the national K song and cool dog live broadcast, is responsible for commercialization.
However, the live broadcast business cannot always transfuse online music services, and Tencent Music’s business realization path has a long way to go.
With short video fastWith the rapid rise, Tencent Music’s live broadcast business bears the brunt, especially the short video platform represented by the vibrato and fast hands has grown into a force to be reckoned with.
According to the “2018 Vibrato Big Data Report” released by Vibrato, as shown in December 2018, the number of vibrating domestic daily users exceeded 250 million, and the number of monthly users exceeded 500 million.
An undisputed fact is that short videos have begun to pose a threat to Tencent Music. For Tencent Music, the more sticky users of short video platforms, the smaller the commercial value of live broadcast services.
For the platform that provides online music services, this does not seem to be the best era: the cost of music copyright is high, users are not aware of the cost of payment and have low willingness to pay. In addition, they must always be wary of competition. The plunder of the opponent.
However, the crisis is also a turning point. While China’s music market has not yet matured, there is still an infinite possibility in this fertile soil.
The picture in the text comes from: pixabay, piqsels, based on the CC0 protocol.