The big ship of Internet music has gradually moved away from the shoal to the deep sea where value and risk coexist.
Editor’s note: This article is from WeChat public account “New Music Industry Watch” (ID :takoff), author Chen Xianjiang.
When we talk about the Chinese Internet music market, low pay rates are a lingering problem.
The long-term low rate of payment makes the entire music market look a bit embarrassing. This kind of embarrassment has a profound historical root. When the early Internet destroyed the era of physical records, the free pirated environment soil could not make music pay for results. It takes time to build new rules. If you want a tree to grow, you must first make the desert a good place. Fortunately, this situation is rapidly improving at a rate visible to the naked eye.
The latest Q3 financial report released by Tencent Music Entertainment Group shows that in the third quarter of 2019, the online music paying users of Tencent Music Entertainment Group grew rapidly, and the user payment rate has a new breakthrough. The number of online music paying users increased by 42.2% year-on-year. 35.4 million, online music users pay 5.4%, and at the beginning of this year, the ratio was 4.3%, in less than a year, the rate of payment increased by more than 1 percentage point.
For the market, this is a positive sign. As the Internet music market landscape stabilizes, the Internet music market may be entering a key time node: If, since 2015, genuine construction has become the main driving force for the rapid growth of China’s Internet music market, Today, the big ship of Internet music has gradually moved away from the shoal to the deep sea where value and risk coexist.
In this “deep sea”, the survival test of Internet music service providers is no longer limited to copyright, but the full range of operational quality and ability to penetrate the market. From this perspective, although digital music payment has begun to accelerate, the real good show has just begun.
Payment Speedup
The low rate of Internet music payment in China is a historical issue. The long-term free use of user habits is not solved overnight.
But we should also see that in recent years, the payment training of China’s Internet music platform has also been effective, and the “Digital Album” has repeatedly been sold.Behind the volume record is the concept of digital music payment, which has taken root in the younger generation of users, and thus promoted the improvement of the domestic Internet music payment environment.
According to the “2019 China Digital Music Content Payment Development Research Report” released by iResearch in July this year, users under the age of 30 accounted for 68.6% of paying users, and the user’s willingness to pay was also from 16.3 yuan/month in 2016. It has grown to 31.7 yuan / month.
The improvement of the paid environment also reflects In the third quarter earnings report released by Tencent Music recently: After the online music paying users reached a record 31 million in the last quarter, up 33% year-on-year, in the third quarter of 2019, Tencent Music’s online music paying subscribers created new highs.
In the third quarter of 2019, Tencent Music Entertainment Group’s online music paying subscribers reached 35.4 million, a year-on-year increase of 42.2%, and paying subscribers increased by 4.4 million, higher than the 2.6 million in the second quarter of this year and 140 in the first quarter. This is the largest net increase in data since 2016. The online music user’s payment rate reached 5.4%, more than double the number in 2016.
The increase in the number of paid users will inevitably lead to an increase in online music payment revenue. In the third quarter of 2019, Tencent Music’s online music service revenue reached 1.85 billion, an increase of 26.2%.
More notable is the increase in online music unit user value (ARPPU). In the third quarter of 2019, Tencent Music Entertainment Group’s online music monthly unit user value reached 8.9 yuan, the highest since 2017 Q2. ARPPU is an important indicator to measure the quality of payment. The value of unit users increases, indicating that users’ willingness to pay and actual expenditure are increasing. This is undoubtedly good for platforms and industries.
It seems that the fee-based growth of the Internet music market has begun to accelerate.
The inflection point is coming?
The cultivation of paying awareness requires a process. It takes a little time for music consumption to completely transform the “inflection point” of Internet consumption from traditional consumption.
Observing the development of the music industry over the years, we willIt is seen that in addition to the influence of free listening to songs, the traditional concept of music consumption is still deeply ingrained, which has caused the confusion of the concept of music consumption to some extent. In what way does music consumption exist in this era? It is not clear.
Therefore, the low rate of Chinese Internet music is inevitable.
Ai Rui Consulting’s “2019 China Digital Music Content Payment Development Research Report” shows that in 2018, South Korea’s digital music payment rate is as high as 90%, the United States and Europe are 67%, and the low-paying Indonesia has 15 %. Although the payment rate of Internet music in China has increased this year, it is still far below the international level.
Building an Internet music consumption concept is not just about doing one thing, but needing to build a complete system. This may be a problem that many people ignore.
Traditional record consumption is not just as simple as buying and selling records. Behind the traditional record consumption, it is supported by a whole set of planning, production and announcement systems. Every path in this system ultimately leads to music consumption.
The weakness of music consumption is related to the inefficiency of music content development (planning), production (production), communication and marketing (Xuanfa) in recent years. As the traditional recording industry is washed away by the Internet, the old system is constantly failing, and traditional record companies need to learn and adapt to the Internet. Under such circumstances, taking the responsibility of establishing a new system falls on the most understanding of the Internet. Platform shoulders.
Only when this system is established, Internet music consumption can truly “fall” and “inflection point” will come.
The Internet music company represented by Tencent Music is trying to reconstruct a complete music consumption system based on Internet thinking: on the consumer side, helping artists sell more “digital albums”, on the communication side, they try to help artists follow Consumers build more direct connections, and on the content side, the use of AI is helping to provide better on-demand content.
Take the Taylor Swift Chinese fan meeting just as an example. This is an important attempt by Tencent Music to help Taylor Swift and Chinese fans create face-to-face opportunities. In the self-owned matrix, Xuanfa, the new album “Lover” with the same name of the title song on the TME platform launched online, sales reached nearly 6 million within 24 hours.
At the same time, based on the trend of the music market’s differentiation, TME’s Tencent musicians are trained andIncubating new independent musicians provides a full range of services, providing independent musicians with more efficient self-employment tools, helping independent musicians find audiences, output works and manage copyrights. · The data shows that in the first nine months of this year, the total number of songs uploaded by new music players on the platform has more than doubled. Compared with the same period of last year, the average daily play volume of original songs on QQ, Cool Dog Music and Cool Music has increased by nearly 200%.
The show just started
The International Federation of the Phonographic Industry (IFPI) data shows that since 2015, the global recording music industry has rebounded significantly, and music revenue has continued to grow in recent years, driven by the rapid development of streaming media. Despite this, the total value of the global music market in 2018, if it is calculated as inflation, is still only equivalent to the level of 2008. In 2018, the total income of global digital music and physical records is only 53% of the revenue of physical records in 1999.
The streaming media revenue has been occupied In the case of half of the world’s recorded music revenues, how the Internet music platform helps music release more value and achieve more revenue has become the key to further growth in music revenue.
This is especially important in China. Because streaming media revenue accounts for 93.5% of China’s recorded music revenue (IFPI data), the role of Internet music companies will have a direct impact on China’s recorded music market. .
In the past few years, the rapid growth of the Chinese music market has been driven by the “authenticization” of the copyright market. From now on, only by committing to constructing a more efficient business system, increasing the rate of payment and consumption, and sorting out and magnifying the value of copyrighted content can we promote the deepening of the industry.
The increase in the number of paying users is of course a good thing, but the problem cannot be ignored. In fact, the rapid growth of the Chinese music industry in the past two years is based on the rapid increase in short-term revenue brought about by “genuineization”. Due to the low payment rate, the Internet music communication-consumption system is not yet sound, and the core value of music is far from being obtained. Full release.
With the completion of the legalization, and the increasing rate of payment, if the InternetNet music communication – the consumer system can be continuously improved, and the Chinese music market will undoubtedly have the potential to achieve a greater leap.
This requires all Internet music service providers including Tencent Music Entertainment Group and all parties in the industry to work together, the comprehensive renaissance of the music industry, and a long way to go. The transformation of the Internet-based music industry continues. However, the process is accelerating, and the future is beckoning, and the good drama has already kicked off.