In August 2019, Netease announced an unexpected data: Netease cloud music users exceeded 800 million and increased by 50% year-on-year. However, Tencent Music, known for its copyright dominance, had only 654 million monthly active people on various platforms, including Cool Dog Music, QQ Music and Cool Me Music, as of May 2019. Of course, the number of active users of Netease cloud music is not very optimistic. According to the Easy View report, in the first quarter of 2019, Netease cloud music active users ranked fourth, with 110 million active users, that is to say, the number of active users of Netease cloud music is less than 15%. Ding Lei, CEO of Netease, said when talking about future plans: to tap the deeper social functions of cloud music, not only the community, but also social interaction.
After NetEase's cloud music was removed from the shelves for a month, NetEase cloud music made a comeback with the "Yuncun" community, and developed a variety of social sectors. NetEycloud music is getting farther and farther along the road of "music socializing".
Looking at the domestic music market, Tencent music firmly occupies the market's high-quality resources, not only has absolute advantages in music copyright, but also takes the lead in listing and achieves profits, which brings a lot of pressure to Netease Yun music, which is a weak force. Faced with market pressure, Netease Yun Music has to open up a new territory beyond the battlefield of music content. After that, the cross-border efforts made by Netease Yun music reflected more like anxiety.
Failure in Copyright Competition
Nowadays, Tencent music (cool dog music, QQ music, cool self music, national K song) is taking the lead in China's music market, followed by Netease (Netease cloud music) and Ali (shrimp rice music). Competition in online music is extremely cruel, and content has become the key to all major music platforms.
Therefore, copyright is very important for a music platform. If there is copyright, there will be content. If there is content, there will be users, and if there are users, there will be market and profit. Early music platforms also struggled for copyright.
In 2011 and before, the piracy rate in China's music market was about 99%. The rampant piracy and brutal growth of piracy were the true portrayal of China's music market at that time, and the word copyright was rarely heard of. In 2015, after the National Copyright Administration issued the Copyright Order of "Notice on Order Network Music Service Providers to Stop Unauthorized Dissemination of Music Works", the disorder in the industry has been effectively improved, the order of domestic music copyright has been maintained and consolidated, the value of copyright has been gradually valued, and the copyright war in the music market has begun. Curtain.
Accordingly, the major music platforms on copyright war broke out. In 2015, Ali Music won the exclusive copyright of Huayan International at a price of 20 million yuan a year. By 2018, NetEase Cloud Music had spent 3.5 billion yuan to win the exclusive copyright of Huayan International. The average annual copyright fee was 167 million yuan, eight times more than that of Ali Music. In addition, when the platforms grabbed the licensing fees of Universal Music, the initial bid of Universal Music was only US$340 million, then rose to US$240 million. Finally, Tencent Music offered US$350 million in cash plus US$100 million in equity. Major music platforms continue to stage the plot of "hurting the enemy one thousand and hurting oneself eight hundred" for exclusive copyright, and they are happy to do so.
Although Tencent, Netease and Ali have reached mutual grant agreements in response to the requirement of the State Copyright Administration that music platforms should avoid purchasing exclusive copyright, since February 2018, the number of music works authorized by each platform has reached more than 99% of their respective copyright. However, 1% of non-transferring exclusive copyright songs have also become the key to the rise and fall of major platforms, competing for major platforms. Netease Cloud Music's open music library is 20 million pieces, 1% of which is more than 200,000 pieces.
Last year, because Netease did not renew the copyright of Jay Chou, in April 2018, all Jay Chou's songs were off the shelves. Statistics show that at least 15% of users of Netease cloud music lost to Tencent music. Taking the video industry as a lesson, Tencent Video, Aiqi Art and Youku Potatoes continue to occupy a large part of their respective rivers and mountains. One important factor is their own exclusive copyright possession, and even the live broadcast of a play. It is easy for users to jump from one platform to another.
The advantages of exclusive copyright are more and more evident in user trends and performance data. The battle for copyright came to an end when Tencent signed Sony, Universal, Warner and Emperor Entertainment as the biggest copyright winners in the entire music market in China.At that time, Tencent's music copyright has a great advantage in the domestic music market, while Netease Yun's music can only survive under the pressure of copyright by "Stone Project" and cultivating independent musicians to survive in the Jedi.
Membership Increase Slow
Netease Q2 financial report shows that the number of effective members of Netease cloud music payment increased by 135% year-on-year, but the number of specific members has not been shown. Tencent Music Q2 Financial Report: Online music payment users reached a record 31 million, last quarter was 28.4 million, an increase of 33.0% year-on-year. As a platform with a monthly activity of 650 million, membership fee rate is less than 1/20. Obviously, the membership fees of NetEase Yun Music will not be better, or worse.
Although the speed of Chinese young people switching from free MP3 to paying songs is beyond the expectation of most people, Q's green diamond and cloud village's black glue VIP have many loyal users. Even the digital albums paid by the traffic stars are selling like a raging fire. The new album like Joker Xue's popular singer sells tens of thousands of songs in Yun Village, but it's true. The transformation of paying customers is still in its infancy.
Apart from Apple Music, which is a platform without free mode, it can achieve 80% of paid members. The conversion rate of other players is not particularly ideal. Spotify's conversion rate is about 45%, Pandora of the older generation is only 7.8%, Tencent's music can only achieve 4%. How to start a huge base of customers becomes a difficult problem. How to make a good match between user growth and payment income is a topic of concern for capital. Platform without profit model has no prospects even if it has first-mover advantage.
According to Spotify Q2 in 2019, Spotify's total revenue was 1.667 billion euros ($12.790 billion), an increase of 31% over the previous year. Among them, the revenue of paid services is 1.502 billion euros (about 11.524 billion yuan of RMB), an increase of 31% over the same period of last year, and the number of paid members has reached 108 million. Sptify went public in 2018, with a peak market value of $35 billion, and then plunged to more than $27 billion, evaporating a market value equivalent to four pandoras. The stock price plunged all the way because of spotify's unstable revenue. Membership fees do not seem to have gained much advantage, and the profit potential of music fees has once again aroused concern.
Turning to the neighborhood video industry, in June 2019, it has achieved the feat of more than 100 million online members of IQISAN platform. Tencent video is also hovering at the edge of more than 100 million, and membership fees have exceeded advertising revenue to become the largest revenue of the video industry. The largest number of users of video websites is only 800 million, which is the same as Netease's music users. However, members'income and payment rate have left the major music platforms far behind.
With the beginning of the era of knowledge payment, the awareness of user payment has gradually increased over the past three years. The business environment of digital music in China has been systematically established and regulated, but the payment efficiency of implementation still needs to be improved. According to the data of 2017, from the perspective of user payment, the per capita music consumption in China is only 0.69% in Japan, 0.91% in the United States, 1% in Germany, 0.772% in Britain and 0.77% in Switzerland. From the data, we can see that the per capita music consumption level in China is obviously different from that in developed countries. By 2018, the subscriber fee rate of China Digital Music Platform was about 3.5%. Although it increased year by year, the rate was really slow. Music payment, like other content payment industries, has ushered in the bottleneck of payment development.
Profit model is still being explored
If Netease first launched cloud music, it is the founder team's love and feelings for music. So, when Netease cloud music has accumulated hundreds of millions of users, we have to consider the commercialization of the platform.
With the long-term development of NetEasy Cloud Music, NetEasy Cloud Music is not only a song-listening software, but also a multi-functional social platform integrating music, live broadcasting, making friends, radio, community, shopping mall and video. Only you can't imagine, without its involvement, it is really a collection of micro-blog hyper-talk, post comments, Weixin circle of friends, trying every means to attract money, drainage for their own use. Although NetEase Yun Music has developed many profit models, including paid music, advertising, live music broadcasting, ticketing, surrounding shopping malls and other diversified business models. But all the hunting is often not in-depth, looking left and right at a mess.
According to Netease Q2, Ding Lei, CEO of Netease, responded to Morgan Stanley analysts'questions about business models and how to make profits. One is members, the other is advertising, the third is live broadcasting, and the fourth is social networking. Ding Lei expressed confidence and confidence in the profits of these four aspects.
In terms of membership fees,Netease Yunyun Music has never disclosed its actual number of paid subscribers publicly, while the official data announced to the outside world has been emphasizing the growth of data, while never publishing specific data, it is inevitable to avoid the heavy suspicion, and the actual profitability is unclear. Therefore, we can be sure that this mode of realizing Netease cloud music has not reached the ideal level of Netease cloud music in the layout of this section.
And Netease cloud advertising,In the past 2018, Netease Cloud Music has become one of the most popular cooperative platforms for advertisers in Netease products, such as Beijing Hyundai, Oriental Nissan, Chevrolet and other high-quality advertisers, who have conducted in-depth brand cooperation with Netease Cloud Music. Netease Cloud Music receives some profits by opening-screen advertisements and banner advertisements on its home page. However, no matter what form of advertisements, Netease Cloud Music can not become the main revenue of Netease Cloud Music.
In cross-border broadcasting,NetEase Cloud Music is a live dating platform located in the "live music" type. With the wind blowing in the capitalist market, now it has almost become a handsome man and a beautiful girl in the coat of music. NetEYun music live in the current tiger tooth, Douyu, Douyin and other large platforms squeezed under the market prospects doubt.
Netease Yun Music MallThe transaction can be divided into two ways: sign-in point exchange commodity and on-line sale. Users can exchange related items by sign-in point, provide benefits to users regularly, or purchase items as contemporary gold vouchers. This way is not so much a commercial way of Netease cloud music as a user incentive system. However, because there are few kinds of goods sold in the cloud music mall, many users do not think that these functions can play much practical role. Therefore, as far as the commercial layout of Netease is concerned, the Yunyun Music Mall has nothing to do with it.
Netease Cloud Music is also constantly exploring innovative business models, such as IP cooperation with brands. In June of this year, Netease Yunyun Music reached strategic cooperation with the three national brands and formally explored commercialization in the form of IP authorization for the first time. In August, Netease Cloud Music and RuixingCoffeeJointly opened a music theme coffee shop in Shanghai, and will cooperate more in the surrounding areas and culture of music coffee. Although the propaganda is good, it still needs time to verify whether the specific commercial scheme can be done well.Yiyun Music has taken a new step in the commercial Internet and opened the road of commercial exploration, but how these cooperative projects will germinate and how far they will develop in the future is still unknown.
Continue to socialize
Not long ago, Netease Yun Music suffered a storm off the shelf. Since June 29, Netease Cloud Music has been removed from the shelves in China and can not be downloaded and used. As a result, negative rumors such as "uninstalling and reloading members of Netease Cloud Music", "deleting users'local files secretly by Netease Cloud Music", "Netease Cloud Music is dead" have been circulated on the Internet.
Under the divergent opinions, Netease Yun Music was successfully re-published at the end of July. Netease Yun Music came back in the name of building "Yuncun" and restarted its social business. And in Q2 earnings teleconference, by the "official declaration" as Netease's expected business growth point.
Put aside the frustration of NetEase Music in commercialization. From the perspective of future development, the "Yuncun Community" on the line of Netease's cloud music layout has also become the focus of the topic. Yuncun's play is similar to the music version of "Weibo". As for making friends, we can "only look at the opposite sex" for targeted screening, which is similar to the common type of dating APP. As early as a few years ago, Ding Lei defined Netease cloud music as a music community. Early Netease cloud music successfully attracted users through music review area and daily recommendation function. It is not difficult to see that Netease cloud music emphasized its "social" attribute.
With the continuous incubation and shaping of e-commerce, content and other businesses, a remarkable change of NetEase in recent two years is that it does not exclude independent financing and listing of new businesses. Netease is now promoting its IPO in the United States. The remaining three businesses, Netease Cloud Music, Koala and Yanxuan, are the most promising ones to be listed independently.
NetEasy Yun Music, known for its "feelings", has made remarkable achievements in exploring and satisfying the market segments of music enthusiasts. It has successfully withstood copyright repression and the impact of the market, and has grown madly under the "music community" model.
Looking from the time line, the user increment of Netease Cloud Music has been running very fast for six years. Netease Cloud Music was officially released on April 23, 2013; the number of users exceeded 100 million in July 2015; 200 million in July 2016; 300 million in April 2017, 400 million in November 2018, 600 million in November 2018 and 800 million in August 2019. Moreover, UGC content and community atmosphere, such as unique and active music reviews and singles, have been used to increase stickiness, with an average of 2 million reviews per day, totaling more than 1.6 billion. Netease Yun Music connects the majority of music fans with music and content, and constructs an extraterrestrial online music community.
The social family of NetEase music is really a unique way to become rich, in the case of copyright content disadvantage to achieve a bend overtaking, this wave of "music social" feelings of operation with the deepening of social development, amazing everywhere.
Netease Yun Music is a music social prosperity, in the plight of copyright disadvantage, hard to rely on social play for a day, to win the second place in the industry. At present, NetEase Yun Music, while absorbing "fans", runs a business model of social networking, trying to improve the liquidity of music based on music, through live performances and community business elements, thus forming a music social entertainment ecology, breaking away from a single "listening to music" model, and forming a more sound ecological industry chain. 。 However, the liquidation problem has not been well solved.
Netease cloud music in other commercialization model progress is not ideal, firmly grasp the root of social life-saving straw in Yuncun, continue to restart the social road. However, it will take time to verify whether Yiyun Music, a rising star of the music community, can achieve differentiated competition, and whether it can walk out of an unusual prosperous road through Yuncun social intercourse in the music field.
With the convenience of the current information production mode, it is no longer feasible to stick to the road of making music only. Only when deeper users meet their needs can there be a market.Personalized recommendation, social interaction, interpenetration of social platforms, shopping malls and so on are just incisions. Netease cloud music multi-functional drainage mode is just to gain a higher market share advantage.
Whether in terms of the payment rate of online music services, the possibility of upgrading the industry chain, or in terms of opening up more online and offline businesses like NetEase Music, China's Internet music market is still huge, perhaps it can fully accommodate two or more competitors. Netease Cloud Music can be a piece of cake, but the premise is to change.
Looking at the current situation, Alibaba Taobao has become a prosperous company. Its commodity sales are taught by each other and initiated by social interaction. Tencent Group has sprung up with QQ, and interaction also depends on social interaction. Tencent music and social revenue also account for the largest proportion. Social interaction seems to be a "treasure chest" where all the fun can make a fortune. andNetease cloud music social networking has been going for so long, and the potential growth of music users has peaked in the future, facing core copyright weaknesses, users are difficult to realize, the road is still a long way to go. Whether Netease cloud music social networking can carry a larger dream? We will wait and see.
Wen/Leek Financial Reporter Zhu Lin, Public ID: jiucaifin