Tencent Music is under investigation by China's antitrust authorities, a review that could terminate exclusive licensing agreements signed with Global, Sony and Warner, the world's largest record labels, according to recent news.
The report said that Tencent's music, from the hands of the three major record companies, sold its copyright to smaller rivals. The latter is of the view that this approach is not fair. Tencent music purchases copyright at a relatively high price and transfers most of it to its competitors.
People familiar with the situation disclosed that the price of licensed songs from Tencent music in China could be twice as high as that from major record companies in other markets around the world.
In response, Tencent staff said that the news has not been officially released and confirmed, and there is no accurate source and explanation.
Relevant data show that Tencent Music now has more than 35 million tracks authorized and has more than 80%of the music copyright in the Chinese market. The two strong patterns of online music platform are formed, and Tencent Music and NetEase Cloud Music rank the first camp.
However, Tencent Music's online music service and social entertainment service account for 26.4 percent and 73.6 percent of total revenue, respectively, in terms of data from its second-quarter earnings report for 2019, and Tencent Music, which relies on its copyright share to attract users, has less copyright revenue than social entertainment.
Tencent Music: the advantages and disadvantages of copyright
Tencent Music recently reported results for the second quarter of 2019, with revenue of 5.898 billion yuan, up 31 percent from 4.503 billion yuan in the same period last year, and attributable to the company's shareholders' net profit of 927 million yuan, up 2.5 percent from the same period last year.
Tencent's revenue and net profit have grown at different rates in earnings figures, but overall revenue and net profit have slowed for three consecutive quarters.
Tencent Music's total revenue rose 39.4 percent from a year earlier, compared with 50.5 percent in 2018, according to Q1 results in 2019. In terms of net profit, Tencent Music attributed to the company's shareholders' net profit of 987 million yuan in the first quarter of 2019, up 17.4 percent from the same period last year, and the fourth quarter of 2018 net profit was 916 million yuan, up 37.3 percent from the same period last year.
The main reason for the slowdown in revenue and net profit growth is Tencent Music's cost of purchasing exclusive copyright. According to the financial report, Q1's revenue cost in 2019 increased from 2.43 billion yuan in the same period in 2018 to 3.7 billion yuan, an increase of 52.2% over the same period last year. In the second quarter, the revenue cost was 3.96 billion yuan, up 46.1% from 2.71 billion yuan in the same period last year.
Moreover, compared with Tencent Music's results in the past three quarters, Q1 in 2019 compared with Q4 in 2018, the total revenue increased 6.2% and the cost increased 3.9%, while in 2019 Q2 compared with Q1 in 2019, the total revenue growth rate was only 2.8%, the cost growth rate reached 7%, and the cost growth rate has outpaced the revenue growth rate.
In terms of copyright, Tencent Music, backed by Tencent Holdings, has included exclusive copyright signed by Global, Sony, Warner and other of the world's largest record companies. At present, Tencent music relies on the exclusive copyright advantage, the total fee account number is second only to Spotify and Apple Music, ranks in the world top three.
In 2017, the State copyright Administration interviewed music companies at home and abroad and several major domestic online music service providers to request full authorization of online music works and avoid exclusive authorization.
Recently, the music of Tencent is due to
Whether Tencent music has formed a monopoly, the intellectual property research expert, Zhu Yunqing, said, because of the existence of the transfer authorization, the exclusive copyright belongs to the commercial cooperation mode, and does not form the market blockade.
According to the development of online music industry, the number of online music users in China is increasing year by year. According to the Statistical Report on the Development of Internet in China published by CNNIC, the number of online music users in China has reached 608 million by June 2019, an increase of 32.29 million compared with the end of 2018, accounting for 71.1% of all Internet users.
Mobile music user penetration is also on the rise. Quest Mobile's "China Mobile Internet 2019 Half Year Report" shows that in June 2019, mobile music user penetration rate reached 65.9%, an increase of 2.8% compared with the same period last year.
The two-strong pattern of online music platform is now formed. At present, the music of Tencent and NetEase are in the first camp with 8% of permeability and over 80 million of MAU. After the combination of QQ music and CMC, Tencent's music entertainment group has three pieces of music app, which is in the leading position, and the net-cloud music is growing rapidly as a black horse, and is now in the first camp.
After many years of development, China's online music industry has moved towards legitimate.
But from the data, Tencent Music and Netease Cloud Music payers growth is extremely slow, revenue mainly depends on social entertainment.
Tencent's music payers rose 39.2 per cent to 27 million in the past year, compared with 4 million in the first half of 2019, with payment rates rising from 3.9 per cent to 4.8 per cent. Online music ARPPU, the average income per paying user, fell 1.1 per cent to 8.6 yuan a month.
Tencent Music revenue is mainly made up of online music services and social entertainment services, according to the results. Online music services accounted for 26.4 percent and 73.6 percent of total revenue in the second quarter, compared with 28 percent and 72 percent in the same period last year.
Since the fourth quarter of 2016, Tencent's live music reward revenue has always accounted for about 70% of the total revenue, and this proportion is still growing.
NetEase cloud music mainly positioning original copyright, music community atmosphere, music communication ecology these three aspects. Among them, NetEase cloud music mainly depends on the music community atmosphere, with the song list, music evaluation, dynamic and so on as the characteristic, adds the attention star, the talented person and the friend and so on the function, converts the one-way music dissemination into the two-way, thus enhances the user to use the time.
Netease ceo ting lei has also said that the cloud village community has achieved good results. For NetEase cloud music, he said,
Although Tencent music and NetEase cloud music business model is different, but at this stage, both sides focus on the music community and live broadcast, and so on.
At present, online music has entered the era of stock, and copyright competition as the core has been unable to meet the development needs of various music platforms. How to sustainably tap the user value, and at the same time enrich the content, what kind of balance mechanism should be adopted to make profits on the platform, become Tencent Music, Netease Yun Music and other domestic online music platforms urgently. Problems to be solved.