On April 27, NetEase Cloud Music once again challenged Tencent Music.
NetEase Cloud Music posted on social media that it had formally instituted judicial proceedings against Tencent Music for unfair competition.
On the afternoon of the same day, Chen Mo, the head of Tencent Music's brand public relations, responded to NetEase Cloud Music in the circle of friends, "Porcelain marketing is not conducive to the development of the industry."
At the beginning of 2021, although the exclusive copyright of music was lifted, the copyright dispute between the top music platforms has not subsided, and lawsuits have continued for 9 years.
The Beijing News Shell Finance reporter combed through the data of the Judgment Documents Network and found that since 2014, the head music APP has filed many lawsuits over copyright and other unfair competition issues.
This also reflects the difficulty of finding gold in the online music industry. The Beijing News Shell Finance reporter will interpret the financial report data for you. In the post-copyright era, how profitable are the two leading music apps, Tencent Music and NetEase Cloud Music?
1. Since 2014 to present
NetEase Cloud Music and Tencent Music go to court several times
On April 27, NetEase Cloud Music issued a long statement on its official WeChat account and WeChat official account, stating: "For a long time, Tencent Music Entertainment Group has illegally played unauthorized songs, faked and washed songs in batches, and copied NetEase Cloud by following. Music product innovation, evasion and even confrontation with supervision, etc. infringe the copyright of NetEase Cloud Music and constitute an act of unfair competition."
On the afternoon of the same day, Chen Mo, the head of Tencent Music's brand public relations, responded to NetEase Cloud Music in the circle of friends, "Porcelain marketing is not conducive to the development of the industry."
In fact, the two sides have gone to court several times since 2014.
In 2015, the National Copyright Administration promulgated the "strictest copyright order", and various online music service providers have taken offline music works without authorization.
Since then, the competition of major music apps around copyright has gradually become "white-hot".
The Beijing News Shell Finance reporter found on the Judgment Documents website that there have been many disputes between the two parties in the past nine years. Tencent has repeatedly applied to the court for "pre-litigation behavior preservation", claiming that NetEase Cloud Music infringed Tencent's rights, and Tencent There have also been cases where lawsuits have been withdrawn.
On July 24, 2021, the State Administration for Market Regulation: ordered Tencent Music to release its exclusive copyright within 30 days.
Since then, it has become a thing of the past for online music platforms to rely on exclusive copyrights to make money while lying around.
2. Music APP "Nuggets" is getting harder and harder
Tencent Music's net profit shrinks in 2021, NetEase Cloud Music still loses money
Although China's music industry has cultivated the habit of users to pay for high-quality music content, the online music industry has entered an era of stock competition, and it is increasingly difficult for music apps to extract money from users' "ears".
NetEase Cloud Music has accumulated 400 million users in just four and a half years, and the revenue gap with Tencent Music is getting smaller and smaller.
But both listed companies have had a tough time.
Tencent Music's net profit last year shrank significantly compared to the previous year, while NetEase Cloud Music has been in a state of loss.
Tencent Music and NetEase Cloud Music have previously released their 2021 full-year financial reports. Tencent Music’s revenue exceeded 30 billion for the first time, while cloud music revenue was nearly 7 billion.
In 2018, Tencent Music's annual revenue was 16.53 times that of NetEase Cloud Music, and in 2021, this figure will shrink to 4.46 times.
The Beijing News Shell Finance reporter combed the financial report and found that in recent years, Tencent Music’s online music service revenue growth rate and net profit growth rate have both shown a downward trend. In 2021, the company’s revenue growth rate fell to single digits for the first time, at 7.17% , while its revenue growth rate in 2017 was 151.80%.
Although Cloud Music's 2021 revenue growth rate is 44.45%, it is still in a loss - narrowing from -2.95 billion yuan in 2020 to -2.06 billion yuan in 2021.
On July 24, 2021, the State Administration for Market Regulation required Tencent Music to cancel the exclusive music copyright agreement within 30 days, stop payment methods for copyright fees such as high prepayments, and not ask upstream copyright owners to give it better conditions than competitors without legitimate reasons.
The era of "exclusive copyright" in the online music field has come to an end, and the market has responded quickly. In the fourth quarter of 2021, Tencent Music's total revenue fell by 8.7%.
This is also the first quarterly decline in revenue growth since it went public at the end of 2018.
Cloud Music also reached a direct agreement with Warner Music Group in August 2021, which means that Cloud Music currently has direct digital distribution contracts with the world's three major record companies. Copyrighted music from popular labels such as Entertainment Group.
The Beijing News Shell Finance reporter sorted out the financial report and found that due to the substantial increase in cloud music's membership subscription sales revenue, cost control has also improved.
Last year, the gross profit margin of cloud music sales finally turned positive, rising from -12.16% to 2.04%.
3. Run multiple music apps for love song
This year's young people are more willing to pay for listening to music
Nine years later, the copyright issue is still a "thorn in the heart" of music apps.
At present, music platforms still face the risks of copyright risk, short video platform competition and user loss.
At the beginning of 2018, under the promotion of the National Copyright Administration, Tencent Music and NetEase Cloud Music reached an agreement on the cooperation of online music copyright, and mutually authorized music works, reaching more than 99% of the number of their exclusive music works.
However, based on the huge music copyright library, only 1% of the exclusive copyright is still not a small amount.
Therefore, current users still have to "run for love songs" between different music apps.
What APPs are users of different age groups using to listen to music?
The Baidu Index shows that the age distribution of people who searched for QQ Music, NetEase Cloud Music, Kugou Music, and Kuwo Music during the period from 2022.3.1 to 2022.3.31 is slightly different. Music accounts for a relatively high proportion; among people over 30, Kugou Music and Kuwo Music users have an overwhelming advantage.
Kugou Music and Kuwo Music are both operating products of Tencent Music.
In addition to the music APP copyright dispute, the prosperity of the short video platform "BGM" (background music) has also led to the diversion of Tencent Music APP users.
The Beijing News Shell Finance reporter combed the financial report and found that in the fourth quarter of 2021, the number of monthly active users of Tencent Music’s online music dropped by 1% year-on-year to 615 million.
The financial report believes that this is mainly due to the loss of light users to other pan-entertainment platforms.
The Beijing News Shell Finance reporter combed the financial reports of Tencent Music and Cloud Music and found that compared with the fourth quarter of 2018-2021, the number of monthly active users of Tencent Music's online music service gradually decreased slowly, while NetEase Cloud Music featured song commentary UGC community The music APP of 2020-2021 has higher user activity and user stickiness, and has maintained growth in recent years, but the growth rate will slow down significantly in 2020-2021.
According to the cloud music financial report, in 2021, each daily active user of NetEase Cloud Music will spend an average of about 78.2 minutes listening to songs every day.
At the same time, nearly half of users also browse the "comment area" while listening to songs.
Despite the decline in Tencent Music's monthly active users, Tencent Music's online music paying users continued to achieve strong year-on-year and month-on-month growth, hitting a new high of 76.2 million; the online music payment rate increased from less than 2% before listing to 12.4%.
Tencent Music said that growth in this segment was mainly from music subscriptions and long audio, but was partially offset by declines in re-licensing, digital album sales and advertising.
The number of monthly payers for Cloud Music’s online music service increased from 16 million to 28.9 million.
The growth rate reached 80.62%, and the online music service revenue also increased from 2.6 billion to 3.3 billion.
Revenue per paid user for online music services dropped from RMB 8.4 to RMB 6.7, as Cloud Music cooperates with other platforms to increase sales of joint membership packages from 2020 to 2021, selling its own membership subscriptions at discounted prices to Promote subscriptions to NetEase Cloud Music to expand service coverage.
4. Seek new growth
Tencent Music launches long-audio cloud music to support independent creators
The products operated by Tencent Music include QQ Music, Kugou Music, Kuwo Music, National K Song and Aiding Zhuole.
The cloud music business revolves around "NetEase Cloud Music" and its affiliated social entertainment products such as "LOOK Live", "Sound Wave" and "Sound Street".
In the past three years, Tencent Music's net profit growth rate has continued to decline, NetEase Cloud Music's net profit growth rate has fluctuated greatly, and leading music apps have actively sought new growth points.
Tencent Music chose to focus on developing the long-audio business, supporting podcast anchors, accelerating the expansion of long-audio content in PUGC and UGC, acquiring Laren Dingshu and starting business integration, releasing a new long-audio brand "Lazy Listening".
Cloud Music has increased its support for independent musicians, launched the content creator support plan "Cloud Ladder Plan 2022", and launched BeatSoul, China's leading one-stop Beat (accompaniment) trading platform, to expand trading channels for Beat producers and rap music lovers. To cultivate user stickiness.
Tencent Music’s financial report shows that the monthly active users of long audio in the fourth quarter of 2021 exceeded 150 million in the fourth quarter, a year-on-year increase of 65%.
Strong growth in long-audio revenue boosted Tencent Music's fourth-quarter revenue from online music services to 2.88 billion yuan, up 4.3 percent year-on-year.
Tencent Music also released innovative models such as TME Live and TME digital collections to obtain development dividends, enriching and improving its business ecology and business model.
NetEase Cloud Music, the main product of Cloud Music, focuses on supporting independent musicians and original music.
By the end of 2021, NetEase Cloud Music has more than 400,000 independent musicians, while by the end of the fourth quarter of 2021, the number of independent musicians on Tencent's musician platform will only reach 300,000.