China Online Music Industry’s 2013 Resolution: Having More Users Pay

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Leehom Wang, a famous singer across Greater China, is selling a new song on his official website. It’s the first time a Chinese-language singer sells song downloads directly to users online. And he is not only for his own benefit but also plans to build a legitimate and profitable online platform for every singer to share and sell music.

This song is priced at one dollar for a download – pretty expensive in China. Alipay and PayPal are available so that both mainland China users and those overseas have no problem with payments.

LeeHom Wang sells his new song on his official website.

It was rumored that China music industry reached out to major online music services, having them charge users for higher quality music or downloads from 2013. It is unknown what an agreement they reached, but some music sites indeed rolled out premium services shortly after 2013 arrived.

Douban FM, an online music radio service, launched a ten-yuan monthly subscription offering ad-free higher quality music, DoubanFM PRO. Douban FM, launched in late 2009, has been paying royalties for songs streamed based on personalization algorithms.

DoubanFM PRO

Xiami, a full-fledged online music service who failed in charging for downloads, partnered with China Unicom’s WoFM and released a nine-yuan monthly subscription. The only offering, apart from the existing Xiami has provided for free, that is worth mentioning, however, is the data plan provided by China Unicom for unlimited streaming or downloading music through mobile phones. Xiami was among the earliest music services in China that tried to charge for downloads, but it only got 0.5% out of the over 5mn users to pay and hardly made a profit. Xiami is reportedly acquired by Alibaba, the company the founders of Xiami used to work for, to form its digital music division.

Xiami-WoFM Subscription

360Buy, an e-commerce platform, also initiated a digital music service, LeMusic, in late 2012, selling music albums at comparatively low prices.

It’s not that Chinese users never paid for digital music. They were enthusiastic to pay for mobile phone ringtones in 2G times or subscribe to QQ Music for premium services. Chinese telecom operators not only made a fortune from the ringtones, but also shared 50% or so of sales with copyright holders. But the business has been vanishing as 3G times came and ringtones weren’t that popular anymore. QQ Music is one of the very few who have been receiving payments directly from users for such a long time – ever since 2006. It can sustain for such a long time largely because it’s one of Tencent’s full-fledged online services that profitability isn’t a concern at all since its parent company profited a whole lot from other businesses like online games.

But back then musicians or music companies could hardly charge users on other web services or 3G terminals thanks to the ubiquitous piracy through websites or search engines like Baidu MP3. Music services such as A8 and top100.cn who offered legitimate digital music also found it hard to make money directly from users, so they turned to advertising, music events or other means. But they could hardly see profits.

It looks the times have never been so right for digital music industry that music production industry is receiving royalty payments from music service operators and will receive more from users. Hopefully those standalone music services are motivated to create features attractive enough for users to subscribe to. Of course, there still are services, such as Baidu Music, claims they’d continue offering services for free(Update: Baidu Music also launched a subscription-based paid service for 5 yuan a month on Jan. 31). And there must be new services offer existing paid services for free in order to gain market shares, as it always happens in China.