Kuwo, a Chinese digital music service founded in 2005, has endeavored to pull in cash since its birth, but it seems to be still in vain. Kuwo’s CEO Lei Ming recalled the course of monetization in an interview recently. The company started receiving revenues through ads, premium service and online games since 2008 and broke even in 2010, but couldn’t make a decent profit to this day.
Kuwo was established the time when a new wave of Internet companies, such as the interest-based social network Douban, classified site Ganji and the like, sprouted up. Just like others, Kuwo initially considered user pool as of first priority, putting the commercialization issue aside. But after the financial crisis in 2008, Kuwo realized the importance of monetization and began to make attempts to cash in money.
Kuwo claimed to break even through ads and games, the two main income sources. Other attempts like charging value-added service, however, failed. Only 1o, 000 paid users make huge contrast with Kuwo’s 1oo million monthly active users. But Tencent’s subscription-based paid music service turns out to be working. Mr. Lei thought QQ Music’s key to success lay in the combo of SNS while a standalone music service is not likely to survive the environment where people are spoiled by free downloads and lack the awareness of copyright.
The CEO admitted it’s a regret that digital music services like Kuwo missed the opportunity to grow to be a big industry, like video industry or gaming industry. Kuwo once launched a YY-like music service which users could buy virtual gifts for the performing singers, and paved way for the potential business opportunity of celebrity management which entails setting up an agent company, signing contracts with online popular singers and organizing offline events.