YY reported another quarter of eye-catching results. In Q2 2013 the company’s total revenues increased by 118% to $66.6 million, driven by a 132% increase in revenues from internet value-added services, YY Muisc, online games and membership subscriptions.

Its total paying user accounts grew by over 50% YoY to more than 1.1 million. The online game business grew steadily with RMB346 ($56) in ARPU.

YY Music saw a 189.3% YoY increase in revenue that generated $27.8 million in the quarter. Paying users grew by 174% YoY to 635,000.  ARPU is RMB269 ($44) .

Top five performers contributed less than 5% of the total revenue; top ten performers contributed 5% to 10% of the total, disclosed Eric He, CFO of YY, during the earnings conference call today. Top five music channels generated roughly a quarter and top ten created roughly one-third.

As we discussed before the online music show market had become crowded and some platforms offered higher revenue-sharing ratios to attract performers. The competition is reflected in YY’s financial results that the revenue-sharing fees and content costs paid to performers, channel owners and content providers result in a 100.6% increase in operation costs in Q213.

However, YY Music is still the fastest-growing business and largest revenue stream of the company’s. No wonder Tencent would join in. Tencent also has been promoting QT, YY Voice-like voice communication tool designed for online gamers, in games the company operates.

Commenting on it, Eric He said they were not afraid of competition as 1) they have been in the business ever since 2008, 2) a number of competitors emerged along the way and YY is still doing well, 3) they believe the relationship between the content providers and audiences on YY platform is solid, and 4) big names would help educate users.

In the past quarter YY partnered with a local TV station to run a singing contest show that contestants can perform and interact with fans on YY platform apart from participating in the contest on TV. YY is also trying to expand from music to other categories of entertainment, such as story-telling show.

Tracey Xiang is Beijing, China-based tech writer. Reach her at traceyxiang@gmail.com

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