How’s The Reconstruction of China Digital Music Market Going?
Half a year ago I wrote about this interesting statement that major digital music services in mainland China would not offer pirated content any longer and should roll out paid services by the end of June. Now it’s two months after the deadline. I was asked about how the reconstruction of China’s digital music market going. Here are some facts and thoughts.
Premium Subscriptions
From early this year, major online music providers did launch premium subscriptions that charge users up to 20 yuan a month for high-quality music, downloads or non-ad streaming.
Most digital songs they provide are copyrighted, but there are still illegal tracks especially on platforms with special models. Like Xiami where users are allowed to upload song tracks by themselves, before copyright holders find out Xiami hasn’t paid for certain tracks. To be fair, it’s can be really hard to eliminate digital music piracy altogether.
It was reported that those music services were forced by labels or agencies to roll out paid services so that the latter could receive revenue cuts. Several years ago, Chinese music businesses like A8 tried to establish the iTunes-style platforms selling digital songs to end users. It is said users back then didn’t want to pay.
It’s unknown now how many Chinese users would like to pay for digital music, but the fact is not many would like to pay for higher-quality music files. I heard many say that they could hardly figure out the difference in sound quality and didn’t care about it.
It’s possible, however, that those online music services will come up with new offerings that users would be more willing to subscribe to.
Top100.cn was shut down.
Top100.cn was found shut down in April, half a year after Google China closed its music search. The founder of this online music service, Gary Chen, was the one that convinced major record labels to joined in the Google Music search program in 2008 — they agreed to offer users in mainland China free downloads and monetize the service together through display advertising.
Although it’s the only content provider of the music search service, it’s also top100.cn that was paying millions of RMB each year to music companies for music rights. Advertising was what top100.cn had been counting on in terms of monetization.
Chen disclosed that traffic on top100.cn declined by 80% after Google China suspended the music search. He estimated the total loss in advertising revenue was approaching 100 million yuan as of June 2013 (interview in Chinese). I asked an entrepreneur in the digital music sector about it. His comment is Gary Chen is an enthusiastic entrepreneur, thinking big, but top100.cn didn’t offer good user experience.
Top100.cn now is re-selling music rights to businesses, according to a Weibo post by Gary Chen. But critics don’t think it could be a good business as what top100.cn bought, a considerable part being imported songs, were not those the majority of Chinese would like and cannot be sold at high prices.
Musician Platforms
Xiami Musician/Artist, launched in July, is the same with Douban Musician. Both of them provide musicians, being independent or from record labels, webpages where songs can uploaded onto. Different from Douban, Xiami has built a music trading system where users can buy downloads — songs listed on musicians’ pages can be sold directly.
The Xiami system was once controversial. As mentioned, Xiami uses are allowed to upload any digital songs, so copyright holders were so angry at the fact that Xiami was selling their songs without their permission. Xiami, actually, shares revenues with copyright holders and users who upload those songs. But that not many people would pay for downloads didn’t make copyright holders happy, either. They kept asking Xiami to pay a large amount of money for copyrights.
After being acquired by Alibaba, Xiaomi now has no worries on copyright expenses. And the trading system for musician pages seems to be in the right place. Xiami promises not to take a penny from the musician program in two years. It also shares 10% of the sales of a song with the composer(s) and lyrics writer(s), respectively, with the rest 80% going to the singer(s).
New Service Models
Jing.fm, now a interest & scenario-based music streaming service, wants to become a music search. Jing.fm recommends songs based on keywords a user input by saying something or type in some words. The algorithms have considered acoustic analysis.
NetEase, an Internet service provider, stepped into digital music industry with a playlist-based music app. There had been similar services in China, but NetEase tries to attract users by getting musicians or celebrities in general to share their playlists. If it works well, monetization could be easy that marketers would like to spend budgets somewhere full of users and attention.