Online music users in China were 450 million as of the end of 2013, according to the China Digital Music Market Annual Report for 2013 which was newly released by Chinese Ministry of Culture (CCNT) (report in Chinese).

Mobile music users reached 291 million, up from 96 million the year before — that’s a 203% increase. There had been 31,000 apps in the Music category on the App Store for Mainland China as of the end of 2013, with 500-800 new being uploaded each month (app updates are included).

695 companies had been authorized to operate online music businesses by the end of 2013, 21% increase year-over-year.

Online Music Show Platforms Contributed 49.5% of the Total Online Music Revenues.

Mobile music revenues (exclusive of sales from mobile ringtones or other offerings by telecom operators) increased 13.3% year-over-year. What seems unusual is PC-based digital music sales increased by 140%. The significant increase is largely thanks to online music show businesses which contributed 84% of PC-based sales and 49.5% of the total.


                                                                                                                                       Source: CCNT

Online music show platforms, which are for artists to perform live online, emerged in China several years ago. It became a lucrative business after virtual gifts were introduced for audiences to buy for performers. 9158 was one of the first entrants into the market; YY was the first, currently the only one, that went public with online music show as a major revenue source. Till today there are a dozen of online music show platforms in China.

CCNT didn’t mention the revenues from online music show in its annual report for 2012. YY made RMB92.7 million (USD14.6 mn) from the music business that year, so that’s roughly 5% of the PC-based sales reported by CCNT. Given there were a couple of online music show operators, 9158 and, that reportedly were more profitable than YY Music back then the combined revenues generated from online music shows must account for a considerable percentage of the total if CCNT counted them then.

It turns out that the market had grown to be bigger than the founder of 9158 estimated. It is expected the market would continue to grow. YY saw a 217% increase in music show revenues in 2013. More Internet companies, such as download service Xunlei, social service 51 and even Internet giant Tencent, launched similar services during the year. The CCNT report estimates that the total revenues from this market will be RMB8.5 billion in 2015.

Thanks to the increasingly fierce competition, some have started exploring relevant sectors; for instance, 9158 now is working on revolutionizing traditional Karaoke Bars with Internet-based social services. Hopefully the new services created will grow the pie.

The business model may help monetizing the mobile too. Changba, starting off as a singing recording and sharing app for everyone, has began making revenues through similar approaches. Audiences who like listening to shared singing are able to buy singers virtual gifts or even higher chart positions.

Monetizing the Existing Online Music Services is still a Problem.

Since the beginning of 2013, almost all major Chinese online music services launched premium offerings during the year. The CCNT report concludes that the paid services weren’t well received as expected as of the end of the year.

There’s little room, CCNT thinks, for any service to gain new users on the PC-based music market, especially after another two major Chinese Internet companies enter the market in 2013; Alibaba acquired two online music services, Xiami and TTPod, and Netease launched a playlist sharing app. The CCNT report for 2012 pointed out a problem with online music services was the difficulty in raising funding, so now it seems not to be a problem any more.

The competition then centered on music content and mobile users, CCNT concludes. Since now major online music services are backed by big Internet companies that are able to pay for a majority of the digital music rights on the market, the differing content are mainly through buying exclusive rights for certain albums or popular music TV shows. When it comes to mobile users, the existing PC-based service providers have successfully channeled their existing users to mobile or attract the new with their well-established brands.

The CCNT report points out that more and more users in China, like what happens in the rest of the world, consume online music through multi-screens, and reckons that online music thus is able to reach, besides the young, the older age group and possibly create more revenue sources, such as family-targeted advertising — previously ad spend was more targeted at young people — and content subscriptions as families are used to paying for cable TV subscriptions.

Chinese online music businesses have been trying to convert their online users to offline concert or event consumers. But it seems the offline market hasn’t created any worth-mentioning numbers of audiences or revenues.

Tracey Xiang is Beijing, China-based tech writer. Reach her at