NetEase Cloud Music is partnering with record label Nippon Columbia in a bid to target China’s high-end paid users with a diverse music portfolio. The gaming and entertainment company is the first in China to collaborate with the record label.
Music from the Nippon Columbia label is now available for streaming on the platform, including pop music from anime voice artists and enka, a traditional Japanese music genre. A NetEase spokesperson told TechNode that free users can also access some of Nippon Columbia’s content library. However, offerings to free users were very limited, with most records provided to paid users with a starting price of RMB 8 (around $1.2) each month, based on TechNode’s observations.
“More and more NetEase Cloud Music users now listen to Japanese music and have gradually formed large, active Japanese music fan groups,” said Miyomatsu Abe, President of Nippon Columbia, in an announcement sent to TechNode. Further details about the deal were not disclosed.
The NetEase’s music streaming platform was an early mover in bringing Japanese music to China, distinguishing itself from its rivals with its long-tail marketing strategy. It looks to lure higher-end users who are willing to pay for the content they like out of the 20 million tracks available on the platform.
However, NetEase’s profits are suffering. The company recorded gross losses of RMB 326 million ($47.5 million) in its innovative business segment in 2018. It attributed the losses to higher copyright costs related to licensed music content and decreased revenue contribution from certain online platform businesses. NetEase spent massively on a single deal with Taiwan-based music label Huayan, paying RMB 170 million for 2,000 music tracks in 2018, 21st Century Business Herald reported citing local broker Guosen Securities.
China’s music streaming market is dominated by Tencent, which owns three platforms—Kugou, QQ Music and Kuwo—in a cash-burning rivalry with NetEase. According to research firm Trustdata, Kugou and QQ Music maintained their top and second spots as the two most-used music platforms with monthly active users (MAUs) of 109 million and 103 million, respectively, in March. NetEase Cloud Music ranked third with 52.8 million MAUs, followed by Kuwo with 51 million active users.
The Hangzhou-based internet giant stated that it doubled the number of paid users with robust growth in digital album sales in 2018, according to chief financial officer Charles Yang during its earnings call in February, though exact figures were not disclosed. Tencent Music grew its paid memberships 39.2% year on year to 27 million paid users in the fourth quarter of 2018.