Forget 5G, Next Chinese Hot Trend Is Music: Now PRC Based Music App Are Going Global

11/06/2019

Not only Apple and Spotify. Tencent dominates online music-streaming industry in China, but challenges loom on the horizon. Today Chinese music apps are going global. Africa’s maturing streaming market is the target 

 

While everybody is deeply discussing US-China trade war or China’s “Great Leap” in 5G and AI, there is a different industry totally overlooked by highbrow tech bros: entertainment, next Chinese internet tech hot trend is the music.

China loves music. Nearly 75% of its 1.4-billion-strong population listens to music regularly. In the late 1990s, the music industry, especially its distribution channel, was disrupted by a new set of technologies: digitalization, data compression, and the Internet. Digital music services, such as downloading or subscription streaming began to change consumer behavior and gain more market share than the traditional distribution channels, that is, physical CDs.

 

©123.rf. Nearly 75% of its 1.4-billion-strong population listens to music regularly

 

China also follows this global trend and has become a leading digital country in terms of music consumption. After increased piracy enforcement by the Chinese government, China has become a growing legitimate market, which shows great potential.  Once again , the difference between PRC and other markets is that Chinese music streaming services have arisen as part of large online companies engaged in search, e-commerce, and social messaging platforms.

 

Chinese digital music industry is nowadays dominated by one company: Tencent Music.

 

Tencent Music is China’s largest online music-streaming platform with over 800 million monthly active users. Its ecosystem merged the music apps QQ Music, Kugou, and Kuwo with the karaoke platform WeSing, which together control about 75% of China’s streaming music market. According to data, its daily active users spend over 70 minutes per day on the platform, which has access to over 20 million songs from over 200 domestic and international music labels. Unlike its smaller rivals, Tencent Music holds exclusive deals with many Western artists.

 

©123.rf. Chinese digital music industry is nowadays dominated by one company: Tencent Music.

 

As we stated, integration between music streaming services and social media is the secret behind Chinese streaming music industry. Concerning Tencent Music, 70% of its revenue comes from its social entertainment services, which include virtual gifts on WeSing and premium memberships. The social platform’s paying users grew 24% annually. The remaining 30% of its revenue came from its online music services, which include paid subscriptions to its ad-free platform, a la carte music sales, and ads for free listeners. The unit’s paid users rose 36% annually, and experts argue how Tencent Music is actually better than Spotify to making money.

 

But QQ Music is not walking alone in the digital streaming sector. Behind NetEase is trying challenging Pony Ma’s company.

 

NetEase Cloud Music, NetEase’s music streaming unit, asserts that it has over 600 million registered users, but it’s never disclosed the platform’s number of monthly active users . In 2017, research firm DCCI estimated that NetEase controlled about 16% of China’s music streaming market, compared to Tencent Music’s 76% share. And in January NetEase decides to challenge Tencent. The company announced a new strategic partnership with CUBE Entertainment, one of the biggest entertainment companies in South Korea. The deal grants NetEase Cloud Music access to CUBE’s entire music catalog, but still faces an uphill battle against the market leader.

 

NetEase. NetEase controlled about 16% of China’s music streaming market.

 

NetEase faces a lot of pressure to expand its ecosystem to stay relevant. NetEase generates most of its revenue from online games and e-commerce sector with its Kaola and Yanxuan platforms. The problem is that both of those businesses are overshadowed by larger rivals. Tencent is the biggest online game maker in China, and Alibaba is the leader in the highly competitive e-commerce market.

 

©Alizila. But Alibaba itself has its own horse in the digital music race: Xiami Music.

 

But Alibaba itself has its own horse in the digital music race: Xiami Music. Founded in 2006 and bought by Hangzhou-based giant in 2013, the company lags far behind in terms of user numbers, but the user stickiness of Xiami is actually the highest among the aforementioned platforms. This might owe to the fact that the app focuses mostly on niche quality music and Xiami itself likes to emphasize “profession” and “precision.” Chinese music industry is already gaining attention from foreign investors and it might be on the right track to going global. Next step Africa

 

Yet the battle for control of the African music space is heating up. Chinese music streaming platform Boomplay is making a play for the African market.

 

Is China break into the worldwide music game? Already done. Today Chinese hi-tech firms are ready to conquer Africa streaming music market. Global streaming giants Spotify and Apple have entered parts of Africa, but Chinese music firms may offer the stiffest competition.

As experts pointed out, given the size of the African market, the lack of activity from two of the two western major music companies is quite unclear. Spotify has given the continent the most dedicated attention, but its 2018 launch in South Africa is its only inroad south of the Sahara. Spotify has a presence in Algeria, Egypt, Morocco and Tunisia as part of a batch of Middle East and North Africa rollouts.

 

©Boomplay is a music streaming app, that like Spotify makes it possible to enjoy loads of music from the best artists in Africa.

 

Apple Music is still only available in the same small number of African countries as on day one. This is surprising. Africa has 1 billion people and many of them are young and tech-savvy, with consumer spending on the rise. Whereas Spotify and Apple have thus far mostly passed up the opportunity, China is filling the gapThis has come in the form of Boomplay, a music streaming and downloads service launched in 2015.

A joint venture between phone-maker Transsion and apps developer NetEase, Boomplay is 100-percent focused on Africa, and has built a user base of 46 million people across a handful of different markets. The company recently raised $20 million in funding as it prepares to launch in more countries and now Boomplay has become the largest streaming music service in Africa.

Chinese music industry is already gaining attention from foreign investors and it might be on the right track to going global. With the success of media companies like 88rising, spreading the word about Asian artists around the world, or individual achievements by the likes of Kris Wu (no matter how controversial), China, having almost tamed Hollywood, might soon break into the worldwide music game. To make it clear, it was TikTok that made Lil Nas X’s ‘Old town road’ a number one hit on the Billboard Hot 100 chart.

 

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