The Future Of Online Music Market: Copyright War Or Innovation War?

The market structure of China's streaming media platform has not changed since 2017. QQ music, cool dog music and cool music platform, Tencent Music Entertainment Group (hereinafter referred to as "Tencent music"), has become a big Mac in user volume, followed by NetEase cloud music and Ali's shrimp music.

Corresponding to the scale of users is the difference between the three platforms in terms of music copyright. At present, Tencent music is the only one with the largest number of core music rights, which also makes NetEase cloud music and shrimp music face the dilemma of "copyright shortage" for a long time.

For the streaming media music platform, copyright determines the quantity of music, and the quantity of music directly affects the satisfaction of users on the platform. If the user wants to listen to the song but can not hear, it is very difficult for the platform to retain the user. Therefore, in the current situation, NetEase cloud music and shrimp music are also trying to add copyright.

Since 2020, the two parties have been acting repeatedly in copyright cooperation: in March 12th, Ali announced the cooperation with Taihe Music Group in the content of digital music. Ali's shrimp music, Tmall spirit and short music innovation products, whale singing and singing duck, will be authorized by Taihe music artists' songs.

In March 13th, NetEase cloud music cooperated with Japanese Studio Ghibli to achieve copyright licensing, including "dragon cat", "go all the way", "Hal's mobile Castle", "wave girl on the cliff" and so on. Prior to this, NetEase cloud music has won the music copyright of "singer", "Sheng Lin Jing 3", "Hi singing turn", "our band" and other variety shows.

In an interview with the twenty-first Century economic report, Yin Guo, director of the music content cooperation center of Alibaba group innovation group, pointed out that it is obviously unrealistic to let shrimp behave like a Tencent music. Therefore, we are also trying to find some new opportunities in the music field based on the characteristics of shrimp.

Questioned copyright exclusive

In February 27th, NetEase released its fourth quarter and full year earnings for 2019. Financial reports said that with the development of paid members, digital albums, live broadcast and other sectors, the income of NetEase cloud music increased rapidly.

In the subsequent earnings call conference, Ding Lei, chairman and chief executive of NetEase, said that the exclusive sales mode of the three major international record companies in China made the companies that need to purchase copyright, including NetEase cloud music, paid two to three times more cost than the reasonable price.

Ding Lei said frankly, "this is unfair and unreasonable. We hope that music products will be able to return to a reasonable and rational copyright fee in the future. These record companies should not continue to authorize China in an exclusive form".

In fact, this is not the exclusive authorization mode that Ding Lei questioned the first time at the earnings conference. In the NetEase's first quarter earnings call conference in 2019, Ding Lei also said, "some companies control the market, and the rental cost of copyright is raised very high every year, which has produced some negative effects on the development of online music in China."

Although Ding Lei did not name any company mentioned above, the industry knows that he is talking about Tencent music. Prior to this, Tencent music won the exclusive copyright of China's three largest international record companies, such as universal, SONY and Warner.

2015 is the watershed of Chinese music copyright. In those days, the State Copyright Bureau issued the notice on ordering the online music service providers to stop the unauthorized dissemination of music works. After the publication of the most stringent copyright order, copyright began to become the core of competition in the online music market.

According to the statistics of IFPI (international record industry association), the piracy rate of Chinese music market was 99% in 2012, and in 2018, the rate of Chinese music market had reached 96%.

In the process of constant editing of music market, Tencent music also began to seek exclusive cooperation in music copyright with abundant resources. In 2014, he got the copyright of Warner Music, received the copyright of SONY music in 2016, and got the copyright of Universal Music in 2017. At this point, Tencent music has built up an insurmountable copyright barrier for its competitors.

The fierce competition for copyright by streaming music platform also makes copyright prices rise. According to media reports, in 2017, the copyright fees of Universal Music rose under the competition of multiple platforms, rising from the initial $34 million to over $400 million.

According to AI's consulting data, in 2018, the income of copyright owners in China's music copyright market was 18 billion 800 million yuan, and the average annual compound growth rate reached 2013-2018 in 2013-2018 years. It is expected to reach 32 billion 100 million yuan in 2022.

For Tencent music and record companies, exclusive copyright seems to be a win-win cooperation: record companies can get a lot of licensing fees, while Tencent music can get more users with exclusive music.

A music personage told reporters that in the past few years, NetEase's cloud music and shrimp music have also signed some exclusive music rights. In his view, this is more like the "counterattack" of NetEase's cloud music and shrimp music. "Others have exclusive resources, but you do not, that means others have songs, you can not hear, and you have songs that others can listen to, why do the users want to come to you?"

From the perspective of the whole industry, whether "exclusive" is a cooperative mode worth encouraging is still a controversial topic. Insiders believe that copyright is also a part of business competition, and it is beyond reproach that enterprises are willing to exchange high cost for exclusive resources. But there are also objections that the exclusive mode has infringed the normal development of the whole music market.

On this issue, shrimp music and NetEase cloud music maintain a consistent position. Yin Guo told the twenty-first Century economic report that the development of Chinese music copyright is in a special period. It does not represent the future, nor will it be a long-term trend.

Shrimp and music

As for the time when this special period is over, it believes that it does not have an accurate node, but depends on the choice of various participants in the industry. "For example, the cooperation between shrimp music and Taihe music is that we choose not to continue to get entangled in the past pattern, but choose to innovate and find some new business opportunities."

It is reported that although the two sides are not exclusive cooperation this time, it has important significance for shrimp music and innovative business group of Alibaba. On the one hand, the long shrimps music will take the lead in the new round of copyright acquisition cycle. On the other hand, this cooperation has gone beyond the scope of streaming music platform, and many of its innovative products are involved.

Yin Guo said that before Ali and Tai He music had been content cooperation, but mainly focused on shrimp music, in the past year, Ali's Tmall spirit, singing duck, whale and other innovative products have made many breakthroughs, so there is a further cooperation between the two sides.

According to the reporter, singing duck is a music product that was hatched by Ali last May. The main function of playing and singing is to enable users to interpret songs according to their own understanding. Since the on-line, MAU has been maintaining an increase of over 180% per month. Whale Ming is a song product that is mainly targeted at voice barrage, mainly for students and white-collar workers.

In the past few years, Tencent music has not been easy to rest. Especially the rise of short video has brought a great impact on the business of Tencent music. It also provides a strategic reference for NetEase's cloud music and shrimp music, that is, bypassing those big copyright rights and breaking through some innovation in subdivision or mode.

If only from the perspective of music players, the copyright advantage of Tencent music can not be shaken in the short term. It is difficult for other platforms to enhance market share through copyright competition. But from the perspective of music content industry, the market still has much room for growth.

Yin Guo told the twenty-first Century economic report, "shrimp music is no longer the user scale as the primary consideration. Now we are more interested in Ali how to match these products on the music track to meet the needs of users in different dimensions and different scenarios". For example, shrimp music has been linked with whales to achieve product level. Users can jump to whale App to release voice barrage and form "cloud chorus" with other people while listening to songs of shrimp music.

NetEase cloud music is also acting. Last year, NetEase cloud music online cloud village community, began to force the social sector in the music field. Recently, according to the twenty-first Century economic report, NetEase cloud music is conducting an internal test of a song called App.

CNNIC data show that as of June 2019, China's online music users reached 608 million, accounting for over 70% of the total Internet users. Although user dividends have peaked, the market prospect of music consumption is still considerable.

Insiders told reporters that some of the copyright agreements between Tencent music and the three major labels will expire this year. Whether this will become a turning point in the music industry is not yet known, but Yin Guo told the twenty-first Century economic report, "if their agreement expires and the record company decides not to continue to sign the exclusive, we will definitely contact for the first time."

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