Internet giants compete to become digital music tycoons

There is a joke in the Internet field: No one expected that the one that killed the radio station was actually the taxi app. In fact, mobile Internet channels are indeed replacing many content channels that were very strong in the past.

In the music industry, with the decline of traditional radio, television and operator channels, record companies suddenly found that Internet companies, which they used to denounce as "pirates", had become the "big legs" they had to rely on.

According to the data report released by CNNIC, the number of domestic online music users in 2014 was 478 million, of which 366 million were mobile online music users.

The massive number of mobile music users has become the object of competition among Internet giants, and the competition in online music has reached a new height this year.

1. Giant companies have begun to pay attention to Internet music, and each has its own unique advantages.

Since 2014, major Internet companies have begun to invest in the development of music apps.

Tencent has been continuously acquiring exclusive copyrights from record companies, including recent large-scale exclusive acquisitions of Warner Music and YG, and even included the development of QQ Music in its 2014 year-end financial report. In an interview with [Penguin Ecology], QQ Music said that it already has 70 million daily active users.

In March, Alibaba announced the merger of Tiantian Dongting and Xiami Music, and the transfer of the music business to the Digital Entertainment Business Group headed by Liu Chunning.

Alibaba Music's investment is even greater. It is reported that Alibaba spent a total of 300 million yuan in its exclusive cooperation with "The Voice of China", and was called a "real tycoon" in the industry.

In addition, Kugou and Kuwo, which have been merged for more than half a year, have also attracted attention again recently. Ocean Music, which merged Kugou and Kuwo, is considered to be the strongest in the industry in terms of content output capabilities. Interestingly, according to industry insiders, Tencent is one of the shareholders of Ocean Music.

In addition to the above players, Baidu Music, NetEase Cloud Music, Duomi Music, etc. are also considered to have considerable strength. Overall, the competition in the online music market is quite fierce.

2. Digital copyrights of online music are being snatched up, and prices are constantly rising.

Relying on the power of capital, Internet companies have purchased a large number of exclusive copyrights, which has once again pushed up the selling price of digital copyrights.

Xian Jiang, a senior practitioner in the music industry, said that the industry generally reflects that digital music copyrights are too expensive and are constantly rising. However, it is still relatively cost-effective to buy them now. Overall, digital music copyrights will only become more and more expensive.

It is understood that in 2011, when Baidu Music signed a cooperation agreement with the three major record companies (Universal Music, Warner Music, and Sony Music), the total price was only 30 million yuan, but Xiami recently spent about 20 million yuan to purchase the copyright of Taiwan record company "Huayan". And QQ Music's purchase of Warner's full set of digital copyrights and distribution rights cost at least tens of millions of yuan.

Compared with the copyrights of classic music from record companies, the copyrights of popular music nowadays are more expensive. Statistics from QQ Music show that the top 100 songs account for more than 30% of the total playback volume. This is why The Voice of China was able to bid 300 million yuan to Xiami.

3. Record companies and Internet giants: clinging to others and self-release.

The digital copyrights in the hands of record companies are considered to be classic "stock", that is, copyright content whose total amount will not increase significantly. However, the revenue-generating capacity of record companies has been greatly weakened in recent years, and they currently mainly rely on high annual licensing fees from Internet companies to make profits. Internet companies have replaced operators and become the direct breadwinners of record companies and artists.

Taking the "Music Festival" held by Tencent in the past two years as an example, not only did all the first-line artists from major record companies attend the event, but they also charged almost no appearance fees. Including their entourage, some even paid to participate in the event.

As record companies’ revenue-generating capabilities weaken, Internet companies are moving towards original music creation. Alibaba’s Xiami Music is famous for having a large number of independent musicians.

Some practitioners pointed out that on the one hand, the licensing prices of record companies are getting higher and higher, and no matter how rich the Internet companies are, they cannot buy endlessly; on the other hand, the revenue-generating ability of record companies is weakening. Therefore, it is an inevitable trend for Internet platforms to move towards the original content end.

It is understood that Xiami Music, QQ Music, NetEase Cloud Music, etc. all have their own original musician plans. In the long run, Internet platforms are partially replacing the original role of record companies.

4. After obtaining the copyright of the content, can we follow the example of online videos to combat piracy?

The person in charge of QQ Music said that the current environment is rampant piracy. Under such circumstances, it is not reliable to make money by relying on music products. At this stage, creating a good industrial environment is more important than building a business model.

Some practitioners also pointed out that Internet channels are acquiring or creating exclusive copyrights, and their practices can be likened to ammunition storage. In the future, there will definitely be a copyright war, the severity of which can be compared to the online video field. Pirated music apps will also lose their living space overnight.

However, some practitioners are not optimistic about this. Xian Jiang, a senior practitioner in the music industry, said that the crackdown on piracy by major Internet companies is more like a phased behavior, and currently almost all music apps cannot 100% eliminate piracy. In addition, the spread of pirated music is much easier than that of videos. If you want to fundamentally eliminate piracy, you have to place more hope on the national policy level.

5. Music App is transforming from a tool to a platform, and it is too early to talk about the business model.

Although many music platforms have stated that they are not in a hurry to make money, the outside world is still very curious: How do you make money?

Previously, in an interview with the media, Kuwo Music CEO Lei Ming said that Kuwo’s three monetization models are: one is advertising; two is charging; and three is peripheral services.

Ross, general manager of Tencent Digital Music, believes that with rampant piracy, products must rely more on traffic monetization; in terms of value-added services, the traditional membership model is not easy to follow and it is necessary to create consumption scenarios for users.

Ross gave an example, a major consumption scenario for QQ Music's Green Diamonds is the background music of QQ Space. In the future, QQ Music hopes to replicate this business model on WeChat and Mobile QQ.

At the same time, music platforms must continue to expand their ecosystems. Ross gave an example: QQ Music is evolving to more platforms, including the smart home and car markets. It is understood that QQ Music has reached a cooperation with Xiaomi, and the music downloaded by QQ Music will be able to be directly stored on Xiaomi routers, realizing free data playback.

In general, music platforms on mobile devices are no longer just tools, but an ecosystem that extends not only to content production, but also to more hardware and consumption scenarios. For products with hundreds of millions of highly active consumer groups, their commercial potential is beyond doubt.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.