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2020 China Country Profile

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2020 China Country Profile 1 China Music Industry Development Report COUNTRY China: statistics PROFILE MARKET PROFILE claiming that China’s digital music business 13.08.20 ❱China increased by 5.5% from 2017 to 2018 while the number of digital music users exceeded Population... 1.4bn 550m, a jump of 5.1% year-on-year. GDP (purchasing power parity)... $25.36tn GDP per capita (PPP)... $18,200 What, exactly, these digital music users are doing is still not entirely clear. Streaming, as 904m Internet users... you might imagine, dominates digital music Broadband connections... 407.39m consumption in China. The divide, however, Broadband - subscriptions per 100 inhabitants... 29 between ad-supported and paid users is opaque at best. The IFPI, for example, reports Mobile phone subscriptions... 1.65bn that revenue from ad-supported streaming Smartphone users... 781.7m is greater than that of subscription in China Sources: CIA World Factbook/South China Morning Post/Statista – a claim that was met with some surprise by some local Music Ally sources. “For most of the platforms, subscription income is still the largest contributor in the digital music market,” says a representative of NetEase A lack of reliable figures makes China a Cloud Music. difficult music market to understand. Even so, Simon Robson, president, Asia Region, its digital potential is vast. Warner Music, says that the ad-supported China basically lives model isn’t really set up to make money in China but is instead designed to drive traffic CHINA’S GROWING IMPORTANCE as a service NetEase Cloud Music, warned inside WeChat now... to the service. “Within China, the GDP is so digital music market is perhaps only matched that IFPI numbers for China were largely we fix problems for the different from city to city that it becomes by a fundamental lack of understanding based on advances; that means they may difficult to set standard pricing per month that exists about the country. That’s not not necessarily reflect the music industry’s releases on WeChat, for a product,” he says. “So despite the ad- necessarily the music industry’s fault: actual performance there. Current IFPI too. Of course we supported model not making money at the it’s extremely difficult to get your head numbers for China, according to Music Ally moment, it will continue to be used to drive around a country of 1.4bn people whose sources, suggest that the country’s recorded use email, but if you traffic. I’m hopeful that we’ll start to see political structure is very different to what music industry grew 16% in 2019 and it is want to do business in people in China migrate to paid subscription many people working in the traditional the seventh biggest market globally with a in the near future.” music industry power bases are familiar market size of $590.9m. China, you have to use with. Indeed, China’s surge in political WeChat..... He explains that there are currently 60m and economic power over the last two A recent report by the Chinese government, paid subscribers in China – a number that is decades has left many global industries however, put the value of China’s digital the second highest globally overall but still discombobulated. music industry in 2018 at RMB 61.24bn, represents under 5% of the country’s total or around $8.76bn, a vast difference from Xiaoman Zou, population. “That number has more than It doesn’t help either that statistics about the IFPI figures, even if we allow that the doubled in the last two years, which is a Kanjian Music China’s recorded music industry are Chinese report includes areas like mobile really positive sign and shows that the public report generally seen as unreliable. In his 2019 karaoke that the IFPI does not track. Both are starting to embrace paid subscription Midem keynote speech, Mathew Daniel, reports do, at least, agree that China’s digital services,” he adds. VP of international at Chinese streaming music business is growing, with the 2019 the 2 COUNTRY PROFILE MARKET PROFILE 13.08.20 ❱China continued... Source: 2019 China Music Industry Development Report gamification techniques,” he says. “Tencent WeChat – which is vast in China and Value of China’s digital is integrated with [hugely popular messaging lesser known in the West – is one of many music industry app] WeChat. So if you share on WeChat that platforms that foreign music industries will (in billion RMB) Year-on-year growth (%) you have purchased 100 copies of, let’s say, have to get to grips with if they want to make the new Taylor Swift album, then you can progress in China. 700 14% gift it to 99 people. They have leaderboards 11.5% – with the most dedicated fans showing off Xiaoman Zou, co-founder of Kanjian 600 12% on them. It is a very popular thing in China, a Music, told Music Ally’s NY:LON Connect 9.6% very interesting way of bragging about how conference in January 2020, “China basically 500 10% much money you have and showing that lives inside WeChat now. We talk to the 400 6.3% 8% you support the artist for real.” (Taylor Swift, DSPs on WeChat, we fix problems for the incidentally, is a pertinent example: the Shuzi releases on WeChat, too. Of course we 300 6% Zhuanji release of her most recent album, use email, but if you want to do business in 5.5% Folklore, reportedly made $1.2m in three China, you have to use WeChat.” 200 4% days on NetEase Cloud Music after its release 100 2% in July 2020.) Sina Weibo – often described as “China’s 1.4% Twitter” – is another key platform as well as 0 0 Kanjian international business specialist Douyin/TikTok and Tencent QQ. Then there 2014 2015 2016 2017 2018 Yutong Situ gives an example of how this is NetEase Music’s own Fan Connect, which gamification can work. “For the digital album allows fans to comment publicly on albums NetEase itself was reported to have around If you needed further proof of China’s New World by Chenyu Hua 数数数, a local and tracks. US singer Lauv, for example, 600m registered (rather than active) users at singularity in the global music market, top-level pop singer, fans who purchased recently took part in a fan Q&A on Fan the end of 2018, making it the main rival to the NetEase representative mentions the album enter a draw to win autographed Connect. Tencent Music’s three streaming services in the importance of Shuzi Zhuanji (数数数数). merchandise. Another gamification function China – Kugou Music, QQ Music and Kuwo This roughly translates as “digital albums”, is that, since on NetEase Music [as on However, Mathew Daniel told Midem that Music. In May 2020, Tencent said that it had although this doesn’t tell the full story. Shuzi Tencent Music Entertainment’s DSPs] many international artists don’t concentrate 657m monthly active users across its three Zhuanji are albums on digital music platforms customers are allowed and encouraged to as much as they should on Chinese social services, of which 42.7m were paying, up that even subscribers have to pay extra to buy multiple digital copies [plus] there is a media. “International artists also need to put 50.4% year-on-year. access, either to stream or to download. ‘unlocking offline promotion’ section.” in the effort to make their music relevant,” According to one source, releasing an album he said. “There’s no Facebook, no Instagram, Announcing the results, Tencent also like this is something of a badge of pride Situ adds, “If the total digital sales hit no Twitter. One of the things I always ask revealed strong growth in subscription for artists and fans, serving as proof of their 270k digital copies, NetEase will run labels is, ‘Would you do a release without revenues, which went from RMB 710m popularity. advertisements on the back of all of China Facebook, Instagram or Twitter?’ And they ($101.5m) in the first quarter of 2019 to Airlines’ flight tickets. If the total sales hit say, ‘Never!’ And I say, ‘That’s exactly what RMB 1.21bn ($ 173.1m) in Q1 2020. This is The albums also work as a form of bragging 500k, NetEase will make it to big LED screen you do in China!’” an encouraging result, although it is worth rights for fans, according to Tinko Georgiev, in Beijing, Shanghai and Wuhan. If the sales bearing in mind that two-thirds of Tencent VP of international business for industry achieve 700k, the ad for the album will be Georgiev says, “There is a fundamental report Music’s revenues in the quarter still came services company Kanjian Music. “The on Beijing Metro for one week. If it goes to a difference in the way these artists build their from ‘social entertainment’ (mostly karaoke idea behind this is that you could buy million, the video teaser will displayed for a careers in mainland China and they try to and live video). multiple copies of an album and they have week in Times Square in New York.” apply it outside. It doesn’t work. And it is the the 3 COUNTRY PROFILE MARKET PROFILE 13.08.20 ❱China continued... same the other way around. Western acts new acts who have made more of an effort try to apply the same techniques they use in the market, such as Latvian producer Tobu, outside to China. And it doesn’t work again.” who works with Kanjian directly. It is perhaps for this reason that Western acts “Artists who are making money from aren’t making the same impact in China that their success in the West and have not they are in many other markets.
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