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As China wakes up to streaming, the beginning is already big and consolidated

china map 300wChina’s consumption of online music is changing, as piracy reduces and streaming gains a big foothold. That message was delivered to the NY:LON Connect conference in London last week, according to MusicAlly. That publication covered a session featuring Ed Peto of Berlin-based Outdustry.

Half-billion

Peto is a specialist in the Chinese music market, and he noted that there are 1.36-billion people in China, 731-million of whom use the internet. (695-million, or 48% of them, are mobile.) Forty-eight percent of the Chinese population (502-million people) is using online music. That last number contrasts interestingly with The Infinite Dial 2016 (produced by Edison Research and Triton Digital), where 57% of Americans over the age of 12 listened to online radio.

The phrases “online music” (used by Ed Peto) and “online radio” (used by Edison Research) can mean different things. So all these numbers are best viewed directionally, and it is interesting to note that a half-billion people listen to music online in China — as an absolute number, percentages aside, that half-billion is the entire U.S. population plus 62% more.

Eggs In One Basket

The direction of Chinese online music listening is honed by audience numbers in the major Chinese music services. The largest is QQ Music, which RAIN News has covered, at 39% of that half-billion audience market according to Ed Peto — that is 196-million users using the hybrid radio/download service, about twice as many as Spotify. The next two most-used services are Kugou (29%) and Kuwo (10%), and underlying those numbers is a conglomerate. QQ Music owns both Kugou and Kuwo, and besides that has captured an immense audience with its WeChat social platform. QQ Music itself is owned by Tencent Music Entertainment.

QQ Music’s Chinese dominance in music is enabled and reinforced by exclusive music licensing deals with two of the three major label groups, Sony Music and Warner Music. The screws really tighten, according to Ed Peto, in that QQ Music (plus subsidiaries Kugou and Kuwo) have sub-licensing rights to other Chinese services. Peto is quoted with this explanation: “We’re talking about the idea of someone like Warner licensing exclusively to Spotify, and then asking them to license on to Apple Music on their own terms.”

The Money Flow

While the Chinese streaming music catalogs are almost entirely licensed, according to Peto, the system around reporting and payments suffers from metadata insufficiencies. Also on the downside from in the perspective of rights-holders is what Ed Peto calls “one of the lowest per-stream rates in the world. Perhaps the lowest […] the transaction value is off the bottom of the scale.”

With all this, the scene is evidently one of eager and massive adoption. From a region rife with music piracy, Ed Peto now says, “People are going to pay for music, and they’re going to do it en masse.” He noted that about 15-million people have music subscriptions, which are priced at $1.50/month, and that is the starting point of future growth. And that is yet another interesting number: 15-million Chinese music subscribers against the 100-million global subscribers recently observed by MIDiA Research.


Brad Hill

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