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Tencent builds music streaming empire

News, 27 September 2016

SHANGHAI: Brands looking to scale in China should prioritise scale over price in the beginning, says a senior executive at QQ Music, Tencent's music streaming arm.

In just a few years, Tencent has built QQ Music into the country's largest music-streaming platform by promising to tackle rampant music piracy in partnership with music labels and offering a unique incentive-based pricing strategy.

But changing the Chinese consumer's perception of the value of music has not been easy, Andy Ng told the All That Matters conference in Singapore. (For more, including details of QQ's approach to incentivising users, read Warc's exclusive report: How fighting piracy built Tencent's music streaming empire, QQ Music, in China.)

"China has been a 'free' music market for over 20 years," he observed. "It took a lot of time to educate the Chinese users to think that music has a value, content has a value."

A crackdown by Chinese authorities on online piracy finally gave QQ Music the opportunity to capture Chinese consumers at scale.

QQ Music's listenership now includes some ten million users who have signed up for its paid music services – around 55% of the total market in China. Premium users who fork out a top-tier subscription of 15 RMB (US$2.25) also have access to giveaways such as concert tickets and games bundled with their subscriptions.

It's a hugely successful concept that has attracted some of the world's biggest music labels to QQ Music.

"This is a really unique concept. In the West we put barriers in place, like ads. Whereas in China you don't have those barriers on the free tier, but you're putting barriers on the content," said Gavin Parry, VP/Digital and Business Development for Sony Music in Asia.

While the subscription price is much lower than other services, the size of the China market makes it lucrative. Ng argued that music labels looking to target China should put volume over output and keep subscription prices lower.

"We have to give an output that is really low for users to try out the services, otherwise they are not willing to pay… We are hoping that in the future, when the market is really changing to a better situation, then we can start to increase the output. That is our strategy," Ng said.

Data sourced from Warc