Listen: What Can We Learn From China's Music Business?
"We've talked a lot on this show about how the recording industry has changed due to streaming platforms like Spotify and apple music. But today we're going to be discussing a couple of streaming platforms. You probably never heard of ten cent music and net ease both are Chinese platforms which cater mostly to domestic artists. But unlike Spotify both have managed to turn a profit even in a country, where music piracy has been rampant for years to find out more. I spoke with Sherry who she's a freelance music and technology writer for outlets like billboard and Forbes, and when I reach her by Skype today, we began with what makes the Chinese music industry different. I think one really interesting aspect of the Chinese industry that the French sheets from what's going on in most western markets. Maybe some of the markets in Asia's Wallace that there's really a holistic view of. Celebrities enough celebrity culture in China. Meaning that if you're one of the biggest singers or music celebrities in China, you're also very likely a really big actor are also very likely pursuing a lot of deals with fashion brands and another smaller comedies, and if I were go to China and listen to music, what would I see that's different from the United States. Is there broadcast radio terrestrial radio record stores? How is the market fundamentally different from what people here might be used to? I do think broadcast and TV still play such an important role. Like singing, contests rapping, contests is this one show called wrap of China. Pizza told you so a lot of people treat that as a gateway from the artist's perspective into the major corporate hip hop world in China in terms of the physical market. I actually don't think CDs and bottle records are really increasing in China doll for showed the dominant mode of music consumption is still streaming and most of that is happening for free. But one thing that is also different is that if you look at the if you look at a given streaming service in China on how people consume music, I think it is much more multi media by default within a singular platform. So if you think about the the average US extreme consumer you might discover a song on Spotify, a non you'd have to go to YouTube to wash the music video whereas on some of the biggest services in China. Let q music you have audio video more fully integrated. And it's awesome. Much for social experience that you can comment on videos and songs and share them with your friends. A lot more easily through the same platform, you reported the China is recorded music industry is growing really quickly, but it's still relatively small, and if you look at the per capita spending, it's only like twenty cents per person per year is that because so much of this. Dreaming is free is that because there's so much piracy a combination of those factors if it were totally legitimate and people were paying for what they're listening to how big could possibly be. I'm not sure if any official numbers published on this fed, if you ask anyone who is active in the Chinese industry in the early two thousands like around two thousand five they would say that consumption digital music exception with essentially ninety nine percent pirated any would have situations where these platforms in companies that are quite big are actually just sourcing their music from or call the cloud locker. Files so essentially like MP three files that were stored in the cloud somewhere downloaded onto their platform, regardless of having any kind of fishing license from the major labels, and it's only within the last night even five years. I would say just like two three years that major labels are now pursuing official licenses and in many cases, exclusive licenses with Alexa, tencent music in net. Use cloud music as well, which are the two biggest platforms in the country. And so I think now that we have that infrastructure in place. I think the industry will grow more quickly. The other thing that you point out is that they're streaming platforms like Netease and ten cent. They're actually signing artists way. A record label would is that part of the trend there that a lot of artists in China are bypassing what we would consider to be the traditional model where you signed to a label label releases your music, and then a streaming service picks it up. Yes. Definitely. And this is so interesting because not just in China and. India you see one of the biggest streaming services in India called seven also running their own essentially, artists management and music marketing company already in addition to a streaming platform distribution platform underspin mostly positive reaction. And I think that the the same is happening in China yet the net use cloud music, assigning direct deals, both with local end with international artists. I think there's this realization that these platforms. Not only have a lot more reach just by nature. But also, they have the digital marketing expertise and the ability to move really quickly and dynamically that traditional labels might not have. I'd like you to explain the idea of tipping, and why that's important to streaming music and China, and whether or not western music companies could emulate that behavior. Yes, definitely. So let's take tencent music as an example. According to their most recent financial report, I think the filing that they put out a head of their appeal launch US December. They revealed that they made over seventy percent of their revenue not from audio streaming but from tipping as low as maybe even a couple of cents so didn't have to be large donations, but the sending money to creator. So they wanted to support for us to they wanted to support. And you see this kind of tipping micro payment dynamic, not just the livestream environment. But even in a downloading environment. I think part of it is distinct China, but I think what other western is extreme platforms. Can learn is that there's a much wider diversity of people's willingness to pay for music into support artists than just the nine ninety nine a month that I feel like a a lot of us are being funneled into"