Feature Stories

03.01.2018

Tencent Music: Let the Online Music Grow in a Sustainably Prosperous Way

Services which enable streaming and downloading music have been available for a long time in most parts of the world. In mainland China, Internet users’ demands for good music have been increasing and Tencent Music Entertainment Group (TME), the largest digital music and social company in mainland China, has made great efforts to provide consumer-oriented services and innovations to grow in this market. The group is looking to make fuller use of the possibilities of today’s technology to give users a whole new experience.

Dennis Hau, Vice President of Tencent Music Entertainment Group (Kellogg-HKUST EMBA graduate)

Parent company Tencent is a leading provider of Internet value added services in China, providing social platforms, such as the ubiquitous QQ (QQ Instant Messenger) and Weixin/WeChat, as well as the digital content services under the “Connection” Strategy.  TME was created in 2016 to mainly manage the company’s three online streaming sites, QQ Music, Kugou, and Kuwo, amongst which, QQ Music is now the largest online streaming site in mainland China. Together, these three are the most popular music streaming services in the mainland, with around 700 million active monthly users, according to TME Group Vice President Dennis Hau. In addition, Hau says, TME’s WeSing online karaoke app has a total of 460 million registered users.

The business model

“Artists have a hard time selling physical albums in the shops these days,” Hau explains. “People are changing the way they get their music, and they are becoming used to getting songs from the cloud.”

TME was the first music streaming business to introduce the subscription model to the mainland music market, Hau notes. “Our users are still listening to music online for free, and for some music we charge them for downloads to support the musician’s sustainable development. Though with many exclusively authorized songs, we have been licensing music to other businesses and music service platforms like Alibaba’s Xiami. We are devoted to grow the prosperous online music market, to provide more good music to Internet users, and at the same time reward the musicians for the sustainable development of the whole industry.“

This makes TME the main music service provider and content distributor in the mainland. “We are trying to create an ecosystem. For example, via QQ Music a user can listen to music, watch a music video, and then use our WeSing online karaoke app to sing and then share it with their friends,” Hau says.

One way to enable this ecosystem grow in a healthy and sustainable way, is to offer devoted fans the chance to buy digital albums, by their favorite artist, before the songs are available to the public. QQ Music invents the creation of digital albums, which has been a popular online music pattern in mainland China for years. Examples of recordings TME has published in this way, Hau cites the latest Taylor Swift album, and the new album by Taiwanese artist, Jay Chou. The latter sold a record-breaking one million albums in 36 hours, earning the musician 20 million yuan.

Hong Kong is not left out either with JOOX, the international version of QQ Music. “The business model in Hong Kong is that you can listen to songs on a shuffle basis unless you pay for a subscription,” says Hau.

To overcome the challenge of piracy

Hau says the scale of the piracy problem had been one feature that distinguished the mainland digital music market from other international markets in the past. But he believes this has been brought under control. “We have been working very closely with the government, and with music labels such as Universal, Sony, and Warner Music, as well as with more than 200 local labels, to fight piracy,” Hau says.

“These years online music users are getting more used to paying for good music to support the sustainable development of their favorite musicians and the overall music industry, after years of joint efforts we have made with the government and our partners. Getting people to subscribe for music was not an easy transition process. But QQ Music has been providing music services for over 12 years, so we know our users and they are getting used to the subscription-based model now, which is an advancement of the new music era catching up with the world,” Hau says.

Using big data

“We are using the data we collect about the listening behavior of our users to personalize the music service we offer them,” and the service can even recommend the musical choices of friends to listeners. “We are leveraging our big data by using a deep learning technology,” Hau says.

To give more opportunities for new artists to break into the business, “we are using digital technology to try to give fresh talent a break”, Hau says

“We have more than 4.6 million registered users who are quite actively performing on WeSing,” Hau points out. But, he adds, this is not just a platform for those who want to have some fun, and possibly share their efforts with their friends via social media. It’s also envisioned as a channel for would-be professional performers to showcase their skills and connect to fans.

“We are trying to use our big data and deep learning technology to identify good singers with a big fan base. Then we try to help them create their own digital album,” he says.

Earlier this year, a pair of WeSing artists published a digital album that made a million yuan in its first week. “This way of developing an artist is also something new and innovative in the music business,” he notes.