This article is edited by CSC FINANCIAL CO.,LTD: after the copyright era of digital music, Tencent Music forged the kingdom of pan-entertainment music.

At 18:00 on the evening of July 8, Tencent issued a notice on the Hong Kong Stock Exchange, proposing to spin off the online music business and allow Tencent Music Group to list independently in the United States. The Stock Exchange of Hong Kong has confirmed that Tencent can carry out the proposed spin-off. In other words, Tencent Music is about to be listed in the United States, and at present, the market values Tencent Music at about $30 billion.

Industry cycle:Digital music enters the post-copyright era

Digital music has entered the post-copyright era, the focus of future development is to improve the penetration of paying users and expand diversified profit channels.The digital music market has entered a mature period since 2016. in 2016, QQ merged with China Music Group to form Tencent Music Group, the digital music market has formed a pattern of "one super and many strong", the business model has gradually matured, and the platform has realized the mutual authorization of copyright. Strengthening the production of upstream content and expanding diversified profit channels have become the focus of development.

Industry scale: the digital music market reached 18 billion yuan in 2017

Since 2013, digital music platforms have begun to explore commercial realization.In 2017, the size of the digital music market reached 18 billion yuan, of which online music accounted for 75%, accounting for 13.5 billion yuan. In April 2018, the number of online music users exceeded 610 million.The revenue of online music platform includes user payment income, copyright sublicense, advertising revenue, music live broadcast, offline and derivative, etc., but most platforms account for more than 50% of advertising revenue, and some online music platforms account for 90% of advertising revenue.

Market pattern: Tencent Music dominates the world

In terms of competition, Tencent Music's three major platforms are in the leading position. According to the 2017 Global Music report released by the International Federation of the Phonographic Industry, Tencent Music accounts for more than 70 per cent of the domestic streaming market.On MAU, Tencent Music's KuGou Music, QQ Music and Kuwi Music are in the first echelon. In May 2018, the monthly active users of Kugou Music, QQ Music and Kuwi Music were 228 million, 195 million and 107 million respectively, followed by NetEase, Inc Yun Music, Migu Music and Xiami Music with 68 million, 18 million and 13 million monthly active users respectively.

Future trend: obvious trend of copyright cooperationAchieve differentiated competition by supporting original music

• The trend of copyright cooperation is obvious.In October 2017, the National copyright Administration required several major online music platforms to follow the principle of fairness and reasonableness, market law and international practice, not to bid up prices or vicious bidding, and to avoid purchasing exclusive copyright.Then Tencent Music, NetEyun Music and BABA Music were sublicensed one after another.There are differences in the quantity and value of copyright among different platforms, among which Tencent's copyright quantity and heavyweight are larger than those of the other two platforms. Tencent Music is expected to receive considerable sub-licensing income in the licensing cooperation.

• The copyright of high-quality content drives most consumption, and the value of the remaining 1% copyright cannot be ignored.According to Yien data, the number of copyright of QQ Music alone reached 15 million in 2016, so the remaining 1 per cent of unlicensed music rights are more than 150000.According to audio and video streaming, it will make the head effect.Sales of the first 5000 singles account for about 15 per cent of total sales, while the first 500 singles account for 40 per cent, and the remaining 1 per cent of music rights are significant for the platform.Exclusive copyright is Tencent Music's biggest moat. At present, the proportion of music rights granted to each other on various major platforms has reached 99%, but Tencent Music still has an advantage in some popular songs.

• In the post-copyright era, the platform achieves differentiated competition by supporting original music, and expands the upstream and downstream business industry chain to achieve diversified profits.Tencent, BABA, NetEase, Inc, Baidu, Inc. and other major music platforms have launched original musician programs to advance the upper reaches of the industrial chain. Expand the original copyright, at the same time by training artists to use fan brokers to achieve offline performances, derivatives and other business development, to achieve platform differentiation competition, diversified revenue.

Tencent Music's competitive advantage

Tencent Music Entertainment Group (TencentMusicEntertainmentGroup, TME) is the leader in the field of online music services in China.Integrated by China Music Group and QQ Music, it includes three mainstream music service providers, including QQ Music, KuGou Music and Kuwo Music, as well as entertainment platforms such as National singing, 5sing and KuGou Live.

QQ Music: omni-directional music entertainment platform.QQ Music has the characteristics of large scale, a wide range of products and a wide range of users, providing services in many areas, such as genuine music library, music social networking, smart cloud terminals, fan community, and so on. Green Diamond members also provide paying users with more comprehensive music privileges, including digital album sales, live concerts, O2O performances, game value-added, and so on.

KuGou music: create "digital music + live broadcast" music ecology.Cool Dog Music launched Star Live in 2012, becoming the first vertical music live platform. The pan-entertainment live broadcast industry develops rapidly, the user stickiness is high, and the development space of music live broadcast is considerable. KuGou Live fosters original musicians, and relies on the user base and publicity advantages of KuGou Music to release digital albums to improve music cashing efficiency.

Cool my music: the old digital music platform, focusing on the original music.Kuwi Music is an early established music platform, which has developed so far to provide users with music copyright resources in various fields, such as variety, film and television, originality, etc., and the user activity is in the forefront of the industry.

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