Due to the impact of the epidemic, offline concerts were shut down directly, but the music could not be stopped. Tencent Music launched an online concert TME Live ahead of schedule. The performances of May Day, Liu Ruoying, Eason Chan and other celebrities hit the moments. The company's share price has also risen all the way, with a total market capitalization of $26 billion, and the latest results released today also show that the company's revenue and net profit exceeded expectations.

First, the payment situation of users is good, and the revenue has increased significantly, but the MAU has declined.

In the second quarter, in addition to launching TME Live, Tencent Music upgraded the platform, enhanced the interactive functions with social attributes, created a "plop community", built a bridge between fans and idols, attracted many stars to settle in, and DAU penetration has increased steadily since its launch, further enhancing the stickiness of platform users. In the current quarter, the revenue of the platform reached 6.93 billion yuan, an increase of 17.5% over the same period last year, and the net profit was 939 million yuan, exceeding the market expectation of 883 million yuan.

1. The growth of online music services continues to accelerate, and social entertainment has a good momentum.

The platform's revenue mainly comes from online music services and social entertainment and other services: thanks to the growth of online music subscription revenue and the good performance of digital album sales, online music services continue to grow in the first quarter and continue to accelerate. Revenue reached 2.22 billion yuan, a year-on-year growth rate of 42.2%, up from 27.4% in the first quarter. With the decline of the epidemic, revenue from social entertainment and other services, which rely on services such as live rewards and singing members, increased by 8.6% year-on-year to 4.71 billion yuan.

What is worth noting is the payment situation of the platform. Through the continuous improvement of the recommendation algorithm and the advantage of copyrighted content, the paying users and payment rates of online music services have once again achieved record growth, with 47.1 million paying users, an increase of 51.9 percent over the same period last year, and a sharp increase in payment rates from 4.8 percent in the same period last year to 7.2 percent in the same period last year. Moreover, the platform's revenue from music subscriptions reached 1.31 billion yuan, an increase of 64.7 percent over the same period last year.

However, despite the increase in payment rates and revenue of the platform, Tencent Music's monthly active users data showed a decline.

2. The return to work and study has a short-term impact, and the platform MAU has declined.

Online music MAU for the quarter was 651 million, down from 657 million in the first quarter and 652 million in the same period last year. Social entertainment MAU declined even more rapidly, at 236 million in the quarter, down from 256 million in the first quarter and 239 million in the same period last year.

The company explained that it was mainly due to the short-term impact of the epidemic under control and going back to work and school. although the user MAU declined in this quarter, it only declined normally and could not be understood as a long-term trend. Therefore, the revenue of the platform has increased significantly in this quarter, but we still need to enhance our stickiness and improve the liquidity of the platform for a long time.

Tencent Music continues to enhance the function of the product, and the copyright competition is still fierce.

When it comes to user stickiness, copyright is the most critical. In the second quarter, Tencent Music strengthened cooperation with major music brands, adding all kinds of hot ensemble tracks and independent original music; at the same time, it launched TME Live online concerts to provide users with rich audio-visual entertainment and complement the online links of music distribution.

1. Record companies, popular variety shows, online Live, long audio, enhance the competitiveness of the audio field

In terms of copyright, on the day of the release of the results, Tencent Music reached a multi-year copyright licensing strategic cooperation with Universal Music, and as early as March, a consortium led by Tencent acquired a 10% stake in Universal Music. At present, the platform has signed an exclusive copyright agreement with the three major record companies in the world. in addition, in this cooperation with Universal, the two sides will also set up a joint venture music label to jointly tap independent musicians.

In terms of thermal ensemble, "Youth has you" and "Sister who braved the Wind and waves", more popular variety content has been introduced into the platform. In the first half of the year, more than 80% of the content rights of domestic music variety shows have been included in the platform music library, which has further won the favor of young users.

This year marks the third anniversary of Tencent musicians, during which the number of independent musicians on the platform has grown exponentially, and hot hits such as "meet him later" have been published. This quarter, the number of independent musicians on the platform and the number of original songs have achieved triple-digit year-on-year growth.

In terms of TME Live, May Day, Huazhai coriander, Eason Chan and other well-known artists held nine online performances and once brushed the screen in moments. Through the form of online Live, add barrage, virtual gifts and other functions, rebuild and strengthen the communication between fans and singers, while VIP, membership, free and other ticket system, reshape the traditional concert business model.

In addition to strengthening music content, the platform also released a long audio strategy in April to increase content such as radio dramas and talk shows. The number of licensed works on the platform increased nearly threefold this quarter compared with the same period last year, and MAU penetration increased to 9.4%, up from 4.6% last year. In the future, the company will also launch a paid subscription service to further enhance its liquidity.

Various measures are to strengthen the drainage ability, user stickiness and cash realization ability of the platform. although the platform is the first online music platform in China, the competition is still fierce.

2. The net suppresses the cloud and wants to go out in a circle, and short videos join the competition.

First of all, in the field of music platform, NetEase, Inc Yun Music also reached a strategic cooperation with Universal Music on the same day that the company renewed its contract with Universal Music. And in terms of product function and tonality, "net suppressing Cloud" has won many users' favor with its good community interaction experience, and recently, it is because the community culture is out of the circle and gets a lot of traffic. And after receiving US $700 million investment from BABA and Yunfeng Fund last year, Internet Yiyun has the strength to participate in the copyright competition.

In addition, in addition to suppressing the cloud on the Internet, the popularity of short videos such as Douyin is also in competition with the platform to some extent, which also has social networking, content publishing and other functions. Douyin also needs to purchase relevant music rights.

Therefore, in this highly competitive market environment, the management also chose to strengthen the investment in independent original music and cooperate with other platforms such as Bilibili Inc. to consolidate their position.

Conclusion

In the long run, with the formation of users' payment habits, it is still necessary to look at the characteristic content and humanized functions on the platform in order to gain the favor of users.

At present, the online music market has formed a situation in which Tencent and NetEase, Inc compete for hegemony. Although the copyright war is hot, both of them also recognize that they still need to make efforts on original music, and then rely on the advantages of platform distribution to establish their own position in the Chinese music market.