These two days your circle of friends must be full of pictures similar to the picture below, except for different colors.

This is the new issue of screen-brushing marketing launched by the well-known sound (funeral) music (culture) community "net suppressing Cloud"-- Color Acoustics Research Laboratory. The mini-test, which determines personality color based on the perception of music, dominated moments and Weibo Corp on the same day, and a large number of participants led the well-known science community fruit shell network to quickly end popular science and say, "this is not scientific."

However, this did not stop it from brushing the screen, and even the fruit shell comment area was occupied by netizens from NetEase, Inc Yun Music, which ushered in another language contest and homophonic revelry.

NetEyun Music has always been famous for its comment area.

The nickname "net suppressing cloud" is also attributed to the comment area, where the average person is depressed, so it is named "net suppressing cloud". This nickname was even selected by Youth Digest as one of the "top ten online buzzwords of 2020".

On the day of revelry in moments and the successful output of NetEase, Inc Yun brand value again, NetEase, Inc Yun Music submitted a prospectus to the Hong Kong Stock Exchange and will soon land in the capital market.

Following the independent listing of Youdao, Inc, NetEase, Inc Yun Music started the listing process again as a key layout under NetEase, Inc. Will this lead to another orgy in the capital markets?

Maybe Ding Lei will tell us the answer.

The first generation of Internet people who became the richest man at the age of 32

In China, there are only three people who become the richest people in their 30s: Chen Tianqiao, Huang Guangyu and Ding Lei. The ages at which they topped the wealth list were Chen Tianqiao 31, Huang Guangyu 35 and Ding Lei 32.

And Ding Lei, together with Wang Zhidong and Zhang Chaoyang, are known as the "three swordsmen of the Internet". They are well-known figures in the Internet and capital circles.

He is well-deserved the first batch of Internet entrepreneurs to test the waters. Born in 1971 in Ningbo, Zhejiang Province, and graduated from University of Electronic Science and Technology in 1993, Ding Lei's resume in the first 22 years can only be regarded as an outstanding young student.

But the Internet gave him a chance to get rich.

In 1997, Ding Lei founded his own company after leaving the database company Sybase, which had been in the database for two years. The domain name maverick uses the digital combination of 163s, which has become an important symbol to influence the next generation of Internet people.

At that time, Ding Lei was famous as NetEase, Inc in the Internet circle for his "fast". It took Ding Lei only three years from founding NetEase, Inc to landing on NASDAQ, and only six years from starting from scratch to becoming the richest man.

At the beginning of its establishment in 1997, NetEase, Inc started from BBS, launched the portal in 1998 and listed on NASDAQ in 2000.

However, in 2001, NetEase, Inc encountered serious difficulties for the first time since his founding.

The dotcom bubble burst just a year after it went public. When the company was forcibly suspended, Ding Lei revived and began to transform with the encouragement of his good friend Wu Xiaobo.

At that time, seeing the graphic online games developed by Sony and EA, Ding Lei captured the business opportunity, bought Guangzhou Tianxia for $300000, and developed the Chinese online game masterpiece A Chinese Odyssey series with the company's R & D team as the core. At the end of 2001, "A Chinese Odyssey Online" came out and became a blockbuster in online games, allowing NetEase, Inc to quickly join the ranks of game giants.

After that, NetEase, Inc sang all the way to the game.

But if it's just to make money, life will be boring for Ding Lei. He once said in public: "making money is just a passing thing, and money brings me less than 5% of my happiness."

Behind this phenomenon is his free and easy nature, following his own interests in everything. And it is this characteristic that brings NetEase, Inc Yun music.

Because Ding Lei's dream when he was young was to open a record company. Although he eventually became the richest man on the Internet, he could still make a music product.

As a result, NetEase, Inc Yun Music was launched in 2013. At the beginning of his launch, Ding Lei was a staunch user of his own products, listening to songs ranging from Shanghainese folk songs to Spanish minor, from two-dimensional animation to symphonies.

NetEase, Inc Yun's characteristic comment area also comes from the core determined by Ding Lei: the sharing attribute is the infrastructure of NetEYun music. Over the past eight years, social and emotional attributes have become the core competitiveness of NetEase, Inc Yun music, which is different from other music platforms. According to the prospectus, 48% of listeners visit the comment area to chat and look for inspiration.

According to the prospectus, in 2020, 89% of NetEase, Inc Yun Music's current users were post-90s, with daily active users listening to music for an average of 76 minutes a day, and 25% of users actively creating UGC. By the end of 2020, the total number of song lists created by NetEase, Inc Yun music users exceeded 2 billion. This is an excellent user stickiness report card.

NetEyun Music completed financing of more than $600m in 2018, with investors including Baidu, Inc. and Pan-Atlantic Investment Group. In September 2019, NetEase, Inc Yun Music received a total of US $700 million from BABA and Yunfeng funds.

In the ownership structure disclosed by NetEase, Inc Yun Music, NetEase, Inc holds 62.46%, making it the largest shareholder, with BABA holding 10.81% and Baidu, Inc. holding 4.26%. BABA and Baidu, Inc., who both had a layout in the music field but eventually returned empty-handed, both found a home here in NetEase, Inc Yun Music.

The music track competes for hegemony among the heroes.

Baidu, Inc. and BABA both missed out on music, which shows that this is a race track with fierce competition for hegemony.

Since the emergence of human civilization, music has been a powerful way of expression and entertainment, although the emergence of film and television dramas, short videos and other forms of entertainment has enriched human audio-visual experience, but the influence and transmission of music has not been affected.

According to the National Internet Information Center, the number of users of China's online music entertainment market reached 658 million in 2020, and the figure is expected to reach 793 million by 2025. The post-90s generation accounts for nearly 50 per cent of the market, which is expected to grow to 57 per cent by 2025.

The business model of online music service mainly includes member subscription, digital album sales, advertising and licensing services. The size of the market has increased from 2.8 billion yuan in 2016 to 12.8 billion yuan, with a compound growth rate of 46.3 percent. It is expected to reach 49.5 billion yuan in 2025, with an expected compound growth rate of 31 percent. Behind the increase in the size of the market is the joint growth of member payment rates and per capita payment, which has increased from 2 per cent in 2016 to 8 per cent in 2020 and is expected to reach 27 per cent in 2025.

This penetration still has room for further improvement compared with 40 per cent in the US.

The average monthly payment by users also increased from 8 yuan in 2016 to 9 yuan in 2020.

The market for social entertainment services derived from music also grew from 3.9 billion yuan in 2016 to 28.5 billion yuan in 2020, with a compound growth rate of 65 percent, and is expected to further increase to 117.4 billion yuan in 2025. At the same time, live video services are also growing rapidly, which is expected to reach 68.4 billion yuan in 2025, and other emerging social forms such as karaoke rooms are springing up like bamboo shoots after a spring rain.

Faced with the fast-growing music service and social market, giants naturally want a piece of the pie.

In BAT, Tencent is the dominant family, needless to say, BABA and Baidu, Inc. did not give up trying.

Looking back at history, BABA has actually been involved in the entertainment industry for a long time. As early as 2013, BABA bought Xiami, which was popular at that time, and set up a music division to formally enter the music industry, and then acquired a music player that sounds beautiful every day. On this basis, BABA founded BABA Music in 2015, and invited the big names in the music industry-Gao Xiaosong and Song Ke to serve as chairman and CEO respectively.

It's still not getting better.

BABA did not give up and launched BABA Planet in 2016, but negative comments followed because of too many functions. At present, BABA's layout in the music section is still not successful, and Xiami Music, the only one in the top 10 monthly active users, will only rank in the fourth echelon in September 2020.

On the morning of January 5, 2021, Xiami Music issued an official statement saying that due to business adjustment, Xiami music player business officially ceased service on February 5, 2021. BABA has lost the only soldier in his hand.

On the other hand, Baidu, Inc. 's side is also very bleak, with only thousands of music under his purview, which is a bit worse than Xiami's status before he quit.

So it is not difficult to understand why these two companies are on the list of shareholders of NetEase, Inc Yun Music. The current industry pattern is a joint force of "NetEase, Inc + Baidu, Inc. + BABA" against Tencent.

This is confirmed by data from Mob Research Institute. As of September 2020, Tencent is absolutely the dominant company in the field of mobile music, with 5 of the top 10 under Tencent's command, including KuGou Music, QQ Music, Kuwo Music, KuGou Music in large print and 5sing original Music.

From the perspective of specific data, NetEase, Inc Yun music has become the most powerful weapon against one super. It is the only mobile music platform to enter the second echelon besides Tencent.

According to the data released by Mob Research Institute in 2020, NetEase, Inc Yun Music ranked fourth in the number of monthly active users, not far behind the third Kuwi, but still far behind the other two Tencent departments.

Tencent Music has been listed on the New York Stock Exchange on December 12, 2018, and NetEyun Music has finally chosen to go to Hong Kong.

NetEyun Music, which is on a mission, is under great pressure to lose money.

According to the latest data in the prospectus, NetEYun Music, which has the mission of NetEase, Inc, BABA and Baidu, Inc., had 181 million monthly active users by the end of 2020, of which 16 million were paying users, accounting for about 8.8 per cent.

Tencent Music, by contrast, had 622 million monthly active users and 56 million paying users in the fourth quarter of 2020, both nearly four times that of NetEase, Inc Yun Music, with about 9 per cent of paying users.

In terms of operating income, NetEase, Inc Yun Music's operating income from 2018 to 2020 was 1.148 billion, 2.318 billion and 4.896 billion respectively, with year-on-year growth rates of 101.9% and 111.2%, respectively. Among themThe proportion of online music services is decreasing year by year, while the proportion of social entertainment services is increasing year by year. In 2020, social entertainment services accounted for 46.4% of the income, nearly half.

It's a pityWhile revenues soared, profits were not realised.

From 2018 to 2020, NetEase, Inc Yun Music's adjusted net losses were 1.8 billion yuan, 1.6 billion yuan and 1.6 billion yuan respectively.

Although the loss has narrowed to a certain extent, but compared with Tencent Music, the data still appears to be more tragic.In 2020, Tencent Music's revenue was six times that of NetEYun Music, with a net interest rate of 14%.

Also doing mobile music, why did NetEase, Inc Yun Concert make such a huge loss?

The scale can not compete with Tencent, and the royalties are difficult to sustain.

Comparing the 2020 financial report of Tencent Cloud Music with the prospectus of NetEase, Inc Cloud Music, it can be found that the two companies have not widened the gap in terms of expense rate. In 2020, NetEase, Inc Cloud Music sales expense rate was 6.7%, management fee and R & D expense rate were 13.8%, and total expense rate was 20.5%. The sales expense rate announced by Tencent Music is 8.5%, and the other expense rate is 10.6%, a total of 19.1%, which is only slightly lower than that of NetEYun Music by 1.4%.

In contrast to the expense rate, Tencent Music's gross profit margin has remained above 30 per cent over the past three years, compared with 32 per cent in 2020.

NetEase, Inc Yun Music's gross profit margin has been negative in the past three years, although the gross profit loss and loss rate are narrowing year by year.

On the cost side, where NetEase, Inc Yun spent his money may be the most crucial question to unravel the mystery of loss.

The answer is-the company spends most of its money on licenses (content services). That is to say,Before 2020, it is not enough for the company to fill in its annual income to buy copyright.

By contrast, Tencent spent 17.5 billion (Service costs) on copyright in 2020, nearly four times as much as NetEase, Inc Yun Music. But at the same time, supported by 4 times the number of users and 6 times the income, 17.5 billion yuan royalties account for only 60% of Tencent's revenue, which is a piece of cake.

Although NetEase, Inc Yun's music is characterized by music socialization, the underlying support of "music socialization" is still music. Without music, socialization is water without a source and wood without soil.

Since we want to be an online music platform, music copyright will always be the lifeblood of online music.

Financing may be the only solution to a dominant copyright dispute.

The reason for Tencent's rise depends on copyright.

Major platforms have also been attacking and defending each other on copyright resale matters. The most serious copyright dispute between Tencent and NetEase, Inc Yun Music occurred in 2017, when Ding Lei had no choice but to shout.

Finally, under the mediation of the National copyright Administration, Tencent Music and NetEase, Inc Yun Music reached an agreement on online music copyright cooperation. The two sides will license each other more than 99% of their exclusive music works, and agreed to carry out long-term cooperation in music copyright.

But at present, there are more and more exclusive copyrights on Tencent Music's platform, and after 2019, many users have found that the music previously available on NetEase, Inc Yun's music has turned gray in large areas-the copyright is gone.

Some netizens even said: "Tencent insiders said that it is not that we want to monopolize, but that they cannot afford it."

Income is only one-sixth of Tencent's, even if all to buy copyright is not enough on Tencent's toes, this battle NetEase, Inc Yun music is really difficult to fight.

Another way is to vigorously develop original musicians to avoid high royalties. Starting in 2017, NetEase, Inc Yun Music opened up musicians to move in, directly docking with original musicians, skipping intermediate links such as distribution companies and copyright companies, and launched the ladder program in 2018. increase the stickiness of original musicians to the platform through a series of incentive activities.

At present, there are a total of 230000 independent musicians on the platform, and popular songs that have been played more than 1 billion times this year, such as "I was", "the beauty of the world is linked to you", "good night" and so on.

However, the move of winning over original musicians can also be done on other platforms, and there is no binding between original musicians and platforms. NetEase, Inc Yun Music also uses channels and platforms to train new people, but the brokerage business and distribution business are not professional. When the trained newcomers mature, there is a good chance that they will still enter a professional music company, and they still have to buy copyright when they come back.

As a result, an endless cycle is formed.

To buy copyrights, you need more users and more revenue; to have users, you need more copyrighted music to attract.

Of course, now, relying on ideals and community ecology, NetEase, Inc Yun Music is still gaining the love of users. It is said that the utilization rate of the music library of the platform is as high as 80%, while that of other platforms is generally only about 20%.

However, it is unknown how long the relationship between NetEase, Inc Yun music and users can be maintained.

Listing financing, get more money, will not "can not afford to buy copyright", may be the best solution of NetEase, Inc Yun music at present.

Of course, from the balance sheet, as of the end of 2020, NetEase, Inc Yun Music account still has 3 billion in cash, which is not yet unsustainable.

The company did not disclose the scale of financing. It was previously reported that the company would raise about HK $7 billion. Even if the money is successfully obtained, it will be less than Tencent's royalties for half a year.

In the face of the encirclement and suppression of the Tencent department, NetEyun Music, which is shouldering an important mission, wants to break through the tight encirclement, and the road ahead is still difficult.