The profit chain has been reformed
After industry policy has been changed and music needs to be paid, it can be found several music apps in everyone’s phone. I’ve interviewed several friends around, and they told me the most app they used are QQ music, Netease Cloud Music, Xiami, Kugou or Kuwo. But hardly found someone using Wo Music or Migu Music. In this music app battle, seems these two has no positions at all.
To have a deep research of these two apps, I downloaded them and noticed that they have almost the same listening functions as other apps, except of the coloring ring back tone (RBT) function. Reasons of not being widely used can be concluded that these two apps are known for RBT only. Thus, people don’t know they can be used as other common music apps.
Actually, it is not hard to notice that, before 2012 income of RBT had already declined a lot, when internet companies started to expand their businesses. To be more specific, users of RBT were largely decreased, which make the mobile operators consider about reformation and cooperate with other internet companies to save themselves.
For example, Wo Music and YinYueTai are in exclusively cooperation relationships to do music vedios (MV). Generally speaking, MV is a sort of video product consuming small service packages, but higher than that of a song consumed. Thus, as an operator’s product, Wo Music has taken this advantage. Wo cooperated with other music internet companies, such as QQ Music, Kuwo and Kugou, mutually using their resources to find a new way expanding their business.
Recently,Migu Musicstarted to cooperate with YY LIVE. In the next year, they will authorize all their online music shows to YY LIVE. Although,Miguhad carried out live shows by their own before, they will get more active users by cooperating with YY.
Since 2002 RBT service became extremely popular, and it became the most earned service of mobile operators. In 2005, it reached its pitch. Every operator owned a great number of active users. In 2009, they earned more than 30 billion RMB only upon RBT services. Till 2012, it had set up a mature RBT distribution system. Additionally, according to the published data, in 2011 the number of total mobile internet users reached 0.7 billion out of the whole music users in China, which is 1.1 billion.
At that time, record companies almost have no positions in music industry. SP became the only way for operators to reach the users and gain profits. However, with internet becoming more and more significant in our daily life, the whole profit chain in music industry has been reformed now.
When the market advanced to SP operating phase, the usage range of copyrights and relevant authorities becomes ambiguous. For instance, actually it’s hard to tell the differences between just listening to an online song and downloading a song from QQ, but initially the product authorities are separated. When more and more record companies or musicians authorize their songs to internet companies, and they are attracting more and more active users to use their products, it is a big strike to the mobile operators.
An insider told us, “Copyright of a song is separated into two parts actually. One is given to internet, and the other is given to the mobile operators. Of course, these two parts are separated very clearly. Ring back tone can be downloaded through mobile operators, and it becomes the most earned part.”
From his point of view, the advantages of an internet company are the large online products and excellent operating societies. However, for operators, RBT service is the only service they can offer, and it is merely regarded as a function not a product.
For mobile operators, cooperation with internet companies will help them to get more users so as to gain more profits. However, users won’t easily change their founded platforms. Thus, this approach seems having little help to the operators to set up their own ecological systems.
Set up customized ecological systems
No big changes after cooperating with internet companies, mobile operators tries a new way and they expanded their business by enlarging their upstream and downstream chains to set up a customized ecological system for their own.
For MiguMusic, they put their focus on live music shows and artists management at present.
Since 2015,Migustarted to hold live shows for A-lists, such as Chen Chusheng, Han Geng, Peng Jiahui, etc. In July 2015,Migubroadcasted G.E.M.’s live show in Beijing with other media,MiguVedio, LeTV, PPTV, Feng Huang Web.
In August 2016,Migu Music carried out a competition among colleges, and signed up with the champion of the competition—Wu Qi. As the first artist signed withMigu, alsoMigustarted its artist management business.
In 2013,Migucarried out a training plan for original musicians. The candidates were selected by people who applied forMiguoriginal musician. By uploading their original music pieces,Miguwould pick up the excellent ones and sign up a contract with them to help them with their future music career. If the music piece become very popular, the songwriters also can get copyright fee according to the split policy in the contract.
Wo Music applied this strategy at first actually. They held online and offline activities. Also, they have their own music brand, and they have online stores in Taobao selling albums, peripheral contents and other hardware products. They have cooperations with YinYueTai and some independent artists at present.
Love Music,which is subordinated of China Telecom, is the first independent label. It held activities both online and offline. They’ve already held 44 concerts, live shows and signing sessions, successfully attracted a great number of fans to come. Also, they set an optimized platform to held tours. In 2015, they made cooperative agreements with virtual operators for expanding their service area of RBT and alerting rings.
According to the latest strategic actions of these operators, they began to set up their own music ecological systems. The next step, they will have more cooperation with record companies aiming at copyrights.
This model of cooperation is quite understandable. Before, operators and internet companies are strongly fortified. Operators have rights to independently authorize to others, and the whole market was followed by them. However, in these few years, operators and internet companies combined to share benefits of copyrights. Operator doesn’t take the monopolize position in the market any more. On the contrary, internet companies focused on better products and user experience, which forced the operators to think about setting new business to maintain.
Nowadays,Wo Music, Migu MusicandLove musicare attempting to be more independent from their main companies, and become more marketable. However, at present, the majorities of users are captured by internet companies. How the operators or independent labels win back the users is a significant problem need to be solved first.
As a matter of fact, at the beginning of 2011, China Telecomhad established a music operational centre and a reading operational centre under its name. Music operational center launched “WO + opening system” strategy for mobile internet to integrated resources and create their own products, such as video, music player, Karaoke, FM and ring tones, etc. These applications reach the terminals by the old way — SP model, including video and music.
At the end of 2012, China Telecom music operational centre united YinYueTai, Douban, Xiami, Duomi, QQ music and other music websites carrying out various music products. The SP fee is 5-15/month each app.
China Telecom and China Unicom opened their SP cooperation. The “WO+ opening system” is able to interact with any users in any platforms. The advantages are, users can get some free service packages and VIP purchase discounts or other benefits. Therefore, cooperation among operators and internet companies can be regarded as a combination of SP and products. The final profits are divided according to the proportion negotiated in contracts.
However, the SP policy of China Mobile hasn’t been opened as yet. Thus,MiguMusic’s cooperational approach with internet companies is still the same as before. It uses various music platforms to sale RBTs.
MiguMusic was named as “China Mobile Music Centre” before, subordinated by Si Chuan Mobile in 2006. Its business scope is only focused on RBT at that time. In Nov. 2014, China Mobile reintegrated resources under its name, putting music, video, reading, game and cartoon underMigu.
At present,Migu Musicis having deep cooperation with Ali, Sohu, 360 and other internet companies. More than 1,000 companies are cooperating with Migu to develop music apps. From 2012 to 2015,Migu Musicoffered VIP service as its main service, for users to download RBT, music or alerting ringtones, 6 yuan/month.
TelecomLove Musicwas names as “China Telecom Music Centre”, is nominated as China Telecom Co., LTD before. Its scope of service is to exclusively operate whole music products, platforms and service under China Telecom at present. The number of users has reached 0.2 billion, among which the users of online music are more than 0.1 billion currently.
Beehivewas a music app produced by Telecom in 2012, aiming at indie musicians or songwriters. It is aimed to offer song producing and publishing service for the musicians, and the artists can get to know each other by this internet tool and win more opportunities for their music career. It owns 8,138 albums’ copyrights, and the download number reaches 2,163,462,915 up to now.
However, different varieties of apps are full of everyone’s phone. It is quite hard forBeehiveto jump out from it now. Thus, it turned back to its old business—RBT and alerting ringtones service at the moment. Additionally, to expand its business range, it is cooperating with virtual operators currently.
Last July, CEO of Love Music, Zhu Yingbo announced in a seminar that, “Love Musichas founded for a year now. We have 200 staffs working with us, 2 million songs authorized and published by our platform, more than 800 record companies and CP cooperating with us. WhenLove Musicwas just established, RBT was an attached service. At present, we are promoting it to reach the terminal of cars, wireless audios, even the wearing equipment for future, which we call it ‘Beehive+’ at the moment.”
In brief, we’ve taken a research via Baidu and noticed these three mobile operators are still quite active on their music business at present. We’re wondering if any new movements or behaviours they will take in 2017. We’re looking forward to witness the developments of these operators in the coming year!
Copyright © 2015 China Music Business News