(Left: Ge Li, Right: Yu Zeng)
“This office is too small now, so we’re looking for a new one,” said Ge Li, the CEO of PILOT. “We’ve established PILOT’s vertical structure, as well as the app and the upcoming video app. Our expansion will be focused on music, and we won’t touch other areas.”
When they received the Pre-A round financing of 20 million RMB in 2015, PILOT had already been working hard in the music industry for a decade. The investor was Hong Kun Asset Management (Shanghai) Co., Ltd. They developed PILOT from a traditional “cost-money” music company into an accelerated, transformative music technology company, with help from the capital market.
In 2006, Yu Zeng, the founder of PILOT, signed with “REFLECTOR”, “CAFFEINE” and several other bands, after his own producers’ group, Mars Radio, fell through. Officially, they began as a rock music brand. At that time, Yu didn’t have any long-term plans or commercial considerations.
Over the past decade, despite lackluster earnings as a traditional music company, PILOT has set up their own music school, accumulated production experience at music festivals, created multiple national tours for indie bands, and become the first ever mainland music production company to go to the Taipei Arena.
2015 is a turning point for PILOT, since three big shots have joined PILOT: Ge Li(CEO), who has a great background in media and marketing, Hailong Zhang (Chief Product Experience Officer), who has expertise in the technical arena, and Chi Chen, who was an Internet entrepreneur with investment experience. Alongside Yu, who has made great efforts in the music industry for many years, the management structure has finally been established.
Recently, PILOT held its most formal press conference yet since its establishment, focused on their app—”Xiao Yang’er DEMO”. Actually, this app was born back in 2013 with hundred thousands of yuan in investment from Yu, Chi, and Hailong. However, back then, it was a pure communication tool among musicians. With this app, people can upload their original works and engage in copyright trading, which helps songwriters obtain profit directly.
As of now, the “Xiao Yang’er Demo” app has gathered more than forty thousand people, collected nearly one hundred thousand original works, and provided ‘one-key-trading’ for copyrights.
Yu said, “At first, my motivation in creating ‘Xiao Yang’er Demo’ was to improve the efficiency of communication among musicians, since I’m also a musician. I wanted it to help musicians speak to one another easily, without sending e-mail, but diffusion was really limited.”
Meanwhile, PILOT also cooperated in-depth with Yugong Yishan and started national concert tours. They provided offline performance opportunities for the original musicians, and hoped to bring more people to concerts to share the charm of live performances.
“In fact, the concert environment in Beijing is OK, but in other places, it’s not. Many people there hope we can send some musicians to them. So now, we want to seize the opportunity and hold 66 weekend performances this year. Hopefully, this can bring good music content and assist them in building an experience offline.” said Yu.
Structure of Pilot Music & Tech
1. Artists: There are eight groups for directly signing artists and 30 managing groups. In the future, we will focus on cooperation with less direct signing.
2. Music production: Mars Radio has a large demand from the B-end.
3. PILOT school: Xiaoping Xu and Zhiyuan Peng, a former MD of Goldman Sachs, invested in the Pilot School. In addition to teaching, we also have rehearsals and studios. Unlike traditional music schools, we primarily provide comprehensive education based on “quality and interest”, without grading tests.
4. Musical Marketing: Traditional music companies don’t cover the music marketing business, but we do. PILOT has done a lot of work in integrated music marketing for the last two years, and has generated great profits. Thus, PILOT will continue to focus on music marketing.
5. Department of large projects: We facilitated some big projects, such as Jeff Chang’s three year, 22 performance world tour.
Furthermore, PILOT was not satisfied with working exclusively in online audio, so they also developed their video-related app. According to Ge, this video app was designed to include a broadcasting sector for music as opposed to internet icons. “We hope it can bring additional value to music and increase desire among consumers.”
Ge Li Pilot Music & Tech CEO: Musical Idealism
I was at Sohu Music back in 2007, during the greatest depression in the music industry. I found they were unable to discover the problems of the music industry through the perspective of public media. Among the Top 4 record companies, only Warner operated mainland artists . It seemed that media had no effect.
The early music critics were very influential and could guide the public’s tastes, since they had good information channels, unlike ordinary people. However, now, in the internet era, everyone can express their views and everyone can be a music critic. Many record companies had also started paying for the reviews of some critics, so a lot of critics began to decline in equality and authority.
In those years, Sina and Sohu fought with each other a lot. Sina did not care about the reviews from record companies, which also had a bad impact on Sohu. I felt really confused in my work, so I left Sohu Music in 2009 .
I helped Liyi Chen obtain Nokia’s entertainment agent qualification in Maxtimes. Later on Yu Quan started Giant Jump and I was the first COO. They said they would engage in brand promotion, but in reality, they only focused on artists’ agency, in which I had no interest. In order to maintain our friendship, I left Giant Jump.
After that, I was free for some time and became a music consultant for Red Bull, since I had been working on Red Bull’s entertainment marketing at Sohu Music.
At that time, TV media was in decline;. Meanwhile, every video site seemed to be expanding in a different direction In 2013 I joined LeTV Music and was responsible for the integration of music as capital resources At LeTV’s ‘National Integrated Marketing Center’. , I experienced the transformation process from content marketing into integrated marketing, and then to eco-marketing.
Why did I choose to join PILOT? I had look through every music company, and PILOT had already established its own structure and place in the industry, for which I could do a lot. My first focus was the improvement of PILOT’s revenue stream.
In the summer of 2014, Yu and I met at a small cafe. From a traditional point of view, you can not find a good merging point for all of the various businesses. However, marketing is the one that you can use to combine music, education, and production together at PILOT. We had a pleasant discussion and then I went straight to PILOT because of their dedication to music.
In addition to the previous discussion, what we mostly wanted to do was live video broadcasting. Obviously, the value of pure music by itself is 0. Only when music is combined with something else can it be better commercialized. Thus, we created two lines , one being the app and the other being video, because there were so many possibilities in the visualization of music, especially when the offline part was too heavy.
In 2014, we started shooting VR. We had Ogilvy & Mather’s MD but still failed after many different attempts. The main problem was the sound immersion. Visual immersion had already been realized in 3D. However, real immersion was contingent on sound immersion. As a music company, we did not want to confuse users with a high-tech concept, so we ended up shelving VR.
However, the video component was actually feasible, so we developed our video live broadcasting function, which we had wanted to do for more than two years. We are completely different from current audio products. We are not for the internet icons, just for music and new content.
What is the copyright trading platform of Xiao Yang’er?
The app Xiao Yang’er was born in 2013, but at that time, it was only a private musician’s communication tool with investment from Yu, Hailong, and Chi. Many people want to upload their own music but have difficulty operating independently, so they joined PILOT’s layout.
Now we have an online store, which simplifies copyright trading. We choose the rights of use and the copyrights for songs and lyrics as two aspects because trading among them is most frequent. Thus, we met with four lawyers, to finalize the copyrights.
Over the years, no one really touched the direct consumption of music. Common sense dictates that music needs vehicles to transmit value. Whether buying a CD or paying on a music player, the consumer is not paying for music directly.
Each piece of music has its own value. For the B-end (television / film companies, advertising agencies), they need music as a part of their work and promote themselves. They do not need to buy music directly, but rather consume through other forms of media.
As for the C-end, ordinary people also consume music. Nowadays, no matter what gift you buy, it’s really difficult to be unique. However, if you buy a song and spend 500 to 5,000 yuan on making a CD, you can be a producer with music as your gift. furthermore, today’s songwriter may become tomorrow’s Wang Feng, who knows? The copyrights of songwriters are just like stocks, which causes lyrics and songs to have circulation value.
Xiao Yang’er provided an online platform for these transactions. B-end or C-end, all people could pick up and pay for songs here. We are primarily focusing on the B-end and some large companies have already signed their music service contracts to us.
However, the C-end is a huge growing space. For example, every music conservatory student wants to have their own work, but they can not easily find someone to write a song for them. Xiao Yang’er Demo provides such a platform for the ones who need songs. You can also record in the PILOT studio, after paying for the service.
The Internet industry is developing so rapidly that it contains rapid trial and error. The music industry will always be different. Ali has the right direction and the right state, but if it does not solve the original problem of content, everything will be useless .
Music becomes the last “Sukhavati” of culture. In the film industry, if you have more money, you can do better. Music is quite different. Sometimes there is no difference between a 10 million and 100 million yuan investment. That’s why music is difficult to understand in the capital market. Cultural industry is largely dependent on accumulation.
From our experience in speaking with the capital market, only 20% of investors fully understand this industry. The most important thing in the cultural industry is the value after precipitation, rather than the current price tag. Most of the capital is effectively not investment, but rather, speculation. When they believe this industry will grow, they will come for returns as soon as possible. However, to be honest, you can not require a music company to reach your desired level after just a year.
Certainly, music can be commercialized, but music can not be treated as a project. Even though the value of music itself can not be exploited simply, it’s simple if you invest based on the value of the music company. Generally speaking, it’s more or less all right to invest on companies’ value. Taobao and Apple in their early days also could not be measured.
In fact, PILOT originally planned to get listed on the National Equities Exchange and Quotations and formalize our finance management. However after our discussion with investors, the capital environment and the liquidity situation were unsatisfactory, and the layer mechanism also was not established. Thus, we chose to wait for rounds of financing.
PILOT started obtaining profits back in 2011, but our annual income is not high. Unlike many from the capital market who can not understand our explanation of music, Hong Kun trusts us and keeps a great relationship with us.
As everyone can see, from the second half of 2015 to now, the figures have demonstrated rapid growth. A member of Hong Kun even said that he also wanted to join us in this start-up business.
We aren’t in a hurry for the future. We hope to find suitable shareholders and draw a bigger picture.
Translated By Chen Bao and Evan Yi
Contact with editor: email@example.com
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