“Duomi Music” may appear on the list of those who failed in the competition of digital music service platforms.
According to the news, the A8 New Media —- a digital music company in Hong Kong Stock —- issued a statement, announcing that the company would transfer approximately 42.73% shares of the mobile music service platform－Duomi Music based on future development strategy. The company has not yet made any clear agreement with anyone in terms of the transferring.
After the new released, A8’s stocks opened higher in HK Stocks. When closing, the stock price rose 12.7% to HK $0.65, VOL at HK $37.266 million, valued at HK $957 million.
According to the information, A8 New Media first spent 19 million Yuan purchasing 43% of Duomi Music’s stake in 2011. In December 2012, A8 once again bought 13 million preferred shares (U.S. $4.2 million), after which its wholly-owned subsidiary Maoyu Company owns 46% shares of Duomi. In June 2014, A8 declared that Maoyu had agreed with Duomi and the latter would buy U.S. $22.91 million (HK $179 million) convertible notes of Duomi Music for business development and day-to-day operations.
Baidu Baike shows that Duomi Music is a free multi-functional music APP with local music playback, online music playing, song searching, downloading and sharing to Weibo. In 2009, it launched under the name “kxting” and released its fifth version on Android, iOS, and PC. The latest news on its official website was “‘FAW-Volkswagen Music Park’ in Tsinghua University, Beijing ” by Tencent Entertainment. But it has little association with Duomi Music. It is also noticeable that there was news revealed that Duomi was TOP 100 Hot APP in China in November 2013.
In June, according to the statistics by BigData-Research APP user behavior monitoring system that in 2015 Q1 Kugoo Music had the highest active user penetration rate at 26.8%, followed by QQ Music at 20.7%. Kuwo Music was the third at 19.8%. Duomi managed to rank among the top five after Kugoo, QQ, Kuwo and TTMUSIC.
In addition, the data also shows that Duomi Music was among the first rank in brand recognition or awareness. The data in 2014 revealed that Duomi Music had 200 million active users and ten millions monthly active users.
However, the cost of operating a digital music platform increases year by year and A8 can no longer afford it. Though there was no clear data in 2014, 2013 reported that its revenue was 24.578 million Yuan and pre-tax net loss was 77.809 million Yuan. The operating net loss was about 52.935 million Yuan. Copyright cost stood at 19.467 million Yuan, increasing by 38%; artificial cost was 25.833 million Yuan, rising by 3%; marketing expenditure was 13.468 million Yuan, dropping by 18%; and operating expenses and other taxes generated at 18.744 million Yuan, growing by 46%.
Liu Xiaosong, CEO of A8 New Media, is one of the early investors of Tencent. He is the founder, Chairman of board and CEO of A8 New Media. Liu founded and started to lead A8 in 2000 and took the lead in China to launch ringtone download service in 2001. He released the first UGC original music platform (WWW.A8.COM) in 2004 with the first digital music stock listed on Hong Kong Stock Exchange (StockCode: 00800.HK). Liu was born in 1965 and graduated form Hunan University with bachelor’s degree in science in electrical engineering in 1984. In 1987, he finished study in China Academy of Sciences with master’s degree in engineering and studied in Tsuinghua University for electrical engineering PhD in 1991. At present, A8 New Media independent non-executive directors include Chen Yaoguang, Wu Shihong and Song Ke.
Copyright © 2015 China Music Business News