Fans of QQ Music, Tencent’s popular streaming service, have been surprised to discover many of the songs they used to listen to have become unavailable for both play and download.
Attempts to play many popular tracks are met with the message, “This company has not provided us with the authorization to play their music and we are striving to respect copyrights.”
Since appearing on QQ Music, similar messages have spread to Duomi Music, NetEase Music, Kugou, TTPod and Xiami.
The trend is a response to the government’s increasingly severe control of copyright.
In July, the National Copyright Administration of the People’s Republic of China released a notice ordering online music operators to cease spreading music to which they do not own the rights by July 30. Sixteen music platforms quickly purged some 2.2 million songs from their platform.
The age of free streaming in China appears to be coming to an end, and companies are now struggling to find a way to make their users pay. As China’s biggest music-streaming platform in China, QQ Music is exploring how to fight its competitors while changing Chinese users’ expectation of a free lunch.
At the beginning of the year, the National Copyright Administration released an investigative report that found China’s digital music market reached 44.1 billion yuan in 2013.
The wireless music market – mostly the sales of ringtone – accounted for 39.7 billion yuan and the online music market for 4.36 billion yuan. There were 453 million digital music listeners using 695 companies that provided music products or services.
The profits to be made in the digital music market attracted more investment from China’s Internet giants. China’s current online music market has been cared up by Ocean Group, which owns Kugou Music, Kuwo Music and Omusic; Alibaba, which owns TTPod and Xiami; and Tencent, which owns QQ Music.
Conflicts over song copyrights have been a frequent problem for all three, but especially for QQ Music. The cost of resolving its numerous legal disputes related to copyright infringement have made the task of turning casual listeners into paying customers all the more urgent.
An internal poll by Tencent found that 65.1 percent of listeners said they would prefer to download their music through pirated channels if Tencent begins to charge for its services. Only 1.18 percent said they would be willing to pay for the service.
With such low acceptance, it will be hard for QQ Music to find a balance between regulations and its users’ demands.
No Permanent Enemies
On October 13, QQ Music resolved a dispute with its longstanding enemy NetEase Music when Tencent announced it would provide the company with the rights to 1.5 million songs to the company.
Tencent previously banned NetEase Music users from sharing songs on its WeChat in February.
On November 14, QQ Music came to a similar agreement with Duomi Music. The number of songs it has transferred to the company remains a trade secret.
“QQ Music is not doing this to monopolize the industry, but to protect authorized music,” said Andy Ng, general manager of Tencent’s Department of Digital Music. “We hope domestic online music market can become organized through the industry’s effort.
It’s not simple for QQ Music to adopt this strategy.
Its comparatively weak position leaves QQ Music with no choice but to be an agency of transferring and delegating songs’ copyright to other companies, because it cannot afford the high expense of purchasing copyrights by itself.
Since August 2014, QQ Music acquired the rights to many songs. It obtained the rights to 1.2 million songs in Warner Music Group’s catalog and 400,000 songs from Sony Music Entertainment.
Those songs are only available in China on QQ Music. The exclusive rights have helped it to win many users – but at a high price.
An industry insider speaking anonymously told Beijing Business Today that a domestic music company sold the rights to 300 songs to a music platform for 20 million yuan. That works out to a price of 60,000 to 70,000 yuan per song.
“At this price, Tencent could have to spend billions of yuan to purchase song streaming rights from 23 companies.”
Since local acceptance of paid services is so low, QQ Music has been transferring some songs copyrights to NetEase Music and Duomi Music. Metaphorically speaking, QQ Music is more like a landlady, receiving rent for transferring music copyrights to NetEase Music and Duomi Music.
That business move also benefits Duomi Music and NetEase Music, which lacked the capital needed to compete with other major players.
QQ Music has been trying to coax users to voluntarily pay to listen to and download music by offering high-quality copies of songs and exclusive content.
Digital albums are QQ Music’s other core business.
Singers who sell their digital albums on QQ Music makes a profit, too. Compared with physical albums that are prices 50 yuan or more, buying digital versions of the albums is a good opportunity to fans who can’t afford physical media or who are desperate for early access.
QQ Music sales of singer Jay Chou’s digital album AIYO, Not Bad – priced 20 yuan at its release in December 2014 – sold more than 160,000 copies. Singer Zhou Bichang released two mini digital albums on QQ Music, each priced 4 yuan. Together they sold 240,000 units.
In addition to premium features and digital albums, QQ Music also hosts online concerts that most fans are happy to pay for.
QQ Music also cooperated with reality shows such as The Voice of China (Season 4) and I am a Singer (Season 3) to make the songs from each season available exclusively through its platform.
While most users remain unwilling to pay for music, it appears more are recognizing it will eventually be required.