Tencent Music and NetEase Cloud Music both added more paying music users than Spotify in Q1

Some exciting news outside of China: Both the region’s largest music streaming service providers, Tencent Music Entertainment (TME) and NetEase Cloud Music (NCM) has seen significant growth in the number of paying online music users in the first three months of 2022.

That is ‘paying online music users’ more than ‘subscribers’ because this specific wording index – particularly in relation to the TME – is adopted by both companies in their finances.

• TME – owner of QQ Music, Music Kugouand Music Kuwo – offer music streaming subscriptions in addition to paid downloads;
• NCMmeanwhile, offers two tiers of paid streaming subscriptions: (i) A standard tier at 8 RMB (about USD $1.26) per month, there is an offline ‘download’ limit; and (ii) Tier ‘Vinyl VIP’, at RMB 18 ($2.84) every month. This really has nothing to do with vinyl (!) but offers unlimited ‘vinyl quality’ streaming and offline ‘download’ music.

Based on New financial results announced analyzed by MBW, Tencent Music adds 4.0 million won pay music users quarterly in Q1 2022 and added 19.3 million won compared to the previous quarter.

TME’s official ‘pay online music’ user base now stands at 80.2 million won customer.

NetEase Cloud Music, whileadded an impression 7.8 million won pay online music users for its platform quarterly in Q1 2022 and 12.4 million won compared to the previous quarter.

NCM’s official ‘pay online music’ user base now stands at 36.7 million won customer.

Where these numbers become especially intriguing is when we compare them to Spotify‘S performance over the same period (Q1 2022).

Spotify, remember, owns a minority stake in TME and TME – in conjunction with Tencent Holdings – minority share ownership in Spotify.

Spotify also are not operates as a service in China.

As MBW was previous reportSpotify net has been added 2 million customers pay for its services in Q1 2022, although this figure is held back by SPOT cutting off payments from 1.5 million won subscribers in Russia during the quarter.

However, that result means both Tencent Music and NetEase Cloud Music added than pay online music users in Q1 2022 (+4 million and +7.8,000,000 wonrespectively) versus Spotify (+2 million).

(See chart below. Because NetEase Cloud Music is only floating on Hong Kong stock exchange in the fourth quarter of last yearNot all relevant figures at NCM are available for each quarter referenced.)

At the end of March 2022, Tencent Music and NetEase Cloud Music are the same 116.9 million won just paying customers to listen to music online in China.

Spotify, meanwhile, counts 182 million won Paid subscribers outside of China, with estimates 68% of these registrants in North America or Europe.

The amount is pay However, by SPOT’s ‘streaming music users’ compared to its rivals in China, the competition is pretty close.

• Based on Spotify’s Q1 2022 results, premium subscription business generated €2.379 billion ($2.67 billion) during the quarter, increased 23% by year;
• Spotify was the average paying customer (ARPU) this quarter €4.38 (USD $4.91) every month;
• Based on Tencent Music’s latest results, revenue from its ‘music streaming service’ drops 4.8% YoY in Q1, to 413 million USD. Of that number, a number $314 million USD coming directly from streaming subscriptions, 17.8% YoY;
• Tencent Music’s average revenue per paying music user (ARPPMU) per month during the quarter was RMB 8.3 (about USD $1.31);
• Based on NetEase Cloud Music’s latest results, its ‘music streaming service’ created RMB 884.8 million ($140 million) in Q1, increase 16.5% by year. Of that number, RMB 710.2 million ($112 million) especially coming from music streaming subscriptions;
• Average NetEase Cloud Music Streaming Subscriber Paid RMB 6.4 (USD $1.01) Monthly in Q1, said NetEase.

One more interesting software from NetEase Cloud Music Q1 result announcement: The company told its investors that regarding their recent record label licensing deals, “[We] We’re pleased to see favorable industry trends with more streamlined royalty fees and cost structures, giving us the flexibility to optimize our content investments with a more disciplined approach. ”

Below, we take a deeper look at both Tencent Music’s Q1 results (released last week) and NetEase’s Q1 results (released today, May 24).

Tencent Music Entertainment

Tencent Music Entertainment sees quarterly revenue decline 15.1% YoY arrive RMB 6.64 billion ($1.05 billion) in the first quarter of 2022.

However, there’s better news for the music business here than the percentage drop might initially suggest.

TME is divided into two divisions: ‘online music service’ (QQ Music, Kugou and Kuwo) plus ‘social entertainment services’ (mainly includes live streaming and online karaoke).

In Q1 2022, TME’s ‘social entertainment offerings’ saw a 20.6% YoY reduce revenue 4.03 billion yuan (U.S. DOLLAR 635 million dollars).

As mentioned, the company’s ‘streaming music services’ division saw a softer decline, 4.8% YoY arrive 2.62 billion yuan ($413 million).

TME’s total monthly active users (MAUs) for its three music streaming services stand at 604 million won at the end of March 2022.

That’s actually a larger audience than Spotify’s total global MAU (422m) on the same spot – but Tencent’s MAU (see above) has dropped 1.8% year on year.

Part of the reason for that decline is TME’s strategic focus on selling more of its existing users into a paid music subscription. (TME’s paid music subscription revenue has increased 17.8% YoY arrive U.S. dollar 314 million dollars during the quarter.)

Revenue from music subscriptions (U.S. dollar 314 million dollars) create 76.0% of TME’s total online music revenue (U.S. dollar 413 million dollars) in the first quarter of 2022.

That percentage has grown above an equivalent number (61.4%) in the same quarter of 2021.

NetEase Cloud Music

NetEase Cloud Music’s revenue increased 38.6% YoY in the first quarter of 2022, arrive RMB 2.1 billion (about 331 million USD).

Like TME, NCM also operates two separate business divisions: ‘online music service’ and ‘social entertainment services’.

• Revenue from online music services increased 16.5% by year arrive RMB 884.8 million ($140 million) for the three months ending March 2022. NCM said this growth was “primarily due to significant growth in revenue from the sale of membership subscriptions”;
• NCM’s revenue from selling music streaming subscriptions has increased RMB 710.2 million ($112 million) in the first quarter of 2022, up from RMB 514.4 million in the quarter of the previous year;
• It is a direct result of users paying monthly for NCM’s online music services extending from 24.3 million won in the first quarter of 2021 to 36.7 million won in the first quarter of 2022.

Revenue from NCM’s ‘social entertainment services’ (and other services) increased 61.6% YoY arrive RMB 731.7 million (115 million USD) in the quarter.

Total monthly active users (MAUs) of NCM’s online music services stand at 181.7 million won in Q1 2022, down slightly from 183.1 million won in the previous quarter.

That means NCM of pay online music users (36.7m) accounting for 20.2% out of all its online music MAU for the quarter.

That percentage has increased from 13.4% in the equivalent quarter of 2021.

NetEase Cloud Music told investors that their results were enhanced in Q1 thanks to the performance of UGC (user-generated content) efforts during the quarter.

“In the first quarter of 2022, we continue to advance our music-oriented community and UGC ecosystem through continuous product innovation across multiple platforms,” the company said in a media release. content format.

“Meanwhile, we continue to develop more assistant tools to further facilitate UGC generation on our platform, which will also enhance our vibrant UGC-oriented community. me and user engagement.

“Our UGC ecosystem is unmatched in the market, backed by our strong and supportive community culture. By the end of the first quarter of 2022, we had accumulated 3.25 billion UGC playlists on our platform.”

Tencent Music and NetEase Cloud Music: Working Directly with Independent Artists

Due to relatively recent regulation in the Chinese market, one of Tencent Music’s previous advantages in the territory – sub-licensing the major record company’s content to NetEase – is no longer allowed.

As a result, both TME and NetEase Cloud Music are in a race to subscribe to independent artists to their respective content and toolkits.

In its Q1 announcement last week, TME mentioned its own independent artist platform – Tencent Musician Communication – it says paid in full 200 million yuan for musicians in the previous 12 months.

“By the end of March 2022, we have served more than 450,000 registered independent artists on our platformrepresents an interval 70% compared to last year evolution.”

NetEase Cloud Music

In addition, it said Tencent Musicians Platform has seen more 100,000 won creator joins its ranks in Q1 2022. Those creators benefit from perks including a new online music production service featuring “over 50 renowned industry professionals” .

Meanwhile, the equivalent program of NetEase Cloud Music is now over 450,000 artists register.

NCM said in its Q1 2022 financial announcement: “In addition to our music labels, we have become a natural incubator of musical talent seeking audiences, supported by our large community and large group of young users with diverse and personalized tastes.

“By the end of March 2022, we have served more than 450,000 registered independent artists on our platformrepresents an interval 70% compared to last year evolution.

“Meanwhile, in our content library, about 2.0 million won tracks come from our registered independent artists. “

All currency conversions from RMB to USD in this analysis are performed at popular quarterly rates used by Tencent Music EntertainmentWorldwide music business