Stat Of The Week: 1 in 5 streams on Tencent Music platforms will be behind a paywall by the end of 2020

 Stat Of The Week: 1 in 5 streams on Tencent Music platforms will be behind a paywall by the end of 2020


MBW’s Stat Of The Week is a new sequence in which we present why a single information level deserves the consideration of the international music trade. Stat Of the Week is supported by Cinq Music Group, a technology-driven document label, distribution, and rights administration firm.

The thought of ‘windowing’ large music releases behind a premium-only paywall is now not de rigueur in the Anglo-American music trade – nevertheless it got here to thoughts this week with the information that Universal and Spotify have signed a fresh global licensing agreement.

The final time Universal and Spotify inked such a pact, in 2017, they made UMG’s ability to put major new releases behind a Premium-only paywall the headline takeaway from their deal.

Yet subsequent uptake, from each UMG and the wider trade, was gradual.

Other than a big album from Jason Aldean (Rearview Town, 2018) and a less-big reside album from Rammstein (Paris, 2017), just about each different main league artist releasing music on Spotify has carried out so on the platform’s free tier and Premium tier concurrently.

Indeed, the prospect of ‘windowing’ a launch on paid-for-only streaming companies barely even comes up in dialog anymore.

Even Taylor ‘Music Has Value’ Swift caught her final studio LP, Lover (and her very new studio LP, Folklore) on Spotify’s free tier on day one of launch.

The causes artists and document labels have gone down this route are distinctive in every case, nevertheless it’s truthful to say that two overriding motivations stand out:

  • (i) Ad-supported tiers like Spotify’s nonetheless contribute closely in the direction of charts like Billboard’s Hot 100 (though much less so, per stream, than paid-for tiers). And artists nonetheless very very like being No.1;
  • (ii) Because YouTube exists, the place free music is accessible, each formally and through person uploads, in head-bending volumes.

In China, of course, there isn’t a YouTube – it’s been officially blocked in the country since 2009.

This truth arguably helps main streaming companies (and artists) in the market to experiment extra with paywalling premium content material.

And that’s precisely what Tencent Music Entertainment (TME) – proprietor of QQ Music, Kugou and Kuwo – has been doing, with more and more spectacular outcomes.

According to TME, throughout the first quarter of 2020, its on-line music subscription revenues jumped 70% year-on-year to $170m.

That was a larger YoY climb than that seen each in the prior quarter (+60.1%) and the quarter earlier than that (+48.3%).

Driving this enhance was the proven fact that, in Q1 2020, the quantity of folks paying for music on TME companies grew to 42.7m, a determine which was up 50% year-on-year, and almost double what it was two years prior (Q1 2018: 22.3m).

Most importantly for this story, Average Revenue Per Premium User (ARPPU) grew but once more on TME’s music platforms in Q1 2020, up 13.3% year-on-year.

That’s clearly in stark distinction to the narrative over at Spotify, the place international subscriber ARPU continues to sink, falling 7% YoY (at constant currency) in the first three months of 2020.

How is Tencent managing to push up its ARPPU fee? In the phrases of TME’s Chief Financial Officer, Shirley Hu, it’s due to the firm’s “continued success of paying user retention” and, crucially, its “content paywall strategy”.

“Internally, we estimate that, by the end of this year, the paywall should account for approximately 20% of our streaming volume.”

Tony Yip, Tencent Music Entertainment

A standout stat (and our Stat Of The Week right here) on this matter was given away on TME’s newest earnings name in May.

Tony Yip, TME’s Chief Strategy Officer, informed traders that, at the shut of 2019, “approximately 10% of the streaming volume on our platforms” was of music solely accessible behind a paywall – i.e. windowed for Premium customers solely.

He continued: “Internally, we estimate that, by the end of this year, the paywall should account for approximately 20% of our streaming volume.”

Obviously, due to the international pandemic, that is no regular 12 months for TME (or anybody else). But, as the end of March, mentioned Yip, his firm was nonetheless on monitor to hit this 20% goal.

In the borderline-incestuous hierarchy of the fashionable international music enterprise, Tencent Music Entertainment – itself majority-controlled by Tencent Holdings – owns minority stakes in Spotify, Universal Music Group and Warner Music Group.

On the flip facet, the likes of Warner Music Group and Sony Music Entertainment personal stakes in TME. And the evidence suggests they actually don’t love studying about Spotify’s ARPU persevering with to tumble.

With that in thoughts, these and different high music rightsholders will little doubt be watching, with eager curiosity, to see how Tencent Music Entertainment’s paywall technique in China performs out in the months and years forward.

Cinq Music Group’s repertoire has won Grammy awards, dozens of Gold and Platinum RIAA certifications, and numerous No.1 chart positions on a variety of Billboard charts. Its repertoire includes heavyweights such as Bad Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel, and hundreds more.Music Business Worldwide


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