TME dominates in China's booming digital music industry, but concerns over sector copyright and sustainability linger
China's ever-expanding digital music industry was one of the hottest on the agenda during global music industry event "Music Matters" held in Singapore from Monday to Tuesday, with worldwide company representatives all highlighting the sector's huge market potential in the near future. As a firm owner of music copyrights in the domestic market, Tencent Music Entertainment Group (TME), Tencent's music unit, has been leading the industry.
For China's online music industry, the best era may have just arrived.
"If I use several keywords to summarize China's music industry in the first half of 2017, it's upgrading and growing as well as expanding the industry ecosystem," Cussion Pang, CEO of Tencent Music Entertainment (TME) Group, told the Global Times on the sidelines of global music industry event "Music Matters" in Singapore on Tuesday. TME was the sponsor of the event.
Upgrading refers to the integration of the traditional music sector with online momentum, Pang illustrated.
China is now home to the world's largest mobile phone user proportion. The huge online population, combined with the growing number of young music fans who are addicted to listening to music via their smartphones, has led to the rapid explosion of the digital music sector.
In 2016, China's music industry was valued at 285.15 billion yuan (.7 billion), up 4.73 percent compared with the number in 2013, according to a report released by the State Administration of Press, Publication, Radio, Film and Television. Among which, the market volume of the digital music sector stood at 48.13 billion yuan, maintaining a robust annual growth rate of 50 percent from 2015, said the report.
The ballooning expansion was also partly thanks to new rules copyright regulators unveiled in July 2015, known as a ''watershed'' moment for the digital music sector, an industry insider pointed out. The new regulations require online streaming services to stop providing unlicensed music to users.
"Prior to 2015, the digital music sector was in chaos, whereby piracy was rampant and consumers lacked awareness of paying for intellectual property," Pang said, noting that the new rules have created a healthier and more legitimate environment for the industry's long-term development.
During the event, industry representatives also highlighted the enormous untapped potential of the nation's online music sector.
"China is still at the early stage compared with foreign countries such as the US and UK, which not only have larger user numbers, but also a higher paying subscriber ratio," Pang said, noting that this phenomenon heralds a promising market prospect for China.
For example, about 30 percent of users in foreign markets such as the US and UK are paying subscribers, compared with a one-digit percentage in China, said Pang, citing an industry report.
The booming domestic online music sector has drawn in a flock of music platforms, which have received funding from China's leading tech conglomerates to vie for market shares.
As competition intensified, those music platforms have consolidated with each other and built up their own foothold, with Tencent-backed QQ Music, Kugou Music and Kowo Music occupying the majority of market shares.
And other players, including Netease Cloud Music - which raises funds from Shanghai Media Group - Alibaba-backed Xiami Music as well as Baidu-backed Taihe Music and Baidu Music, are taking up the remaining small market stakes, experts said.
According to the Data Center of China Internet, Tencent's three music-streaming apps now control a whopping 75 percent of the total market shares. This is followed by Netease Cloud Music and Baidu Music, holding 16 percent and 4.3 percent of the total market share, respectively.