Specialist
Director at Go East Music Entertainment Consulting (Beijing) Ltd (formerly Universal Music Ltd, Beijing Branch)
Agenda
- Review of Tencent Music Entertainment’s 2018 financial report
- Revenue composition and growth trends of Tencent Music Entertainment’s online music services and social entertainment services
- Tencent Music Entertainment’s investment in music copyright and its competition with NetEase Music
- Tencent Music Entertainment’s development strategy
Questions
1.
Can you brief us on the development of foreign and Chinese mainstream online music platforms in 2018-19? What are notable market dynamics and development trends?
2.
You mentioned that Spotify used to dominate the market but may have been exceeded by Apple Music in terms of the user amount all of a sudden. Why?
3.
In Q4 2018, TME generated revenue of RMB 5.4bn, up by 50% YoY, the amount being larger than the expected amount of RMB 5.278bn. In its revenue, 71.85%, that is, RMB 3.88bn, has been contributed by karaoke apps and live-streaming services. The amount has gone up by 52.8% YoY. The rest 30% came from online music services such as paid subscription, music licensing to third-party platforms and digital album sales. The contribution was RMB 1.52bn, up by 45% YoY. What is your comment on performance of TME in last Q4? Did revenues generated from its two major business sections grow as fast as it expected? In which areas do you think TME performed outstandingly and in which it did not?
4.
What is your estimate on revenues of TME generated from online music services and social entertainment services respectively in Q1 or H1 2019?
5.
TME’s sources of revenues from online music services include paid subscription, music licensing to third- party platforms and digital album sales. According to its financial report, paid music covered in subscription packages contributed to revenue of RMB 695m, the amount being RMB 505m at the same time in the previous year. What is your estimate on revenue growth in paid subscription, music licensing to third-party platforms and digital album sales respectively in 2019? Which one will be the primary revenue driver?
6.
This year, Rocket Girls 101 released Collide, which generated revenue of over RMB 20m. Other popular albums include Jay Chou’s Bedtime Stories by Jay Chou and Liu Xing by Chris Lee. How many digital albums may be developed annually? How many of them can generate revenue of RMB 10m or RMB 20m? How much revenue can TME generate from digital album sales in 2019?
7.
In Q4, the amount of mobile monthly active users (MAU) of TME has grown by 7% YoY to 644 million from 603 million; the amount of paying users has soared by 39% to 27 million; the proportion of paying users in total users has also increased to 4.2% from 3.2% last year. You mentioned that the growth was slower than expected. What is your comment on change of MAUs and the proportion of paying users in total users in TME, NetEase Music, Xiami Music or Qianqian Music from last Q4 to this Q1 and April and May?
8.
JayCn announced on 26 March that JVR Music had entered into an agreement with QQ Music. Some of Jay Chou’s songs were made available exclusively to the paying users of QQ Music, and his other songs were expected to turn into paid content gradually. So far, Jay Chou’s songs have all become accessible for paying users only. Because of this, QQ Music is believed to see a notable increase in the conversion from free to paying users this year. What is your estimate of the number of new paying users Jay Chou’s songs have brought in for QQ Music from 26 March to today (13 May)? Do you think QQ Music will offer more songs, particularly those performed by A-list singers, as paid content in the future?
9.
Does NetEase Music lag behind TME in terms of offerings for paying users? Will it see a decrease in the number of paying users?
10.
How many MAUs and paying users does NetEase Music have?
11.
Why does NetEase Music lag far behind TME in terms of the size of music library but is comparable with TME with respect to the proportion of paying users?
12.
Can you compare QQ Music, Kuwo Music, Kugou Music, NetEase Music, Xiami Music and Qianqian Music in terms of the size and quality of their music libraries and their co-operation with record labels?
13.
Can you update us on the exclusive co-operation between online music platforms and record labels? Given the tightening antitrust regulations, do you think the platforms will find it increasingly difficult to acquire exclusively licensed songs?
14.
TME is the only profitable online music platform in China but it recorded net losses of RMB 876m mainly due to a one-off RMB 1.52bn share-based accounting charge related to TME’s equity issuance to WMG and SME, its music label partners. How much do TME and competitors have to pay for music copyright every year and how often do they have to renew the contract for copyright? Do they have to spend nearly RMB 1bn once on copyright every year or quarter at least?
15.
Is there a difference in copyright charges for platforms opening copyrighted songs to paying users only and from platforms on which songs are available to all users?
16.
What do you think of NetEase Music’s move to live-streaming services, the prospects and competitive advantages and disadvantages compared with TME?
17.
Do you see the possibility that users become paying users of two online music platforms at the same time?
18.
Ordinary users can only listen to music on TME’s online music platforms in mainland China but paying users can access music via TME’s platforms even when they are abroad. Why is that? Are TME entitled to copyrighted music in specific regions or across the globe?
19.
Jinri Toutiao and Baidu may incubate online music start-ups. Will they develop such platforms via existing resources like Douyin or design and develop something completely new? Will they be a shock to the online music sector?
20.
How can online music platforms extend presence along the industrial chain? What do record labels think of their moves in developing singers and creating original works?
