The parent company of NetEase Cloud Music published its latest financial results yesterday. Cloud Music Inc’s filing revealed that the company is facing similar dynamics to its rival Tencent Music, with its music service continuing to grow, but challenges for its social entertainment division.
NetEase Cloud Music ended June with 206.7 million monthly active users of its online music services, up 13.7% year-on-year. 41.8 million of those people are paying for music in some way: subscriptions and/or digital album downloads. That’s up 11.1% year-on-year.
Revenues from these online music services grew by 13.3% to RMB 2bn (around $274.4m at current exchange rates) in the first six months of 2023. However, revenue from its social entertainment services – a category that includes livestreaming – dropped by 24% year-on-year to RMB 1.9bn (around $260.7m).
So, just like Tencent Music, online music is now a bigger source of revenues than social entertainment for NetEase Cloud Music, with its rival hitting that tipping point in the second quarter of this year.
Another stat from NetEase Cloud Music’s financials: it now has more than 646,000 registered independent artists, who have uploaded around 2.8m tracks to its platform so far. The company also talked about its ‘X Studio’ voice-synthesis software, which currently provides “12 natural singing voices” for musicians to use in their work.
NetEase Cloud Music has also launched a ‘Comment Square’ feature to offer another way for fans and artists to post and browse comments about music, and is working with NetEase Games to find more crossovers: for example embedding its music player within a popular casual game called Eggy Party, and launching a “bundled vinyl VIP membership” with that game.
Taken together with Tencent Music’s financials, you get a sense of the current scale of China’s streaming ecosystem. In a market where paid music was historically challenged greatly by piracy, its two largest DSPs now have between them 141.2 million people paying for music.
Even with some overlap between Tencent Music’s 99.4 million and NetEase Cloud Music’s 41.8 million, that still represents huge progress from where the market was a decade ago.