China’s music industry is streaming ahead

opinion March 05, 2018 01:00

By Suwichai Songwanich
Chief executive officer,
bangkok bank (China)

3,041 Viewed

China is increasingly proving itself a world leader and innovator across a wide range of industries. Music, however, is one area where it lags. 

It’s fair to say that the country’s homegrown talents have significant ground to cover before their music inspires legions of fanatical fans the world round. Current bands are a far cry from creating a phenomenon anything like K-pop or J-pop. They are further still from challenging top acts from the US and Europe on the Billboard charts.

However, whatever shortfall China’s music industry suffers in terms of internationally successful talent, it is fast making up for it on the technology front. 

The nation leads the world in terms of digital downloads and digital revenue creation for music – 95 per cent of earnings comes from digital sales, with streaming accounting for 75 per cent. In comparison, the US, home to the world’s largest music market valued at $5.3 billion in 2016 by the International Federation of the Phonographic Industry (IFPI), leads digital sales in developed music markets with 75 per cent. 

China’s music market ranked 12th globally at $202 million, according to IFPI. Technology gives it significant potential to grow and become a major world player in the future.

Internet giant Tencent is spearheading the development of China’s digital music consumption with QQ Music, its answer to Spotify. The service has 400 million active daily users, which accounts for about a 70 per cent market share. 

Perhaps the most significant development is the fact that QQ Music, along with contemporaries such as NetEaseCloud Music and Xiami Music, have convinced younger fans that it is worth paying for music. China was once infamous for its music and video bootlegging culture. But now that the likes of Tencent have succeeded in getting fans to pay for streaming services that satisfy their more diverse and eclectic tastes, they are pouring millions of dollars into digital rights management technology to protect their lucrative assets. Despite the significant investments, QQ Music is turning a profit and performing much better than its international peers, such as Spotify and Apple Music, did at a similar stage of development.

These recent changes in China’s digital music industry are not only about how homegrown companies develop talent and technology and use them to expand on a global basis. International music brands are paying close attention to the scene and looking at how they can get in on the act.

Tencent Music Entertainment Group recently announced a new partnership with Sony Music to launch Liquid State, its first original label, which will focus on promoting electronic music across Asia. 

Industry observers also believe that rather than compete head-on with the likes of Spotify, QQ Music is more likely to seek a partnership where the two brands swap stock.

It may be some time before we see Chinese acts beating the likes of Rihanna, Drake and Ed Sheeran in the charts, but it may not be long before their streaming services arrive on your musical radar. 

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