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The Changing Landscape of China's Online Music Market
Online live concert and pay per download services generated total revenue of 1.82 billion Yuan (USD 303 million), an increase of 379%
By Yuhao Xiang
(more articles from this author)
2013-05-16
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According to China Culture Market site (www.ccm.gov.cn), music consumers have drastically increased in year 2012, as a result of the increasing amount of internet users through devices such as smartphones and improved network speeds from the carriers. Undeniably, the music industry itself has been maturing over time as the government also has been playing a vital role in copyright control.

In addition to the traditional business model, the majority of music consumers are moving towards online music services. By the end of 2012, there were 575 registered companies operating China's online music market, an increase of 27.2% compared to 2011, and the number is still growing. Although free music services still dominate the market, newly developed music services have begun having an influence on the market and gaining popularity. For example, online live concert and pay per download services generated total revenue of 1.82 billion Yuan (USD 303 million), an increase of 379% from 380 million Yuan (USD 63 million) in 2011.

As for online music consumers, there are total of 426 million users, with 77.3% of them as active users. Moreover, there is a decreasing gap between male and female users and growing amount of users across diverse age groups and incoming levels.

As illustrated by the above chart, China mobile music market reached 2.72 billion Yuan (USD 453 million) last year. Thanks to large amount of mobile device sales and improved network bandwidths, internet users are consistently growing, extended to 750 million music subscribers, with 66.9% of active users. It also shows that music providers are rising as they seek to provide better and newer services for their customers.

While the industry is booming, China's music market is still facing major problems. First, copyright control remains difficult to enforce. Although many major providers such as Baidu, Tencent, Kuwo, Duomi, and Xiami have already started offering paid digital music services, many unauthorized providers are still offering free music services on the internet. Second, online music providers still rely on an unsustainable profit model, relying primarily on advertising revenue for most of their income by attracting users with free music services. With most consumers are unwilling to pay for music services and the providers are heavily depended on large amount of users to browse their ads, the market still has a long way to mature, not to mention that the payment methods have yet to be standardized. Lastly, due to the unpredictability and risk associated with the music market, there has been a lack of interest from investors, severely limiting the markets development.


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