4-year valuation of 8 billion, the birth of dark horse Netease cloud music
Tiger Sniff Note: Yesterday (April 11th), Netease Cloud Music announced the completion of the A round of financing. As a latecomer in the music industry, Netease Cloud Music became a "dark horse" with a valuation of 8 billion in four years. What did they do right?
This article in Caijing World reviews the growth track of Netease Cloud Music, including the origin and project establishment of the product.Tiger sniffing in the previous articleIt has been involved, so it was deleted when it was reproduced in this article.
This article is transferred from Financial World (ID: cjtxzk) | edited by Lu Hualei in Kong Mingming | Li Ran.
Netease Cloud Music, an App with a deep red background, has become an out-and-out dark horse in the online music market, and it will face more tests in the future with the great integration of the industry.
On April 11th, Netease Cloud Music held a press conference in Shanghai, announcing that the number of users exceeded 300 million. At the same time, it announced that it had completed the Series A financing of 750 million yuan, which was led by Shanghai Radio Station and Shanghai Culture, Radio, Film and Television Group (SMG). The valuation of this financing was as high as 8 billion yuan, and Netease Cloud Music, which was only launched for 4 years, was among the unicorn clubs.
Just after the New Year, the singer Zhao Lei’s name was brushed all over the circle of friends.
In the eyes of many people, the 31-year-old Beijing male singer became popular because she won the current runner-up with a folk song "Chengdu" in Hunan Satellite TV program "Singer". But in Netease Cloud Music, the name Zhao Lei has long been as hot as Jay Chou.
On October 24th, 2016, Zhao Lei’s "Chengdu" studio version was released exclusively on Netease Cloud Music, with over 30,000 comments a day, and 50,000 comments on Jay Chou’s new songs.
On December 21, 2016, Zhao Lei’s digital album "Can’t Grow Up" was exclusively released in Netease Cloud Music. Two months later, that is, two weeks after he won the runner-up, the sales of the album on Netease Cloud Music exceeded 200,000, which is nearly twice the total sales of the album on other music platforms.
From the popularity of Zhao Lei, we can see the characteristics of Netease Cloud Music, which is also a music platform. Zhao Lei’s fan growth rate, album sales and comments on Netease Cloud Music far exceed other platforms. Even QQ music with Zhao Lei’s exclusive live singing of "Chengdu" and more users failed to surpass Netease Cloud Music in data.
▲ In Netease Cloud Music, the name Zhao Lei has long been as hot as Jay Chou.
This is related to the community atmosphere and user types of Netease Cloud Music. Most of its more than 200 million users are young people from first-and second-tier cities, aged between 15 and 35, mostly students and white-collar workers. These people regard Netease Cloud Music as a music version of Weibo and a circle of friends, where they not only listen to songs and write song lists, but also frequently interact with independent musicians such as Zhao Lei, Li Zhi and Chen Li.
Compared with users of other platforms, these users contributed more music payment data. In 2016, the number of paid members of Netease Cloud Music increased by more than 9 times compared with 2015, while the number of digital album buyers increased by more than 7 times compared with 2015.
"Now QQ music and cool dog music rank in the top two in the industry, and we are tied for third place with Cool Me." Zhu Yiwen, CEO of Netease Cloud Music, told the reporter of Caijing Tianxia Weekly.
In the ranking of mobile application apps published by China Unicom in March 2017, QQ Music and Cool Dog Music ranked the top two in terms of monthly active users of 200 million and 150 million, while Netease Cloud Music and Cool Me Music ranked 56 million and 44 million respectively.
This App with crimson as the background color has become an out-and-out dark horse in the online music market.
According to the 2016 China Mobile Music Market Annual Comprehensive Report released by Analysys think tank, Netease Cloud Music increased by 163.8% in 2016 compared with the same period in 2014. Another data worth mentioning is the "music library utilization rate", that is, the efficiency of songs in the music library being played and listened to by users. The usage rate of Netease Cloud Music reaches 80%, while the industry average is less than 20%. This means that Netease Cloud Music is better at revitalizing the music library, and their users are also better at discovering "unpopular" music.
In April 2016, Netease Cloud Music was upgraded from the Music Product Center of Hangzhou Research Institute to the Music Division, becoming an institution on the same level as games, mailboxes, media and other projects. At the same time, it was reported that it started financing of 1 billion yuan, with a valuation of 8 billion yuan.
playlist
UGC mode not only increases the number of "song lists", but also improves the quality of song lists. The most important thing is to make the "music playing software" originally defined as a tool have social attributes-after editing and uploading the song list, users will actively push the song list on social media to show their music taste, and users with the same genre hobbies will comment and share under the song list. This makes the originally lonely music play lively.
"Most of the previous products told users’ I have a lot of songs here, you can listen to and download songs here’, and we want to tell users that we can help you find good songs, especially those that you may like but you don’t know."
In January 2013, Netease Cloud Music logged into the App Store, and Zhu Yiwen brushed Weibo all night that night and found that it "caused a sensation, and many people commented that it was a subversive product".
The first group of users are "musicians from major music forums or platforms". With the help of Chloe Wang’s connections in the music circle, they called "more than 20 best DJs in China" to upload song lists in Netease Cloud Music Production, which quickly caused users to follow suit, and more music lovers entered Cloud Music and made their own song lists.
Users have uploaded their own song lists compiled in different environments and emotions to Netease Cloud Music. Just from the name of the song list, they can see their love for this way of creation. Besides the common song lists that express their emotional needs, such as "those songs that accompanied me through the lovelorn period" and "healing songs", there are also songs that are suitable for different environments, such as "essential songs for knitting sweaters in the sun in winter", "most suitable songs for drinking coffee in the afternoon" and "essential songs for the elderly chess room".
Some fans enjoy making song lists without any material rewards, just hoping to meet "bosom friends".
"In version 1.0, in order to encourage some opinion leaders to create song lists, we will put their song lists on the homepage for recommendation, so that the collection and playback of song lists will increase rapidly, which is a great encouragement for the creators."
Of course, in addition to the appreciation from "bosom friends", song list makers will also get accusations from other users, such as "it is really a failure not to put such a song into the song list", and such nitpicking and responses have spawned user interaction, which, in Zhu Yiwen’s view, is "the embryonic form of music socialization".
Now, cloud music generates an average of 420,000 song lists every day. On the cloud music platform, the number of high-quality song lists (songs collected by more than 100 people) exceeds 200 million, among which the most clicked song list is "epic music that shocked the soul" made by ordinary users, with 1.17 million people collecting it, 28.82 million playing it and more than 17,000 comments. Some users commented under this song list, "Because of this song list,
"Now the song list has become a productivity tool." Zhu Yiwen said that with the increase in the number and quality of song lists, these song lists have replaced "music collections" in a wider range to meet the needs of different scenes. Some wedding companies directly use the wedding song list on Netease Cloud Music as the background sound of the wedding scene, while some video production companies choose the appropriate background music from the song list.
Today, the homepage of Netease Cloud Music no longer recommends a few songs in a unified way, but makes "personalized recommendations" according to each user’s music habits. Using big data technology, they will recommend songs that they may like according to the characteristics of different users.
"For example, if one million people like to listen to Blue Lotus as well as Ice Rain, which proves that the two songs are related, then we will recommend this combination to those who only listen to one of the songs. This is the basic algorithm for our song recommendation." Zhu Yiwen said.
This song list combination algorithm has brought higher activity to Netease Cloud Music. Now 50% of users are used to clicking and reading comments when listening to songs, which is a scene that has never appeared on other music platforms.
▲ Recently, Netease Cloud Music made the high-quality music reviews of ordinary users into posters and put them on the Hangzhou subway to explode the circle of friends.
In Zhu Yiwen’s view, this data proves that they have changed the listening habits of some people.
"In the past, everyone turned off the screen and listened to music after turning on the music player, but now they will listen to songs while listening to them, which proves that he is not listening to songs alone, but listening to songs with a group of people, which brings a human touch to Netease Cloud Music."
This has become the biggest moat of Netease Cloud Music. These music-loving users have continuously created content for Netease Cloud Music Platform, which extends a better "community atmosphere".
"The function may be imitated by others. If we are just a playing tool, others can easily copy our function. But today we are a community and they can’t copy my content. "
After Netease Cloud Music launched the "song list", other music playback platforms also launched similar functions. Even Cool Dog Music opened the "song barrage" in June 2016, and user comments appeared on the cover of songs in the form of barrage, further improving user interaction. However, the users of Netease Cloud Music are more active. In the ranking of monthly traffic consumption of music App users in China Unicom’s March Wo Index, Netease Cloud Music users lead other music platforms with 87MB, while QQ music users’ monthly traffic is 43MB and Cool Dog’s is 13MB.
change
Last year, changes in Netease Cloud Music attracted the attention of the industry.
In April 2016, Chloe Wang left Netease Cloud Music and joined Baidu Music three months later as the general manager. At the same time, the structure of Netease Cloud Music was further adjusted. Zhu Yiwen was promoted from the earlier product director to the CEO of Netease Cloud Music, responsible for the overall management of Netease Cloud Music and reporting directly to Ding Lei. Chloe Wang’s previous operation and management work was taken over by Ding Bo, vice president of Netease Cloud Music, who reported to Zhu Yiwen.
▲ Ding Bo, vice president of Netease Cloud Music, took over the operation management and reported to Zhu Yiwen.
The upgraded Netease Cloud Music has increased its support for independent musicians.
"Music also has a niche market. In the past, everyone was keen to listen to those popular songs, but now different people actually like different songs. Just like in the early years, everyone only watched CCTV, but now with the rise of various media and more people like different content, everyone’s tastes have been divided. " Zhu Yiwen said.
In November 2016, Netease Cloud Music released an independent musician support plan called "Stone Plan", which plans to invest 200 million yuan in one year to support independent musicians from seven aspects: promotion resources, album investment, performance opportunities, appreciation opening, music training, musicians’ surroundings and musician index system.
"Our definition of independent musicians is very broad. As long as we can record and upload songs, we can be independent musicians. However, we will develop a scoring system for such musicians, which is similar to the Baidu Index, and we will promote and support them according to the status and potential of musicians. " Zhu Yiwen said that these musicians can review and upload songs after filling in their personal identity information in the background. If the data of their songs on the platform is good enough, Netease Cloud Music will focus on exploring and creating new stars.
This is how Chen Li, a female folk singer, was discovered.
"At the end of 2013, we found that Chen’s data curve on our platform was very beautiful, so we focused on taking out her songs for recommendation. Later, sure enough, she was on fire. Of course, I dare not say that her popularity is all due to Netease Cloud Music, but it can be seen that the sales of her digital album here are record. " Ding Bo said in an interview with the reporter of Caijing Tianxia Weekly.
As of March 2017, the number of fans of Chen Li in Netease Cloud Music and QQ Music was 870,000 and 749,000. On July 26th, 2016, she simultaneously released her digital album "Little Dream Most" on Netease Cloud Music, QQ Music and Weibo Music. During the initial sale period-within two weeks, the album sold 50,000 copies in Netease Cloud Music, with sales of 1.01 million yuan. On the QQ music platform, it sold 27,000 copies with a sales volume of 549,000 yuan.
▲ The sales volume of Chen Li’s digital album in Netease Cloud Music is record. The activity of independent musicians has made Netease Cloud Music make up for the shortcomings of copyright to some extent.
Now there are more than 40,000 independent musicians on Netease Cloud Music Platform. This number may not be the largest among all online music platforms, but it is the highest in terms of activity. These musicians uploaded more than 800,000 original music works. In 2016, the number of settled musicians and uploaded original works doubled year-on-year, and the amount of original music played increased by more than five times.
"Independent musicians are more likely to become popular on our platform because our user base is more inclusive of new music. This makes it easier for us to promote some unpopular music, and it is this difference that allows independent musicians to get better development here. " Zhu Yiwen said.
The activity of independent musicians has made Netease Cloud Music make up for the shortcomings of copyright to some extent. As a latecomer, although Netease Cloud Music has gathered a popular community through the music+social mode, it still lags behind in terms of song copyright.
On July 15th, 2015, QQ Music announced the merger with China Music Group, becoming the largest exclusive copyright giant in China, which brought a lot of pressure to the latecomers.
At present, there are more than 10 million songs in Netease Cloud Music Library. Some of these songs are copyrighted by record companies, while others are purchased by Tencent in the form of exclusive copyright, and they need to pay distribution fees or copyright fees to Tencent.
Regarding the weakness of copyright, Ding Bo reflected: "Our biggest mistake is that these giants didn’t make timely moves when they went to grab exclusive copyright, which led us to be constrained by others in the future growth rate, but we also took a positive attitude to deal with this situation. We undertook distribution and paid copyright fees, hoping to bring users a better experience."
In order to fill the copyright shortcomings, Netease Cloud Music costs a lot.
Zhu Yiwen said: "At present, 80% of the total cost of Netease Cloud Music is spent on purchasing copyright." High copyright fees have delayed the profit plan. Since its establishment, Netease Cloud Music has never made a profit.
And the emergence of independent musicians let them see another opportunity-from copyright competition to copyright production.
On the one hand, they can make profits by selling digital albums. For example, Zhao Lei’s album "Can’t Grow Up" sold more than 200,000 yuan, which brought more than 3.2 million yuan to Netease Cloud Music. This album, which has no physical record and is only sold in digital form, is low in cost, low in price, convenient to buy and sell, and easy to create high sales.
On the other hand, they can cooperate with independent musicians and become record companies in the internet age.
In an interview with the reporter of Caijing Tianxia Weekly (ID:cjtxzk), Ding Bo said: "Traditional record companies use brokers to help musicians create songs, while the Internet platform can cover all brokers’ businesses. Besides traditional brokers, Internet companies can also help musicians make various data and provide various index reports."
Netease’s ambition for "original music" is obvious. Since it can’t surpass its rivals in the copyright of existing songs, why not overtake them in the "original music"?
In addition to selling digital rights, they will also open an "appreciation" function for independent musicians. Users can appreciate a favorite song, which may not be much, but it is an encouragement for musicians who have just debuted.
Under the situation that competitors monopolize copyright, this way of upstream and downstream development has become the new direction of Netease Cloud Music. In addition to promoting independent musicians, they also invested in music-related hardware manufacturers and undertook ticket sales for some small concerts.
At the same time, other music platforms are undergoing a new round of integration.
QQ Music and China Music Group merged to become Tencent Music Entertainment Group, with Tencent accounting for 60% of the shares. At present, this huge music group controls 42% of the copyright authorization of music lyrics and 53.1% of the copyright authorization of music recording in China. After the merger, QQ Music, Kugou and Kuwo belong to the same group company, with a market share of more than half.
On July 26, 2016, 10 days after the merger was announced, Wu Weilin, general manager of Tencent Digital Music Department, told the media that QQ Music "has achieved profitability", which is the first music streaming service in the world to announce profitability. It is reported that QQ Music will launch a listing plan with a valuation of nearly $10 billion.
In December 2015, Baidu Music announced the merger with Taihe Music Group, whose three major music brands, Taihe Wheat Field, Haidie Music and Dashi Copyright, reached various forms of cooperation with hundreds of well-known artists, and also reached in-depth cooperation with more than 100 institutions including the three major record companies in the world, holding music copyrights of more than 12 million through self-production and agency. Baidu Music has officially become a music industry chain company including record companies, copyright agents, live performances, ticketing and other businesses.
Netease cloud music, which has reached the front line with a dark horse posture, will face more challenges in the future.
But Zhu Yiwen still regards finding good music as the focus of Netease Cloud Music.
"I am not a heavy music lover, but I am a music discoverer." Zhu Yiwen said, "In 2013, Boss Ding took me and Chloe Wang to an activity. On the way, Chloe Wang asked us to listen to a song, saying that this song would definitely be popular in the future. At that time, I thought the lyrics were very distinctive, including wild horses and grasslands."
After listening to a song, Boss Ding agrees with Chloe Wang’s judgment. Later, this song was really a fire.
The singer’s name is Donye.S, and the song title is Miss Dong.