Spotify finally stepped off the altar and made products with TME and Netease Cloud?

Author | Peng Peng Editor | Fan Zhihui

The business of online music is not easy to do. Spotify, who focuses on pushing songs for users, finally began to go down the altar and run into music pan -entertainment with other industries.

On July 12, Spotify announced the acquisition of the Guessing Guessing game Heardle to support music discovery and consider integrating into the main product in the future. On June 30, after a few months of testing, Spotify launched the K song function in some markets to gradually launch the function. Spotify said that all users can use the new karaoke function, not just paying subscribers.

In this way, after the live broadcast, Spotify's functional sector seems to be getting closer to TME and Netease Cloud, that is, the two core sections of online music and social entertainment. We are curious, why do Spotify cut in the K song function that seems to be more preferred by East Asian users, and in the future, will the digital music platform at home and abroad achieve "the world"?

Why did Spotify start doing K songs?

Choosing K song is by no means a moment of the rise of Spotify, which can be traced back to a business line two years ago.

As early as September 2020, the famous reverse engineer Jane Manchun Wong released news on Twitter that she found the new feature of Spotify to go online by digging the code. In the same month, Spotify obtained a technical patent that supports the K song project in the United States. The patent was submitted in December 2015 and was authorized on September 8, 2020.

However, during the two years when Spotify's technical to functional layout, the K song platform owned by competitors Amazon is "coming and rushing."

Twitch Sings is a K song application owned by the live broadcast platform Twitch. It was officially launched on April 13, 2019. At this time, Amazon has acquired Twitch, and the platform has become a pilot on Amazon Music to K song function. However, in September 2020, almost in the same period of Spotify's internal test K song function, Twitch Sings announced its suspension on January 1, 2021.

As for the reason for shutdown, Twitch officially explained that "looking forward to the future, we decided to invest more extensive tools and services to help support and develop the music community on Twitch." Subsequently, Twitch's attention was more inclined to the live broadcast function, and and and and and tilted the live broadcast functions, and and offered, and tilted the live broadcast function, and and offered, and tilted the live broadcast function, and and offered, and tilted the live broadcast function, and and offered, and the live broadcast functions were inclined, and the live broadcast function was tilted, and the live broadcast function was inclined. Integrate the live broadcast function to the main product of Amazon Music, which also helps Amazon Music fast Spotify to launch the live broadcast function in one step.

In the field of K song, strong local player Smule showed market enthusiasm to it. As the United States, the K song social platform, so far, SMULE has raised $ 156.5 million in investment, of which $ 54 million is coming from TME. As of now, the platform has more than 10 million song libraries and 52 million per monthly active users. Among them, 2 million people are willing to pay $ 20 or $ 99 per year to unlock popular songs.

However, from the data released in 2017, 40%of SMULE 52 million per month in Southeast Asia, only 1/3 users in the North American market. And American reporter Joan Solsman said in the report, "In the United States, only about 15%of people can recognize Smule from a series of applications."

From the data point of view, it seems that Asian users love singing. In sharp contrast to the "wind and rain K song road" in the British and American markets, the K song applications in the Asian market have made great progress all the way.

According to the "White Paper Insight in the Development of China's Online K Ge Society Entertainment Industry in 2020", since the large -scale development of the online K song industry in 2014, the number of monthly active equipment in the industry in 2019 is approaching 220 million, of which the national K song is steadily sitting online K. The first place in the song industry. It is worth noting that the national K song is also moving towards other Asian countries, and has landed in the Philippines, Indonesia, Thailand and Malaysia to provide services.

With the expansion strategy in emerging markets, this time Spotify launched the K song function, on the one hand, to catch up with its own Oriental counterparts, on the other hand, K song may also be one of Spotify's products that are expected to leverage emerging market products.

Spotify goes off the altar, transform music pan -entertainment

Whether Amazon chooses to shut down the K song platform, turn to music live broadcast, or Spotify after the live broadcast function, the K song function is launched, and its underlying logic is the same, that is, transition to the field of music pan -entertainment.

In fact, from the current product layout, Spotify has now integrated the content of podcasts, live broadcasts, audiovisual studies, etc., and has become more and more with QQ music, cool dog music, Cool Music and Netease Cloud music. Essence

The reason for the choice of transformation is because after the loss for ten consecutive years, Spotify has finally seen the dilemma of high online music business costs. The model of advertising revenue+paid subscription is almost the same in the short term. possible.

For digital music platforms, important pillars have seen ceiling. Due to the natural "disadvantage" of the music form, ads cannot be inserted in the audio, and the user conversion rate is not good. According to the "2021 China Internet Advertising Market Insight", the annual advertising revenue of mobile video has reached 100 billion yuan, while the advertising revenue of mobile music is less than 10 billion. The SPOTIFY, which has been deeply plowing for the payment subscription model for many years, has steadily increased its user payment rate to the peak of 46.6%in the second quarter of 2019. However, the gross profit margin began to decline from the third quarter of 2019, and then stagnated. In China, the payment rate of online music is led by Netease Cloud Music. In the first quarter of 2022, NetEase Cloud Music's user payment rate reached 20.2%, but Netease Cloud Music was also in a continuous loss.

When the digital music platform is making a problem for profit, TME has a great trend of "the scenery is unique". As of the first quarter of 2022, the net profit of 13 consecutive quarters has been achieved, and the user payment rate of TME at this time is only 13.3%. There is no doubt that the weapon mastering in the hands of TME is the commercialization of social entertainment.

According to statistics, from 2016 to 2019, the social entertainment business has been the pillar of TME's revenue. In the past four years, the income of the business accounted for 50.8%, 71.3%, 70.8%, and 71.9%, respectively. Even though the live broadcast format has been introduced to the live broadcast format this year, the entire industry is facing the pain of adjustment. However, as of the first quarter of 2022, TME social entertainment services and other business revenue were 4.03 billion yuan, and the revenue of this business sector accounted for 60.7%.

The revenue capacity brought by TME's two -wheel drive mode also attracts players in the industry to step up the social entertainment business, all in the same direction.

At present, digital music platforms are expanding to the industry upstream. The production costs are saved through the production of UGC content and the incubation of independent musicians. Since 2018, Spotify has begun to win the artist's direct authorization, causing dissatisfaction with the record of the record of the record. This year, Spotify also stated that it will focus on developing the content of podcasts and audio books. Unlike centralized procurement of music copyrights, this is intended to mobilize the enthusiasm of users in content production.

As described at the first investor day since the listing, Spotify transforms from a music discovery and playback service platform to a mature platform for artists and creators to create, interact and make money here, and subscribe, advertise and advertise and advertise and advertise. The creator service mode is applied to multiple vertical fields such as music, podcasts, and audiovisual studios.

In contrast, the same story is also staged on Netease Cloud Music. After NetEase Cloud Music was listed, Ding Lei released an open letter "Believe in the Power of Music". In the letter, Ding Lei said: "What will Netease Cloud Music look like in the future? In my opinion, it may be more like a universe. Music, podcasts, live broadcasts, K songs, sound theaters, radio ... The form of content will be quite rich. Scenes and experiences will also be quite rich. "

To sum up, it is not only music, but also music pan -entertainment.

Regardless of domestic or foreign, whether it is music or long audio, the digital music platform at home and abroad has reached a consciousness on "who has the right to discuss bargaining." On the other side, UGC content and independent musicians have incubated into a good strategy to reduce costs and increase efficiency. Major platforms are actively deploying the "content-scene-experience" platform ecology and leveraging the competitive advantage of memory.

Can Spotify make a social entertainment dream?

It is undeniable that the commercialization of social entertainment services is releasing its value to the industry.

Compared with the concept of "social entertainment business" in China, foreign countries are more called "Tipping Revenues". This method can better reflect the essence of this business sector: the platform creates revenue through the user's reward. After TME broke the curse of the digital music platform through Tipping's business model, it inspired many foreign -focused content creation platforms.

In 2016, Amazon's live broadcast platform Twitch launched the reward function Cheer. However, before the launch of the reward function, many anchors will publish their own PayPal on their personal homepage, bypassing the platform directly to accept the audience donations. CHEER obviously did not defeat such a supply and demand relationship. In 2021, Twitch announced the new features of testing services for the reward service, allowing users to directly transfer to the creator account. Unfortunately, the reward boom on Twitch is only in the game field, and has not yet extended to the music field.

The most important attempt in the field of music is Anchor from Spotify. Judging from the information published on the official website, ANCHOR provides exclusive subscribing services. The audience can choose a three -telled subscription of $ 0.99, $ 4.99 and $ 9.99 a month. Anchor charges a minimum of 4.5%from each exclusive subscription. The platform outsourcing financial management company Strip charges 5%, plus a fee of $ 0.1 and a transfer fee of 0.25.

Obviously, the reward function has not helped Spotify's podcast sector to achieve profitability, let alone nurturing the entire platform. The reason is that Spotify's platform does not have enough social atmosphere. The user's functional positioning is close to a song retrieval platform, not a social platform. "Chinese music applications are more advanced in the integration of music streaming media with live broadcasts, karaoke, and social communities." Previously, Elinor Leung, the director of Asian Telecom and Internet Research on CLSA, said in an interview with Reuters, "Social interaction is the social interaction is The main difference between Chinese music applications and Western music applications. "

Therefore, even though Spotify is becoming more and more like TME through the development business layout of live broadcasts, karaoke and other functions, it is not known whether it is Essence

It can be seen that the digital music platforms at home and abroad have flooded to the "large and complete" function layout, and they are constantly "adding branches and leaves" in addition to listening to song functions. However, on the same track, everyone's speed is fast and slow.

Conclusion

"I can't see the shore in front of me, there is still a group of geniuses behind it." Li Zongsheng's lyrics may be the recent mood of Spotify, which is really annoying.

Data show that in the first quarter of 2022, although Spotify was still in the position of the boss of music streaming, the sum of the number of paid users of TME and Netease Cloud Music has exceeded Spotify. In order to get out of the profit, Spotify's content layout and product ecology have to from Copy to China to Copy from China, so as to achieve the "monthly survival 100 billion, annual income of 100 billion US dollars, 40%gross margin and 40%gross margin and 40%in the next ten years. The goal of 20%operating profit margins.

On July 12, after the SPOTIFY acquisition of the Guessing Guess game Heardle, Spotify music director Jeremy Erich said: "Since the first appearance, this game has quickly established a loyal follower. The plan is consistent. "

There is still a long way in front of it. Whether social entertainment can go through, but Spotify told himself that the end of the road was 1 billion monthly live and 100 billion years of income.

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