Quick Take: Believe Digital Licenses QQ Music
Following hot on the heals of last week’s Yonder Celcom deal in Malaysia, indie label distributor Believe Digital announced a licensing deal with Chinese telco Tencent’s QQ Music service. Although QQ’s offering is not strictly directly comparable with western AYCE services it nonetheless has more than 3 million subscribers with a subscription price point of around $1.60 a month. In the scale of the total Chinese population QQ Music is small but in in terms of the global music service landscape it is a sizeable player, on par with the likes of Pandora One, MelOn and KKBox.
China has long been an enigma for the music industry, a vast market but with revenues smaller than Switzerland’s music market. A long history of a close to non-existent copyright regime didn’t help but a combination of a tightening up of laws and a maturation of the Chinese telco sector have combined to create the conditions for a nascent digital market.
The vast majority of Chinese consumers will never pay for digital music, but with 1.4 billion consumers you only need to convert a very small share to generate meaningful revenue. The fact that telcos are now shifting focus to increasing spending across their mobile user base is a crucial asset for the music industry. In many respects Chinese telcos are where Western ones were 7 or 8 years ago: realizing that simply being a pipe stops has limited value as a digital market matures.
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Believe’s Tencent deal does not by any measure suddenly mean that the numerous structural challenges facing the Chinese market are suddenly going to disappear but it does however point to a new era for digital music in China.