The Evolution of China’s Streaming Revolution
It’s not news that China is big. Really big. In fact, the portion of the population that most would define as China’s middle class is just shy of the entire population of the United States.
Yep, that big.
With a population of 1.4 billion people and the same total landmass as the U.S., the opportunities for innovators in China’s music space are endless. I received my PhD from the University of Nebraska and spent a good amount of time working in the U.S., and while there are certainly differences between the countries, the love for music and good, efficient technology is all the same here in China. And lately, the music streaming industry here has undergone a massive shift.
Amidst that change, I started my role as Managing Director of Sonos within China. I have always wanted to work in a startup environment — a place with fast growth and a dynamic pace, but without all of the corporate stuff. Plus, as a music lover, it’s great to walk into the office here in Beijing and hear the different playlists that our departments curate each day. (In case you were wondering, there’s a lot of Adele filling the hallways of our Beijing office.)
As much as Sonos offers that startup environment, the landscape that we play in — streaming music — is like a startup industry in itself.
Streaming music in China
China has always been a very active streaming market. If you look at the overall streaming on-demand market worldwide, the most mature market is Sweden because traditionally it’s been a streaming market, and 80 to 90 percent of people there are paying for streaming music. China also has a very large population of streaming music — 300 million active monthly users. That’s by far the largest active market in the world.
“China also has a very large population of streaming music — 300 million active monthly users. That’s by far the largest active market in the world.”
Streaming is very popular here, but generally, paid streaming has not been. The paid segment is just a fraction of the total streaming market, and that’s because of a history of piracy on different platforms. There had been no reason for people to pay for music, when they could get it for free.
An evolving market
In July of 2015, the government decided to clean up the market and issued rules for music services to take down unlicensed songs and albums. That has been positive for the overall market, and the music services acted very quickly to comply. Now, we believe that the piracy is behind us in the industry, and people are really focused on legitimate tracks. That has paved the way for the music services to introduce paid streaming models here in China, creating a very positive trend overall for the industry in the past nine months.
“We believe that the piracy is behind us in the industry, and people are really focused on legitimate tracks.”
In terms of the market potential, you really can look at Apple as an example. The last quarterly earnings release says the Greater China region represents 22 to 23 percent of total Apple earnings. That’s how massive the opportunity here is.
Right now in China, there are a handful of big streaming services: QQ Music is one; another is Ocean Music, which houses Kugou Music and Kuwo Music. Ocean Music’s monthly active users combined are more than QQ’s, though QQ Music is better known. The third major streaming group is AliBaba’s music service which includes Xiaomi Music and TTTOPD Music.
Most recently, Apple Music entered into China as a straight paid service at a very reasonable price — 10 Renmibi, or roughly $1.50 USD per month. The attractive price has removed a barrier for users to adopt the Apple Music service, and people are looking at them and saying: “Wow, if you’re providing a good price, we’re willing to pay!”
The world is yours
As much as I can talk about China specifically, music is truly global. Whether it’s the Adele or Sam Smith-heavy playlists that our Finance department streams into the office on Mondays, or the love our owners have for rock and roll or classical music, it all translates, no matter the country.
MORE: On Sonos, we’ve got streaming services for days. Check it out.
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