Music market in China — will Apple music be a game changer
We all love music, but when comes to paying for it, sorry no. That works especially true for the Chinese music industry.
I will start this blog with some boring figures. 471 millions of Chinese users listen to music online, however only a fraction of the services have been paid. According to IFPI, the online music had a revenue for only $91 million in 2014, that gives to $0.19 per user annually — almost nothing. To put it in comparison with the western market, Spotify had an active user base around 75 millions and reported an annual revenue of 1.2 billion last year.
If you ever saw the combination of “intellectual goods” and “China” in the news media, you will certainly understand this is a really less regulated market for intellectual property. The reason is that Chinese consumers are used to getting their music for free, thanks to over a hundred pirate sites in the territory. Music? Why should I pay for music? That is just the sad reality for music industry. Average users just don’t have any incentive to pay for music, given the fact they can get high quality music for free pretty much easily.
But still given the size of the market, it is arguably the market with a great growing potential. It is just like a golden goose which is not laying any eggs, yet. The music industry basically now gives away music to audience and then make money from other revenue channels like concert, fans meeting, ringtones or other idol related products (like t-shirts).
Will Apple music be a game changer?
Apple started to provide its subscription music service to the Chinese market, with an astonishingly cheap price — 10 RMB ($1.57) per month for individual users and 15 RMB for family users. Additionally users can enjoy the 3-month trial period for free. Considering about Apple’s dominant popularity in China’s high-end mobile market, this close to free music service is deadly attractive to its users.
In my opinion, Apple music will grow fast in the Chinese market by using the current pricing strategy. Comparing its main (legal) competitors such as QQ music, Xiami Music or Wangyi Yun Music, Apple have offered a more advanced recommendation system which will attract lots of users. Additionally, it can benefit to a great extent from its own ecosystem. For instance, the Apple music service is also connected with Siri and iTunes, which makes it extremely user-friendly.
Maybe someday in the future, with the slowly changing IP laws in China, the users have to pay for music.
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Forbes.com,. ‘Forbes Welcome’. N.p., 2015. Web. 18 Oct. 2015.
Ifpi.org,. ‘China — IFPI — Representing The Recording Industry Worldwide’. N.p., 2015. Web. 18 Oct. 2015.