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.

So why? 

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.

Reference:

Feng.com,. ‘Apple Music来了: 用还是不用这是一个问题 Apple Music,中国区,音乐,苹果 _威锋网’. N.p., 2015. Web. 18 Oct. 2015.

Chan, Eric. ‘Apple Music 和 Itunes 电影今天正式在中国大陆推出’. Engadget 中国版. N.p., 2015. Web. 18 Oct. 2015.

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.

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One response to “Music market in China — will Apple music be a game changer”

  1. samjing92 says :

    This is indeed a interesting topic on the future music industry development in China. I agree that Apple’s current pricing strategy may compete against their competitors, however I think that is not sustainable in the long run and Apple should focus on other areas such as, providing music recommendation to its users. Why? Look for example at Sportify, the dominant the music streaming service in Europe, are not winning in this industry because they provide superior service or more music than their competitors Pandora or Amazon Prime, but because they also provide excellent music recommendations services to customers depending on their style, mood or activity. This being said, Apple now has a great opportunity to facilitate recommendation services for the Chinese public. Just like how they have acquired Beats for their expertise in Western Music, they could also acquire a Chinese company specializing in the Asian music market.

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