The bubble of music copyright broke at once.

Picture source @ Visual China

Picture source @ Visual China

Text | Zhou Tian Cai Jing, author | Fu Ye Zhou Tian

The digital music battlefield is reviving.

It was reported in the media yesterday that the core members of the original nine-day music have moved from Shanghai to Hangzhou, and that the new business line products being developed by the team, combined with the products and related reports made before the nine-day music, can basically be determined to be the copyright brokerage platform and business authorization direction of to B.

This shows that Netease Cloud Music began to lay out to B copyright business.

Earlier this month, today's headlines also came out with news about the digital music subscription subscription business. The digital music battlefield, the short-lived peace since the listing of Tencent Music Entertainment Group (hereinafter referred to as TME) in the past six months, is about to come to an end.

In view of the fact that the TME has previously been in the area of copyright issue, it has been investing in the V. Fine parent of the to-B commercial copyright music platform, DNV, and the two platforms in love, which have spread to to B from the side of the user to the C. From the competition of the user's angular force to the industrial chain's voice, and the "all-round war" of the realization mode.

The first shot was in the to B copyright market, and the original unreasonable bubble was being smashed.

01 Distribution system to be refactored

When it comes to the copyright of Chinese digital music, we have to mention the "sword net operation", which has been carried out since 2010, which aims to crack down on online piracy and properly layout music, video, literature, online games, anime and so on.

Many people may still have the impression that in the first ten years of the 21 century, all kinds of pirated resources can be downloaded very easily on the Internet. Although this is a "shortcut" for users, but if the creator does not get the revenue, there is no incentive to continue to create, which is a very simple reason.

In 2015, the relevant departments successively issued policy documents on the spread of online pirated music. Many unauthorized online music providers were suspended, and the proliferation of digital music piracy was controlled. Without weeds to snatch nutrients, trees can thrive – the copyright value of genuine music is beginning to receive attention.

Specifically, the income of the music copyright market mainly includes the income obtained by the China Music copyright Association, record / brokerage companies, copyright agents and other copyright parties through the transfer or sale of music. The main buyers of copyright are digital music platforms (such as NetEun Music, TME, etc.), music variety programs and performance authorizations, as well as OST (soundtrack) or BGM (background music) used in the production of film and television dramas, anime, advertising marketing, games, etc.

Here, the fierce competition between digital music platforms has pushed up the cost of music copyright. In 2017, Tencent won the exclusive copyright of Universal Music for US$350 million and US$100 million, and Netease Cloud Music received it at RMB 20 million. The exclusive copyright of Park Tree's album Orion. In the second year, Netease Cloud Music purchased the 2000 song library of Huayan Music for 170 million yuan.

According to iResearch data, the size of the Chinese music copyright market has increased from 1.84 billion yuan in 2013 to 18.83 billion yuan in 2018. For the digital music industry, this is a huge cake.

But coins also have another side. Under the traditional distribution system, the growth rate of the market has shown a significant slowdown. It is expected that the growth rate will fall to 27.8% in 2019 and to 8.4% in 2021.

Image source: iResearch report

Photo source: Eli Consulting report

Why is this?

On the one hand, the growth rate nearly doubled during 2013 / 2015, largely due to good policy, releasing previously suppressed market demand at once; on the other hand, the current to B copyright licensing method is still very conservative, single, mainly one-off buyout. Music games, for example, pay a 800000 buyout license for a singer's song rights from a record company, with unreasonable bubbles and moisture.

Obviously, such a copyright cooperation model is not conducive to the development and innovation of commercial cooperation.

Because it's a hammer, all the risks and the cash pressure are concentrated on the side of the authorized party. In the United States, the way to pay for music-based games is more flexible and common, including by selling royalties according to the game itself, paying royalties in units, and even designing the rating rates when sales reach different levels, and so on.

A change is inevitable.

02 Music producer walking to the stage

With respect to the music industry, it is important to refer to the three major record companies in the world. The world's film industry has set a three-foot pattern in this regard since the world's record of $1.2 billion in a difficult 100-generation record in 2011.

How powerful are the three record companies? Take one of the largest Universal record companies as an example. Sun Yanzi, Zhang Huimei, Chen Yixun, Lady Gaga,Eminem and other famous singers are all signed artists under Universal.

In 2018, global, Sony and Warner's three record companies have a 68.6 per cent share of global music copyright revenue, with a volume of 89.1 per cent of the world's recorded music, The global music copyright market has the characteristics of the number of publishing rights and the concentration of revenue.

In the Chinese music copyright market, the three major companies are still strong, with nearly 60% of revenue, but less than 50% of the copyright. Behind this fragmentation feature, on the one hand, more than half of the copyrights are scattered among independent music producers, studios, and other record companies outside the three major record companies. On the other hand, these long tail markets can only be divided into four. A revenue cake.

In this context, the living condition of the music producer is very awkward.

According to the Independent Music Survival report 2016 released by NetEase Cloud Music, 68.8 percent of musicians earn less than 1000 yuan a month on music, and copyright revenue accounts for only 9.8 percent of the revenue source. The reason is that the output channel of long tail music content is very limited.

In fact, the emergence of the B-side copyright music trading platform is to make up for the gap in the distribution of digital music on the enterprise side. Take V.Fine as an example. As the first online copyright music trading platform in China, its value lies in Connect enterprise customers with long tail music and get through trading channels.

Zhou Tianjing learned that V. FineMusic has begun to try a new approach to music copyright licensing. One case is to cooperate with Tencent advertising, new studio and other distributors to try to click the mode of effect billing and benefit stratification. The above-mentioned high buy-out licensing industry bubble is expected to be improved.

And this, is also NetEase cloud music is preparing for the business focus.

In addition to V.Fine, nine days of music, there are also some unique B-side copyright trading platforms. For example, in 2006, Kuko music, which focuses on the copyright of non-pop music (such as classical, ethnic, light music, etc.), has gradually expanded its content, including music education and music equipment. And in January this year, the Hong Kong stock IPO application was submitted for the second time.

Another more famous company is Songba Music, which was founded in 2000 and was the first to introduce the concept of "copyright music" into the mainland market. Its main customers are major national television stations, including CCTV, and many CCTV programs are licensed by Songba Music.

But in general, these older platforms rely on accumulation on a vertical category of music, or on a certain kind of vertical customer, and are of limited help to music producers on the long tail-opening the official website of Songba Music, news developments are still being updated, but page design is quite outdated.

In fact, these copyright platforms in the midstream of the industry chain play the role of "intermediary", just like the professional housing brokers play a lubricating role in the transaction, the significance is to reduce the information asymmetry of the two sides of the transaction. To solve the trust problem between music and other industries.

Image source: Tiger sniffing

Image source: Tiger sniffing

Under the new model represented by V.Fine, music producers who were originally in a bad position and have poor incomes also began to have the opportunity to go to the spotlight for the first time. Here, we must first clarify a definition. As long as we participate in one or more links of music composition, lyrics, composition, singing, and production, we can call it a music producer.

Zhou Tian Finance learned that the main method adopted by domestic record companies is still based on three-year buyouts or permanent buyouts. That is, within three years after the song was published, all the proceeds were not related to the producer.

In a perhaps inappropriate way, music producers are in a situation, a bit like farmers in the agricultural industry chain, doing "dirty work" and getting the lowest salary. But don't forget that music is a mature industry, but unlike growing vegetables, music works also have artistic and creative attributes-farmers need technology and experience to grow vegetables, but they have never heard of "inspiration" to grow vegetables.

In Gao Xiaosong’s words: "The threshold of music is very high and the output is very low. It is difficult to cross the border. It is difficult for a musician to be a director, and it is difficult for a director to write a song."

According to the 21st Century Economic report, even in the past few years, the profits of musicians have been very limited. Zhang Yadong, a top music producer, said: "the platform is a package with record companies, and record companies and individual settlements are another matter."

Music producers located in the upper reaches of the industrial chain can not be paid enough attention to and protected, can not be divided into due cake, for the long-term healthy development of the industry, the disadvantages are self-evident.

In the commercial interest chain of foreign music copyright, the interests of music producers are supervised and protected by ASCAP,BMI,SESAC and other organizations, and there have been quite mature trading platforms such as Audio Jungle,SongTradr.

Now, the Internet's revolution in the music industry is accelerating with the promotion of the power of the giants represented by TME, NetEase cloud music, and shrimp music. This challenge to the existing B-side copyright commercial distribution model is expected to form music. The producer group thoroughly overthrew the subversion before the scene, regardless of reputation or interest.

In the future music copyright business model, the copyright trading platform will be in the core position picture source: Tiger sniff

In the future music copyright business model, the copyright trading platform will be at the core position. Source: Tiger Sniffing

03 The Internet’s change to the music industry has just begun

Although the digital music platform has experienced rapid development in the past few years, industry leaders such as TME have been successfully listed, but in fact, the transformation process of the Internet to music industry may be just beginning.

An industry insider described Zhou Tiancai as saying that the current Chinese music industry is "in the upper body of the Internet, the lower body of traditional music."

Combined with the B-side copyright market of NetEase cloud music layout and the previous signs, it can be said that the role of digital music platform in the industry chain has become more and more diverse, and the "lower body" of the music industry will also change its name to "Internet". .

At the beginning of the mobile Internet, the main players are still in the staking, focusing on the user side as the force, and will not hesitate to buy exclusive copyrights, in order to attract users and traffic. However, with the continuous expansion of the user scale, the digital music platform began to extend the boundaries to the upstream and downstream of the industrial chain.

A lot of recent news indicates that Vivendi (Universal Music Parent Company) is likely to sell 50% of Universal Music's copyright to Tencent. If this transaction worth more than $20 billion can be achieved, it means that it has 7 TME of millions of active users will formally enter the core of the industry.

For example, in the music creation stage, the digital music platform has begun to explore musicians, such as Tencent musicians "original plan", Netease cloud music "stone plan", shrimp music "light-seeking plan", etc., through the integration of their respective ecology The rich distribution channels give excellent music producers and works exposure.

Now the pattern of one end of the user is established, and it is also the right time for the music industry to become a platform.

Before 2016, Gao Xiaosong came to the entertainment industry half of the Jiangshan platform, a vigorous start, but in the end, the "Ali Planet" of chicken feathers in the end, looking back, the step is still a little too big-at that time, even the toC,toB has not yet taken shape, just the core of the player, trying to directly build a fan-oriented pan-entertainment platform, the end is doomed to no success.

This time, Netease Cloud Music entered the B-end, and it was rumored that NetEase Cloud Music was about to acquire shrimp music. Although TME took a long step, I believe that it can also feel the urgency of competitors.

However, it is always beneficial to move toward a higher dimension of competition. As Adam Smith once said, "If a cause is good for society, it should let it freely and broadly compete. The more free the competition, the more common it is. The more beneficial to society."

The bubble of music copyright was punctured first, and we can wait and see what the war is going on.

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