Per reporter: Wen Menghua Zhu Peng Per reporter: Dong Xingsheng
In the past year, Shrimp Music has shut down, Tencent Music has been fined, and NetEase Cloud Music has been listed, and the music market has ushered in many changes. Behind the seemingly independent events, there is a long-term battle for music copyright.
Copyright has always been a must-fight in the online music market. With the decline of records, exclusive music copyrights have once become the "moat" of the head online music platform. The transaction threshold for music copyright has also been repeatedly raised by giants in the process, and the transaction price has continued to rise.
Over the past few years, money from the music industry has been flowing to copyright acquisitions. According to MBW news, according to confirmed prices and industry news, more than 60 transactions related to music libraries and copyright acquisitions occurred in 2021, with a cumulative transaction value of more than $5 billion. This figure includes individual libraries sold by artists and songwriters, as well as music copyright portfolio acquisitions between companies, including active record labels/publishers.
Now, with the end of the era of exclusive copyright in China, the online music market is expected to open up a new competitive landscape. When the differences in music copyright between various platforms are getting smaller and smaller, the differentiated expansion and playing style of the content field may become a new direction for online music platforms to explore.
The market competition pattern has changed, and sitting on the exclusive copyright "lying and making money" has become a thing of the past
NetEase CEO Ding Lei previously said: "Copyright is the core of the development of the music industry. Copyright involution, industrial development cannot be balanced and insufficient. The most effective way to dismantle copyright walls is to establish an open, fair and transparent copyright governance model, especially a copyright trading system. ”
The biggest benefit of a transparent copyright trading system is to reduce the price scissor difference caused by the information difference, thereby minimizing the phenomenon of large platforms building moats with strong funds. With the State Administration for Market Regulation ordering music streaming platforms to remove exclusive copyrights on online music, the copyright trading market has finally ushered in a change.
Zhang Yi, CEO of Ai Media Consulting, said in an interview with every reporter that the end of the exclusive copyright era will be more conducive to the market circulation of music works, thus reaching more users. "Accelerating the circulation of copyright will also give the entire copyright market a better chance to burst out more business opportunities, which will provide a better social environment for the entire industry to develop in a more prosperous and healthy direction."
Nearly half (about $2.33 billion) of the more than $5 billion in transactions mentioned above reportedly went to acquisitions directly from artists, songwriters and/or their estate management companies, and the pace and price of such deals is accelerating. It is estimated that in December 2021 alone, transactions from the artist and songwriter library were worth at least $720 million.
The copyright of quality creators is the sweet potato of the trading market. In December 2021, Sony acquired the music rights of well-known American rock singer Bruce Springsteen for $500 million, setting a record for the highest price for a personal copyright transaction in recent years. In the domestic market, the copyright competition of well-known artists can greatly affect the number of platform users. Taking Jay Chou as an example, in 2018, NetEase Cloud Music had to remove Jay Chou's songs because it lost the copyright of Jewell Music (Jay Chou Song Copyright Company), resulting in a large number of users transferring to QQ Music.
Zhang Yi believes that this form of "lying and making money" because of sitting on exclusive copyrights should be turned into the past. "This will force the head platform or APP that once used exclusive copyright as a moat to start changing its business thinking." I think this change will also become a direction for the high-quality development of related enterprises. ”
In addition to buying a library, royalties paid to musicians are also an important part of the copyright deal. In early 2021, digital music service providers, including Spotify, Apple Music, Amazon, SoundCloud, and others, paid $424.38 million in royalties to MLC, the agency designated by the U.S. Copyright Office to collect and distribute royalties paid by digital music services to songwriters and copyright owners.
Spotify (top) and SoundCloud (bottom) interface Image source: official website screenshot
In the age of exclusive copyright, the value of musicians and the distribution of benefits they receive are not equal. Ding Lei once admitted that nearly half of the musicians in the exclusive copyright era earn less than 2,000 yuan a month and are the industry's accompaniment runners. In the post-exclusive copyright era, a large number of music creators are expected to increase the supply of copyright and make the market cake bigger.
But business model innovation is even more critical. Zhang Yi once said that the profit model of music itself is more complicated. "In the long run, high-quality music works can directly generate sales revenue through the music itself, and present better commercial value from the differences in musical works, which is a better way out for the entire music industry."
Shift from resource-based to innovative competition The online music market ushered in a differentiation
In the past year, the cancellation of exclusive music rights and the listing of NetEase Cloud Music have made many online music platforms enter the fast lane of development. The entire online music market landscape has added to the variables.
Since the second half of 2021, NetEase Cloud Music has accelerated the layout of music content, and has reached copyright cooperation with Modern Sky, Hong Kong Emperor Entertainment, China Recording Group, Lehua Entertainment, etc., and has owned songs by many well-known artists and bands such as Nicholas Tse, Joey Yung, New Pants, Pain Yang, and Wu tiaoRen.
According to the NetEase Cloud Music Prospectus, the company's content service costs from 2018 to 2020 were 1.97 billion yuan, 2.853 billion yuan and 4.787 billion yuan, respectively. The cost of content services mainly includes the payment of content licensing fees to music labels, independent musicians and other copyright partners.
"We have been very active in negotiating with various copyright parties, and in terms of music copyright, Ding Lei is personally eyeing and talking, and the investment is also very large." In the future, we will attach great importance to copyright IP operations, attach importance to product and technology innovation, enhance the links between songs and people, and link between people. Talking about the future planning of music copyright, NetEase Cloud Music said.
Image source: Per reporter Zhu Wanping photographed (data map)
In the past, online music platforms were once "the copyright holders get the world", and platforms with exclusive music copyrights have natural advantages in market competition and can easily get more users' favor. But now, the cancellation of exclusive rights means that participants on the online music track are almost all on the same starting line on the content side.
"After the exclusive copyright is abolished, the entire industry is shifting from pure resource-based competition to innovative competition." A copyright source close to NetEase Cloud Music said in an interview with every reporter, "In the past, the music market was more of a head market, but now the music market is showing a trend of differentiation. ”
In his view, in the past, the competition for music copyright was more of a process of resource grabbing, but at present, music copyright owners are willing to choose which platform to cooperate with in depth, and which platform users will be attracted to, the key lies in the platform's differentiated operation and innovative services for music content.
Every reporter noted that as early as before the cancellation of the exclusive copyright model, Tencent Music Entertainment Group (TME) also set its sights on the content field early.
"In 2021, Tencent Music made the biggest adjustment in the five years since its establishment, upgrading its organizational structure, announcing the establishment of content business lines, and setting the two core directions of content and platform, and its content strategy has been raised to an unprecedented height." Tencent Music told reporters that online music platforms should face the future and must have deeper participation and service at the source of music content.
Before the shutdown of Shrimp Music, the "fight" of the online music market once made many music platforms fall in the middle. "In less than a decade, the price of music rights has risen nearly a hundredfold, and the entire industry has suffered from high copyright costs." A music industry source told every reporter.
Nowadays, the cancellation of exclusive copyright has reduced the cost of copyright wars to a certain extent. The above-mentioned industry insiders believe that unlike foreign models, the current domestic music market is still in the era of change from exclusive music copyright conversion, and the future copyright price is expected to tend to a rational stage that is beneficial to the development of the industry.
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