On the evening of March 24, NetEase Cloud Music disclosed the 2021 annual results announcement, which was its first financial report after its listing. According to the financial report, net income of NetEase Cloud Music in 2021 was 7 billion yuan, an increase of 43% over 2020. Adjusted net loss decreased by 33.4% from RMB1.6 billion in 2020 to RMB1 billion in 2021. However, the gross profit margin for the whole year of 2021 increased significantly from negative 12.2% in 2020 and turned positive to 2.0%, recording a gross profit of 140 million yuan.
NetEase Cloud Music's revenue sources are mainly composed of two parts: online music services and social entertainment services. Online music service revenue increased by 25.4% from $2.6 billion in 2020 to $3.3 billion in 2021, mainly due to a significant increase in membership subscription sales revenue. The number of monthly active users of online music services increased from 180 million in 2020 to 183 million in 2021. The number of monthly paid users of online music services reached 28.9 million, an increase of more than 80% year-on-year. The online music service payment rate further increased to 15.8%. However, the monthly revenue per paying user of the online music service decreased from RMB8.4 in 2020 to RMB6.7 in 2021, mainly due to the sale of its membership subscriptions at discounted prices to promote its subscriptions and expand its service coverage.
In 2021, the number of daily active users listening to songs increased to 78.2 minutes, nearly half of the users listened to songs while browsing the "comment area", the proportion of users who generated UGC content on the platform increased to 27%, and the proportion of music played from platform recommendations increased to 32%.
Social entertainment services and other revenue increased by 63.1% from $2.3 billion in 2020 to $3.7 billion in 2021, the vast majority of which came from live streaming services. The number of monthly paid users of social entertainment services reached 683,000, an increase of more than 100% year-on-year. Similarly, monthly paying subscriber revenue for social entertainment services is also on a downward trend, from $573.8 in 2020 to $448.1 in 2021.
Operating costs increased by 24.8% from RMB5.5 billion in 2020 to RMB6.9 billion in 2021, of which content service costs rose from RMB4.8 billion in 2020 to RMB6 billion in 2021, accounting for the majority. The increase in the cost of content services was primarily due to the increase in revenue sharing fees as revenue from social entertainment services increased.
For the copyright issues that the outside world is most concerned about, NetEase Cloud Music is also continuing to improve in 2021. It has successively obtained copyright cooperation from Modern Sky, Emperor Entertainment, China Singing Group, Fenghua Qiushi and Lehua Entertainment, and reached direct agreements with the three major record companies. By the end of 2021, NetEase Cloud Music's content library contains about 80 million music tracks, including music from well-known labels and independent musicians.
Written by: Nandu reporter Xu Bingqian