That could be a one-off purchase like an album or concert tickets, even if it's not an ongoing subscription. Still, despite QQ's smaller proportion of subscribers, Chinese analyst iResearch estimates that over half of users in China would have paid for something on their music apps this year. Spotify, in comparison, has about 100 million monthly actives, although it has 30 million paying subscribers - three times QQ's 10 million paying subscribers.
QQ Music reports 100 million daily active users (Opens in a new tab), and 400 million monthly actives. QQ's user numbers have also well eclipsed the competition. This allows QQ Music to offer products like concert tickets, providing an additional line of revenue to its freemium model of advertisements and paid subscription.
Second, the majority of Chinese users are plugged into its ecommerce system, where they already buy tickets and book cabs cashlessly through WeChat. Tencent has serious negotiating power at the table with record labels.įor one, as one of China's biggest dotcoms - WeChat has 762 million active users - the company has far better negotiating power at the table with record labels.īack in 2014, Tencent already used this to its advantage, striking exclusive Chinese distribution deals (Opens in a new tab) with large music producers the likes of Sony, Warner Music and South Korea's YG Entertainment. While QQ also has to deal with royalty payments, it's had a number of advantages. Other big names like Pandora report growing revenues too, but the company lost $169 million (Opens in a new tab) in 2015.Īpple Music, which doesn't have a free tier, says it has upwards of 15 million (Opens in a new tab) subscribers, but is unlikely to be profitable as a division just yet. The main outflow of money goes to song royalties to record labels and copyright owners - more than 70 percent of Spotify's revenue went to that. The biggest player in the market now, Spotify, showed a net loss of over $200 million (Opens in a new tab) last year - despite raking in a massive $2 billion in revenue. QQ's ability to be profitable is no mean feat, where plenty of Western competitors have fallen by the wayside. Some of Tencent's employees at its Shenzhen headquarters - just a fraction of its 30,000 employees.
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