In a country where a large part of the population (more than 75%) listens to music, China’s music market is still very underdeveloped compared to major producing countries like the United States (1st) or Japan (2nd). Developing and commercializing music in China remains a huge challenge for those willing to enter the market, the reasons why are :
- Government regulations
- Differences in musical culture & tastes, for both providers and consumers
- Music providers need to learn how to establish themselves in the chinese music market.
With an increasing number of young music consumers and strong moves by the chinese government in order to prevent music counter-piracy, China has now become a fertile market especially for digital music and online content streaming, mainly powered by national companies : Tencent and NetEase.
According to a report from iResearch (market research company), China’s revenue regarding its digital music market increased by 60% year-on-year amounting to 7.63 billion yuan equivalent to $1.08 billion (2018). Still according to the report, the previous figure is estimated to hit 42.6 billion yuan by 2023.
The music market in China
China does not yet fully exploit its full potential for musical growth. Indeed, with a population of more than 1.4 billion inhabitants, (exactly 1,444,216,107 as of 2020), the size of the market ranks only twelfth in the music market, behind much smaller countries such as Sweden, Belgium, or the Netherlands.
However, the market is in the process of developing rapidly, indeed the industry’s value is estimated at over $ 169 million with an annual average growth of more than 60%. Moreover, the digital channels of the industry are what allows the market to pursue this exponential growth. The future of the country’s music industry will definitly be more on the digital side, therefore chinese companies recognize the potential and opportunities of digital distribution on the market.
1. Live concert industry in China
In China the number of large-scale concerts has been in decline ever since 2018, while there are less and less performances, the prominent chinese artists manage to fill the biggest stadiums and the live-streams of those performances attract more and more viewers. TFBOYS’ 5th-anniversary concert (2018) broke the preivous year’s records, indeed the chinese boys band performance managed to gather 450 million live views, while other major local artists may be popular as weel none of them seem to be able to achieve success le TFBOYS do.
The digital conversion of China’s music industry might receive extra push in the coming years thanks to the development of VR (Virtual Reality) live streaming, which curently a hot topic in chinese technology development. The large-scale performance in China might be the first part of the global chinese music industry to turn towards live performances.
2. China’s recording industry
- According to IFPI data, China’s music industry sales generated $292.3 million (2017), which equates to a 35.3% increase since 2016
- Around 70% of the recording revenues, or $205 million, were generated by streaming, while physical sales accounted for as little as 7%.
- In 2017, the number of DSPs’ users (Demand-Side Platforms) reached 523 million with the average subscription rate of about 4%.
3. China’s music publishing industry
In 2017 music publishing generated up to $65 million, split between the two copyright management bodies:
- Chinese Music Industry Revenue
- The Daolu Cultural Industry Research Center Record Industry
In China out of all of the sub-industries, the record business is without a doubt the fastest-growing part of the market, the global revenues have tripled in just three years. This amounts to a CAGR of 44%, this type of increase is unique to China as you wouldn’t find such growth in any other country. However it is necessary to note that the global revenues remain very low, indeed the retail value of the chinese music market is only about 3% of the U.S. record industry with its almost $9 billion in music sales. However this comparison is to be taken with a grain of salt of course, as it is totally unfair to compare China and the US’s music industry, with the U.S. being the biggest music market in the world, at the forefront of the industry’s development.
The beginnings of the Chinese digital music industry
The digital market represents more than a billion dollars, a market in a phase of growth that only needs to meet the supply and the demand. More than 70% of the Chinese population listens to music through digital and mobile channels. This figure rises to more than 80% when we speak of the younger generations. The average time spent listening to music per week is 16 hours compared to 19 for young people. The market enjoys a real development that still needs to be exploited, particularly with regard to music listening applications on smartphones. 70% of Chinese listen to music through their phone so it is time for the market to be exploited and meet its new expectations.
A digital market dominated by local brands
The Tencent group dominates the music market because of their holding of a consequent part of the market share, indeed the group holds 78% oft the global chinese industry, thanks to all its applications such as :
The Tencent group can enjoy this leading position thanks to the user base it owns upstream of its music application. Indeed, the group owns the WeChat platform, the largest social network in the country, accounting for more than 850 million subscribers. QQ Music in a year and a half already has a user base of 200 million of which 15 million subscribed to a paid subscription per month.
Digital music market in China
Tencent’s success also lies in the diversity of its musical catalog, the platform offers music of national singers such as Lu Han or Tao but also international singers like Adele or South Koreans K-pop superstars EXO and BTS.
- Revenues : China’s revenue in music downloads segment in 2025 will be around 37.7 million U.S. dollars.
- Users : The number of users in the music Ssreaming segment in China in 2025 will be around 212.7 million. By the end of 2020, about 66.6 percent of mobile internet users in China used mobile music streaming apps to listen to music. In a survey about the online audio market in China conducted in January 2019, about 50% of the respondents said that they preferred to watch concerts online available on music platforms. About 22% of the respondents preferred to stream sports-related content on music platforms. In a survey about the online audio market in China conducted in January 2019, about 41% of the respondents who had purchased online music services said that their monthly costs on membership and/or music package services fell between 13 to 20 yuan. Around 16% of the respondents said they spent more than 20 yuan per month.
- Dominating music apps : As of March 2021, Tencent’s music apps ( 60% of the local music market share) : KuGou, QQ, and Kuwo, were the three most popular music streaming apps in China. The monthly active users of KuGou totaled 292 million, whereas Baidu’s rebranded Qian Qian amassed around 4.5 million monthly active users.
Entry barriers for international musicians in China
While the market has an interesting growth potential for companies wishing to set up business in China. Developing yourself is likely to be more difficult than it was before. Indeed, the government has forbidden all foreign companies to share or publish digital content whether audio or video on the territory. This ban is justified by China’s dissatisfaction with the agreement known as THAAD between the United States and South Korea to protect the US allies from North Korean attacks.
K-pop, a South Korean music industry, is a market that is going to be impacted from this ban as China is a growing market for the Korean entertainment industry as it represents more than $ 5 billion a year. The dramas, the K-pop, and the Korean culinary culture is a great success among the young chinese generation. By banning, the Hallyu wave in the country, China hopes to achieve financial harm to South Korea.
- Chinese language music dominates the market, indeed most of the best selling songs in China are written in Chinese.
- Although the usage of mobile music streaming is high among chinese consumers, most of them are not familiar with having to pay for the services. The large majority are more likely to opt for the free sources available in order to access their choice of music. In 2018, paying members made up about 5% of the total music userbase in China. Even among those who are willing to spend their moeny on online music, nearly 70% were paying less than 50 yuan per month. To address the problem, industry experts suggested raising public awareness of copyright protection.
- Very high rates of music piracy is the main reason as to why China is such an unwelcoming place for music companies. Pirated audio content is very available that the idea of buying albums or having to pay for streaming can seem ridiculous especially to consumers with less ressources. While the IFPI calls China a country with “enormous untapped potential,” it also notes that only 10% of the market goes to non-Chinese-language music.
- Government control and restrictions make it even harder for international artits to break into the market.
To promote music in China you need personal branding
Difficulties to develop but certainly not impossible!
These new regulations make the market more difficult to integrate, but this is not impossible. Effectively to overcome these new government laws, international actors decided to go through local intermediaries to promote their music.
This is the case of BMG, which has partnered with the Alibaba Group, a leading player in e-commerce in china, to promote its composers within the country. The association between the two groups takes the form of an agreement that allows Alibaba to obtain digital rights on 2.5 million music from BMG. In this list, we can find the Rolling Stones, Bruno Mars or Kylie Minogue.
Digital seems to be the ideal weapon for foreign actors wishing to promote and develop their music in China. For this, an effective digital marketing strategy has to be put in place. In this article, we will outline some practices that it is interesting to put in place.
Positioning on Chinese social media
A majority of people in China use social networks to get information, the media are no longer used only to stay in touch with their loved ones but also to search for and find out about a product, service or brand.
Social media strategies are mostly used by players in China as they provide an interactive platform between the brand and its current and potential customers. However, if you want to succeed in developing on Chinese social networks, it is important not to replicate the strategies you have already been able to carry out in the West. Indeed, the digital universe in the Middle Kingdom operates quite differently from the one we know. The rules of the game are different, no Facebook, Twitter, Snapchat. The great virtual wall blocks all Western social networks.
Your social media strategy should focus on Chinese networks that are used differently.
- Weibo (Taylor Swift 9M followers/ Justin Bieber 3M/ Justin Timberlake 3m/ Ariana grande 900K/ Katy Perry 1M/ BTS 5M/ Blackpink 4m (Lisa 568K) and so on…)
Weibo is an open social media platform where people post, share and interact with each other but also get updated on trends and news. This is the place for content to go viral and for KOLs to build their online communities.
- Bilibili : video service perfect to post music videos.
Bilibili is often considered as the chinese versin of YouTube, however unlike YouTube or TikTok, the promotion of a video is not based on a specific algorithm to boost visibility rather it is all about community and recommendations, which can be a great opportunity depending on your local strategy.
- Douyin : short videos, very good media for personal branding.
Douyin allows users to create and share creative and trendy short videos. These short videos are optimal to increase engagement and virality. Douyin provides the ability to edit videos with engaging special effects and funny stickers to inspire its users to produce more and share more of these kinds of funny short videos with their friends.
To learn more about social networks in China it’s right here!
Made you know through Press Relations
To develop your fame and make you a name in China, PR is the most effective communication tool. They will be used to develop and give the public more information and content about your company, its products and services. Generally, the goal of PR is to improve your reputation with your target audience and communities, improve your image through content delivery, and manage your reputation downstream.
In a country where the print media is heavily controlled by the government, looking into E-PRs becomes the most logical solution for any foreign brand wishing to make a name for itself. Moreover, these media are increasingly used by individuals who buy less and less paper-based press.
Here are some PRs you can target for your content:
- Sina: the biggest Internet portal in China
- Sohu: the second most important
- 163 / Netease: news.163.com
- QQ News
Use Online Marketing Videos to Attract Your Audience
According to Forbes, marketing videos will be sources of traffic for 80% of advertising on the Internet by 2019. Videos become a form of marketing more and more demanded by Internet users. The advantage of a video is that it has a strong auditory and visual impact in contrast to written content. The consumer is able to remember a message passed through a video only on another medium. Remembering an advertising video makes it possible to remember another measure of the brand or the product.
To music market in China, Bring your content viral
The advantage of social networks and the internet sphere is its diversity and the speed at which content can be shared and become viral. The effect of network on the Internet makes it possible to reach a wide target of Internet users in a short time. The viral potential of a video can also affect other channels of communication if it has a strong impact. In most cases many media relay the content via television or the online press.
In China, buzz marketing is a technique enabling the attraction of many prospects and arousing their interest. However, the main difficulty lies in creating content that is original enough to impress and capture the audience. For this, you help digital means facilitating the sharing of the video for Internet users can already be a way to make your content viral.
Develop your presence through events
The upsurge of new technologies and their exponential growth to restructure corporate communications strategies. Nowadays, social networks enjoy a preponderant place in the communication techniques of the brands. As a result, events are increasingly used in agency strategies.
Event marketing consists of a set of techniques put in place during events, shows, events allowing the promotion of a brand and its offer to different public. The event allows to complement its communication offer to its public and thus to develop its reputation and brand image with its target audience.
In the continuity of presenting you digital means to develop your music in China, the use of applications and functionalities allowing the direct transmission of events that you will organize is a means of gaining visibility on the country. Live event broadcasts have a strong interest on the part of Internet users. Touching your target through this channel can make your content attractive and give it a positive image.
Partner with Gentlemen Marketing Agency
The Chinese digital sphere is very complex for new entrants to the market. Setting up on it requires a good understanding of the rules and standards of the market for the success of your implementation. To increase your chances of success, we advise you to partner with a local agency that can develop your interests in the country.
Gentlemen Marketing Agency is a digital marketing agency based in Shanghai looking for long-term partnerships with companies wishing to establish themselves in The Middle Kingdom. If you have a concept for the Chinese market, contact us and one of our market experts will be in touch.