Core Viewpoint - The online music industry is becoming a profitable business, with significant revenue growth reported by major players like Tencent Music and NetEase Cloud Music, driven by improved copyright management and user payment habits [1][3][6]. Financial Performance - Tencent Music reported total revenue of 8.44 billion yuan for Q2 2025, a year-on-year increase of 17.9%, with online music service revenue growing by 26.4% to 6.85 billion yuan [1]. - NetEase Cloud Music's revenue for the first half of 2025 was 3.827 billion yuan, a decrease of 6% from the previous year, but online music service revenue increased by 15.9% to 2.967 billion yuan [1]. - Tencent Music's adjusted net profit for the quarter was 2.64 billion yuan, up 33% year-on-year [1]. Market Dynamics - Online music services now account for 80% of Tencent Music's total revenue and 77.5% of NetEase Cloud Music's total revenue, a significant shift from 2018 when these figures were much lower [2]. - The competitive landscape has evolved, with Tencent Music and NetEase Cloud Music now focusing on online music services rather than social entertainment services, which previously dominated their revenue streams [2][3]. Copyright Management - The decline of music piracy in China, from 95% to below 5%, has been pivotal in the growth of the digital music industry, leading to a "copyright accumulation competition" among platforms [4]. - Tencent Music has secured exclusive rights to a significant portion of the music library, forcing competitors like NetEase Cloud Music to pay high prices for licensing [4][5]. - The copyright wars have driven up the prices of music rights, but they have also fostered a culture of paid subscriptions among users [6][7]. User Engagement and Payment Models - Tencent Music's online music subscription revenue reached 4.38 billion yuan in Q2 2023, with a 17.1% year-on-year growth, and the number of paying users increased to 124 million [7]. - NetEase Cloud Music's subscription revenue grew to 2.47 billion yuan, a 15.2% increase [7]. - The platforms have developed a tiered subscription model to enhance user engagement and payment rates, effectively turning music into a sustainable profit-generating business [7]. Competitive Landscape - The rise of new players like "Soda Music" and "Tomato Listening" is challenging the dominance of Tencent Music and NetEase Cloud Music, leveraging lower subscription fees and algorithm-driven user engagement [14][15]. - The competition is intensifying as these new entrants utilize short video platforms to attract users, creating a potential shift in the market dynamics [14][17]. - The future of the online music industry may evolve into a three-way competition, with Tencent Music, NetEase Cloud Music, and new entrants vying for market share [17].

Core Viewpoint - The article discusses the transformation of the music industry driven by short video platforms and streaming services, highlighting the significant shift in revenue sources and the impact on music creation and copyright dynamics [2][11][40]. Group 1: Revenue Trends - In 2024, short video and streaming revenues account for 69% of global recorded music revenue, while physical music sales have shrunk to 16.4%, and download revenues have declined for 12 consecutive years, now representing only 2.8% [2][15]. - The Chinese digital music industry is projected to reach a scale of 102.7 billion yuan, with the copyright music market exceeding 60 billion yuan [8]. Group 2: Music Copyright and Monetization - Music copyright encompasses the legal rights to use and disseminate songs, with revenue generated from various scenarios including advertisements, short videos, and live events [14]. - The monetization model has shifted from a one-time purchase of albums to ongoing revenue sharing based on play counts, with platforms paying artists monthly based on streaming data [15][17]. - For instance, Spotify pays between $3 to $7 per 1,000 streams, while domestic platforms offer around 1.5 yuan per 1,000 streams [17]. Group 3: Industry Dynamics and Creation Process - The industry has developed a standardized promotional process for songs, involving initial rights acquisition, targeted marketing through social media, and leveraging trending topics to maximize exposure [18]. - The "ROI" (Return on Investment) concept is now applied to music, where songs with low ROI are quickly abandoned, while successful tracks can yield significant returns on promotional investments [19]. - The creation of music has become increasingly influenced by commercial viability, often prioritizing catchy elements and rapid production cycles over artistic integrity [21][22]. Group 4: Distribution and Market Challenges - The music industry has undergone three distinct phases: the record industry era, the independent production era, and the current digital streaming era, each marked by changes in production, distribution, and consumption [34][35][36]. - The current landscape sees a high volume of new releases, with 1.35 million new songs in 2024, but a stark disparity in success, as only 0.8% achieve over 10 million streams [39]. - The concentration of wealth and success among a few artists and producers raises concerns about the sustainability and diversity of the music ecosystem [40][41]. Group 5: Future Considerations - The article emphasizes the need for fair distribution mechanisms and transparency in copyright transactions to ensure that creators receive appropriate compensation for their work [41][42]. - A balanced approach that fosters both commercial success and artistic expression is essential for the long-term health of the music industry [43].

Core Viewpoint - Tencent Music Entertainment Group (TME) has shown strong performance in its Q2 2025 financial report, with online music subscriptions being the main driver of growth, despite a decline in monthly active users (MAU) over the past three years [2][3]. Group 1: Online Music Revenue - TME's total revenue for Q2 reached 8.44 billion RMB, a year-on-year increase of 17.9%, with adjusted net profit at 2.64 billion RMB, up 33.0% [2]. - Online music service revenue grew to 6.85 billion RMB, a 26.4% increase from 5.42 billion RMB in the same period last year, driven by strong growth in subscription revenue and increased income from advertising and live performances [5]. - Online music subscription revenue was 4.38 billion RMB (611 million USD), up 17.1% from 3.74 billion RMB year-on-year, primarily due to an increase in average revenue per paying user [5][9]. - The number of SVIP subscribers has surpassed 15 million, marking a historical high, attributed to the introduction of a higher-tier membership option [8]. Group 2: Social Entertainment Decline - Revenue from social entertainment services decreased by 8.5% year-on-year to 1.59 billion RMB, with operating costs rising by 13.1% to 4.69 billion RMB [10]. - The decline in social entertainment revenue is linked to increased costs associated with IP, artist-related expenses, and advertising fees, while revenue-sharing costs have decreased due to the drop in income [10][12]. - The competitive landscape in music streaming is heavily influenced by copyright ownership, with TME controlling approximately 95% of the industry’s copyright resources through its various platforms [12]. Group 3: Future Potential - Analysts suggest that TME's current 20% subscription rate has significant room for growth compared to Spotify's over 40% [14]. - The company is expanding its content offerings and community engagement through initiatives like the "Bubble" product, which allows direct interaction between fans and artists [13].

Core Viewpoint - The KTV industry is increasingly adopting AI-generated music videos (MVs) as a cost-saving measure, despite the negative reception from consumers regarding the quality and emotional connection of these AI-generated content [9][33][38]. Group 1: Industry Trends - Many KTV establishments across the country are embracing AI technology, but this shift is not solely about modernization; it is also a response to declining patronage and changing consumer behavior [18][19]. - The traditional role of KTV as a social gathering place has diminished, with younger consumers opting for alternative entertainment options such as online karaoke and various gaming activities [19][23][24]. - The rise of self-service KTV and the integration of singing services in restaurants and bars have further diluted KTV's market share [22][25]. Group 2: Cost Management - KTV operators face increasing pressure to manage costs, particularly regarding the expensive licensing fees associated with original MVs, which include music and video rights [27][28][34]. - AI-generated MVs significantly reduce costs, as they require minimal resources to produce compared to traditional MVs, making them an attractive option for KTVs looking to cut expenses [29][38]. - The complexity of negotiating MV rights for popular songs adds to the financial burden, prompting KTVs to seek AI solutions as a more straightforward alternative [34][37]. Group 3: Consumer Experience - The shift to AI-generated MVs has led to a decline in the emotional connection that consumers previously experienced with original MVs, resulting in a fragmented and disjointed viewing experience [44][48]. - Many consumers express dissatisfaction with the lack of coherence and emotional resonance in AI-generated content, which detracts from the overall KTV experience [41][56]. - The desire for authentic emotional experiences in entertainment is becoming a new consensus among younger audiences, who are increasingly rejecting overly commercialized and standardized content [55][62].

Group 1 - The core viewpoint of the article highlights the growth and development of NetEase Cloud Music as a leading music community platform, emphasizing its focus on music discovery and sharing, and its significant user base of over 200 million monthly active users [2] - The company has a concentrated shareholding structure, with NetEase being the largest shareholder and founder Ding Lei holding nearly 30% of the shares as of the first half of 2025 [3] - The company has successfully reduced content costs, leading to an increase in gross margin to 33.7% in 2024, with a notable decrease in content service costs as a percentage of revenue from 98% in 2020 to 50% in 2024 [8] Group 2 - The music streaming industry is entering a mature phase, with the recorded music market in China growing at a rate of 9.6% year-on-year in 2024, making it the fifth largest market globally [9] - The complexity of the Chinese music industry is highlighted, with a fragmented copyright landscape and a long digital music industry chain involving multiple stakeholders [10] - The cessation of exclusive copyright models has led to a more competitive environment, with Tencent Music integrating mainstream copyrights and NetEase Cloud Music expanding its music library from 80 million in 2021 to 150 million in 2023 [12]

Core Viewpoint - The ongoing "original singer dispute" in the music industry highlights the complexities surrounding the definition of "original" and the legal implications of music rights, suggesting a need for clearer contractual agreements to prevent future conflicts [1][2][3] Group 1: Definition and Importance of Original Singer - The concept of "original singer" is primarily a commercial one and may not hold significant importance for artists, as it does not directly relate to music copyright rights [2] - Many industry insiders find the dispute perplexing, viewing it as a result of fan involvement rather than a substantive issue [2] Group 2: Rights of Songwriters - Songwriters are considered the primary rights holders, as they can reclaim performance rights if they retain ownership of the song's copyright [2] - Any third party wishing to perform a song must obtain authorization from the songwriter and copyright holder, as stipulated by copyright law [2] Group 3: Contractual Clarity - The root of the original singer dispute lies in the lack of standardized contract terms among OST producers, leading to misunderstandings about who is considered the original singer [3] - To resolve such disputes, it is suggested that future contracts explicitly include clauses regarding the designation of the original singer, which could lead to clearer industry regulations [3]

Core Viewpoint - The article discusses the recent copyright dispute surrounding the song "Nian Lun," highlighting the complexities of music rights and the implications for the Chinese music industry, particularly in the context of original artists and their recognition [1][4][10]. Group 1: Background of the Dispute - "Nian Lun" is a song from the popular drama "Hua Qian Gu," which set viewership records in 2015, with an average rating of 2.69% [3]. - The song has been embroiled in a copyright controversy after a singer known as "Wang Zai Xiao Qiao" claimed that Zhang Bi Chen was the original singer, leading to a public dispute between fans [4][6]. - Zhang Bi Chen's studio announced that she would no longer perform "Nian Lun," while the song's original author, Wang Su Long, retracted the song's performance rights, making it effectively a "forbidden song" [1][6]. Group 2: Legal and Industry Implications - The dispute reveals issues within the music industry regarding the lack of clarity in copyright laws, particularly the absence of a legal definition for "original singer" [8][9]. - Wang Su Long holds complete copyright over "Nian Lun," which includes rights for reproduction, distribution, and performance, allowing him to authorize any performances of the song [8]. - The article emphasizes that the music industry needs clearer contractual agreements regarding authorization scope, duration, and exclusivity to prevent such disputes in the future [9]. Group 3: Broader Industry Issues - The controversy reflects a broader issue in the Chinese music industry, where the identities of songwriters are often overshadowed by the fame of performing artists [9][10]. - The rise of internet celebrities and their impact on music consumption has led to a situation where original creators are frequently overlooked, as seen with "Wang Zai Xiao Qiao," who gained significant popularity through cover songs without proper attribution [10][11]. - The article also notes that music platforms often mislabel original artists, contributing to confusion and disputes over song ownership [10][11].

Investment Rating - The investment rating for the company is "Outperform the Market" [4][48]. Core Insights - The company is a leading online music streaming platform in China, focusing on a young audience and enhancing its subscription business through an increase in paid user numbers [1][10]. - The competitive landscape is characterized by a duopoly between the company and Tencent Music, with the company holding approximately 27% market share [2][13]. - The company's revenue for 2024 is projected to be 79.5 billion CNY, with a year-on-year growth of 1%, primarily due to a decline in social entertainment services [3][18]. Financial Analysis - The company's core business segments are online music services and social entertainment services, with online music services accounting for 67% of total revenue in 2024 [3][18]. - Online music revenue is expected to reach 53.5 billion CNY in 2024, reflecting a year-on-year increase of 23% [3][18]. - The subscription revenue for 2024 is projected to be 44.6 billion CNY, up 22% year-on-year, driven by an increase in paid user numbers [3][19]. - The company’s gross margin for 2024 is estimated at 34%, an increase of 7 percentage points year-on-year, indicating improved cost management [4][34]. - Adjusted profit for 2024 is expected to be 1.7 billion CNY, representing a significant year-on-year increase of 108% [4][28]. Market Positioning - The company has a strong focus on community engagement and emotional connection with users, leveraging user-generated content and a unique review culture to enhance user retention [2][10]. - The company has been gradually regaining music copyrights since the cancellation of exclusive rights in 2021, which is expected to improve its content offerings [2][14]. Profitability Forecast - Revenue projections for 2025 to 2027 are 86.68 billion CNY, 96.76 billion CNY, and 108.10 billion CNY, respectively, with compound annual growth rates (CAGR) of 9%, 12%, and 12% [9][40]. - Adjusted profits for the same period are forecasted to be 2.1 billion CNY, 2.5 billion CNY, and 3.0 billion CNY, with a CAGR of 21% [9][41]. Valuation - The target price for the company is set between 311 and 354 HKD, reflecting a potential upside of 30% to 48% from the current price [4][42]. - The company is compared favorably against international peers like Spotify and domestic competitor Tencent Music, with a projected PE ratio for 2025 of 29-33x [4][42].

Core Viewpoint - The article discusses the challenges faced by artists in the music industry regarding copyright ownership, highlighting the struggles of several musicians, including G.E.M., Wu Qingfeng, and Taylor Swift, who have fought to regain control over their music rights after signing contracts that relinquished their ownership to record labels [3][4][5]. Group 1: Artist Experiences - G.E.M. signed a contract at age 15 that transferred her music copyright and recording rights to her former label, resulting in her not receiving royalties for six years due to ongoing legal disputes [4][6]. - Wu Qingfeng faced a similar situation, where he lost the rights to his music after signing a contract with a music company, leading to a lengthy legal battle to reclaim his rights [8][9]. - Taylor Swift's experience involved her original label selling her first six albums' master recordings to a controversial figure, prompting her to re-record her albums to regain control and encourage fans to support her new versions [12][13]. Group 2: Industry Practices - The article highlights the problematic nature of contracts in the music industry, particularly for young artists who may not fully understand the implications of relinquishing their rights [18][20]. - It emphasizes the shift in the music industry's revenue model, where artists now have more avenues for exposure and income, making it crucial for them to negotiate better terms regarding their rights [20][21]. - The article suggests that the current copyright structure often disadvantages artists, as many are unaware of the long-term consequences of their contracts, leading to a need for greater awareness and negotiation power among musicians [19][21].

Core Viewpoint - G.E.M. (邓紫棋) released a re-recorded album titled "I AM GLORIA," which includes her representative works, amidst a long-standing copyright dispute with her former label, Hummingbird Music [1][5][6]. Group 1: Background of the Re-recorded Album - The re-recorded album is a response to a copyright statement issued by Hummingbird Music, which claimed ownership of over 100 songs released during G.E.M.'s contract with them [6][7]. - G.E.M. revealed that her first contract, signed at age 15, was a buyout agreement, resulting in her losing ownership of her works despite retaining the right to be credited as the author [7][8]. Group 2: Legal Framework and Challenges - G.E.M.'s legal team found a basis for re-recording under Article 42 of China's Copyright Law, allowing recording producers to use previously recorded music without the copyright owner's permission, provided they pay reasonable compensation [8][10]. - The re-recorded album allows G.E.M. to regain control over the distribution of her works' income, which had previously been a source of frustration due to the lack of royalties from her past works [10][12]. Group 3: Industry Context and Implications - The struggle for control over recording rights is a significant challenge in the music industry, where record labels typically retain ownership of the master recordings, making it difficult for artists to reclaim their rights [12][13]. - The situation reflects a broader trend in the music industry where artists are increasingly aware of their rights and are taking steps to regain control over their works, as seen with other artists like Taylor Swift [15][16]. Group 4: Artist Empowerment and Industry Evolution - G.E.M.'s actions symbolize a growing awareness among artists regarding their rights, emphasizing that music is not just a product but an extension of their identity and creative sovereignty [16][17]. - The industry is witnessing a shift where artists are challenging traditional copyright systems through re-recording, repurchasing, and independent releases, aiming to highlight the importance of creative ownership [16][17].