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].