Core Viewpoint - The music industry is expected to achieve dual growth in traffic and paid subscriptions through copyright expansion, as highlighted by Dongfang Securities' recent report on Tencent Music (TME.US) and NetEase Cloud Music [1] Group 1: Company Insights - Tencent Music's stock rose over 3% to $21.31, indicating positive market sentiment [1] - The company is expected to enhance its user base by acquiring Korean company SM and planning to acquire Ximalaya, which will likely attract K-pop and long audio users [1] - The increase in the proportion of paid users and the expansion of SVIP benefits are driving growth in Average Revenue Per Paying User (ARPPU) [1] Group 2: Industry Trends - The report suggests that both Tencent Music and NetEase Cloud Music can stabilize and improve traffic and payment rates through copyright supplementation and user operations [1] - NetEase Cloud Music is maintaining stable traffic by incubating independent musicians and securing K-pop copyrights [1]

Core Viewpoint - The music industry is expected to achieve dual growth in traffic and paid subscriptions through copyright expansion, as highlighted by Dongfang Securities' recent report [1] Group 1: Company Insights - Tencent Music's stock rose over 3% to $21.31, indicating positive market sentiment [1] - Tencent Music is expected to enhance its user base by acquiring Korean company SM and planning to acquire Ximalaya, which will likely attract K-pop and long audio users [1] - NetEase Cloud Music is maintaining stable traffic through independent artist incubation and K-pop copyright [1] Group 2: Industry Trends - The report suggests that both Tencent Music and NetEase Cloud Music can stabilize and improve traffic and payment rates through copyright supplementation and user operations [1] - The increase in the proportion of paid walls and the expansion of SVIP benefits are driving growth in ARPPU (Average Revenue Per Paying User) [1]

Core Viewpoint - The music industry is expected to achieve dual growth in traffic and paid subscriptions through copyright expansion, with Tencent Music and NetEase Cloud Music leading the way in user engagement and content acquisition [1] Company Analysis - Tencent Music's stock rose over 3% to $21.31, indicating positive market sentiment [1] - The company is enhancing its user base by acquiring Korean company SM and planning to acquire Ximalaya, which is expected to attract K-pop and long audio users [1] - The increase in the proportion of paid users and the expansion of SVIP benefits are driving growth in Average Revenue Per Paying User (ARPPU) [1] Industry Insights - The report from Dongfang Securities highlights that both Tencent Music and NetEase Cloud Music are stabilizing and improving their traffic and payment rates through copyright supplementation and user operations [1] - NetEase Cloud Music is maintaining stable traffic by incubating independent musicians and securing K-pop copyrights [1]

Investment Rating - The report maintains a "Positive" outlook for the media industry as of July 28, 2025 [6] Core Insights - The music industry is expected to transition from a paid growth model to a dual growth model of traffic and payment, driven by the expansion of audio content and refined operations of fan economy [4][10] - The resilience of streaming music against macroeconomic headwinds is highlighted, with a projected CAGR of 22% for China's streaming music industry from 2021 to 2024, significantly outpacing retail sales growth [9][20] - The report emphasizes the importance of expanding content pools to shift the music market from a stock game to a growth game, with Tencent Music and NetEase Cloud Music both enhancing their content offerings [9][10] Summary by Sections 1. Emotional Value Driving High Growth in Online Music Platforms - China's online music platforms are projected to reach revenues of 27.1 billion in 2024, reflecting a 25% year-on-year growth [18][19] - The emotional value derived from music consumption is increasingly recognized, with a shift towards subscription models providing significant psychological benefits to users [20] 2. Traffic: Copyright Expansion Expected to Drive Growth - The overall DAU for the music industry is expected to reach 183.73 million in 2024, with a 2% year-on-year increase [22] - Tencent Music's DAU has been declining, but the acquisition of Himalaya is anticipated to reverse this trend by introducing long audio users [24][41] - ByteDance's platforms have seen significant DAU growth, with a 100% increase in the first half of 2025 [26] 3. Payment: Expansion of Rights Driving Payment Increases - The report notes a significant increase in the proportion of songs available to VIP members, with QQ Music's share rising from 38% to 95% and NetEase Cloud Music's from 4% to 48% [48][49] - The introduction of SVIP memberships is expected to enhance ARPPU, with Tencent Music's acquisition of SM Entertainment and Himalaya providing additional content [50][51] 4. Cost: Operational Leverage and AI Expected to Optimize Margins - The report discusses how the management of top-tier copyrights is improving, leading to increased gross margins for music platforms [9] - AI is expected to decentralize music production, further optimizing margins [9] 5. Investment Recommendations and Targets - The report suggests focusing on Tencent Music and NetEase Cloud Music due to their strategic acquisitions and content expansions, which are expected to drive user growth and payment increases [4][13]