MBW Reacts is a series of analytical commentaries from\u00a0Music Business Worldwide<\/a>\u00a0written in response to major recent entertainment events or news stories. Only\u00a0MBW+ subscribers<\/a>\u00a0have unlimited access to these articles.\u00a0The below article originally appeared in Tim Ingham\u2019s latest\u00a0MBW+ Review email,<\/strong>\u00a0issued exclusively to MBW+ subscribers this week.<\/em><\/p>\n What\u2019s the world\u2019s\u00a0biggest subscription streaming<\/strong>\u00a0market?<\/p>\n If you guessed the\u00a0USA\u00a0<\/strong>\u2013 the obvious answer \u2013 then you\u2019re half-right. And half (very) wrong.<\/p>\n Uncle Sam<\/strong>\u00a0still leads the world\u00a0in<\/span>\u00a0terms\u00a0of<\/span>\u00a0subscription revenues (at over\u00a0USD $6 billion<\/strong>\u00a0annually).<\/p>\n But\u00a0in<\/span>\u00a0terms\u00a0of<\/span>\u00a0the\u00a0volume<\/em>\u00a0of<\/span>\u00a0paying subscribers, nowhere can touch\u00a0China<\/span><\/strong>.<\/p>\n China<\/span>\u2019s top two music streaming providers,\u00a0Tencent Music Entertainment<\/a> (TME)<\/strong>\u00a0and\u00a0NetEase Cloud Music<\/a> (NCM)<\/strong>, counted around\u00a0171 million<\/strong>\u00a0paying users between them at the close\u00a0of<\/span>\u00a02024.<\/p>\n That\u2019s nearly\u00a0double the volume<\/strong>\u00a0of<\/span>\u00a0subscription streaming accounts\u00a0in<\/span>\u00a0the US at the same juncture:\u00a0100 million\u00a0<\/strong>(source:\u00a0RIAA<\/a>).<\/p>\n What\u2019s more,\u00a0China<\/span><\/strong>\u00a0is growing\u00a0way<\/em>\u00a0faster than the USA.<\/p>\n China<\/span>\u00a0added over\u00a025 million<\/strong>\u00a0paying music subs\u00a0in<\/span>\u00a02024, according to senior industry sources.<\/p>\n The USA? Just\u00a03.2 million<\/strong>.<\/p>\n China<\/span><\/strong>\u00a0is also rapidly gaining global market share\u00a0of<\/span>\u00a0subscription streaming\u00a0revenues<\/em>.<\/p>\n According to\u00a0IFPI data<\/a>,\u00a0China<\/span>\u2019s annual subscription trade revenues surpassed\u00a0USD $1 billion\u00a0<\/strong>in<\/span>\u00a02024, up\u00a018.9% YoY<\/strong>.<\/span><\/p>\n In<\/span>\u00a0doing so,\u00a0China<\/span><\/strong>\u00a0surpassed\u00a0Germany<\/strong> to become the world\u2019s third-largest subscription market.<\/p>\n It now looks inevitable that\u00a0China<\/span>\u00a0will leapfrog the world\u2019s\u00a0second-largest\u00a0<\/strong>subscription market,\u00a0the UK<\/strong>, by 2026.<\/p>\n The meteoric rise\u00a0of<\/span>\u00a0China<\/span><\/strong>\u00a0as a subscription market is obviously a boon\u00a0for<\/span>\u00a0the\u00a0world\u2019s biggest music rightsholders<\/strong>.<\/p>\n Yet, at the same time, it\u2019s a\u00a0significant threat<\/strong>.<\/p>\n That\u2019s because\u00a0Tencent Music\u00a0<\/strong>and\u00a0NetEase Cloud Music<\/strong>\u00a0are increasingly\u00a0competing\u00a0<\/em>with<\/span>\u00a0music rightsholders\u00a0<\/strong>to\u00a0sign and produce<\/strong>\u00a0China<\/span>\u2019s biggest hits.<\/p>\n Get your head around these numbers.<\/strong><\/p>\n According to financial filings reviewed by\u00a0MBW<\/em>, some\u00a01.4 million artists<\/strong>\u00a0are now signed directly to the \u2018independent\u2019 distribution\/label services arm\u00a0of<\/span>\u00a0either\u00a0Tencent Music<\/strong>\u00a0or\u00a0NetEase Cloud Music<\/strong>.<\/p>\n These indie artists don\u2019t just\u00a0release\u00a0<\/em>music via\u00a0TME\/NetEase<\/a><\/strong>.<\/p>\n The hottest acts also receive a host\u00a0of<\/span>\u00a0career-accelerating benefits<\/strong>\u00a0\u2013 including\u00a0music-making assistance<\/strong>\u00a0and\u00a0serious marketing support<\/strong>.<\/p>\n \n In<\/span>\u00a0Tencent Music\u2019s<\/strong>\u00a0latest\u00a0quarterly filing<\/a>\u00a0(Q2 2025), the platform highlights its \u201ccross-platform promotions\u201d\u00a0for<\/span>\u00a0several key tracks signed to DIY artist services arm,\u00a0Tencent Musician<\/strong>.<\/p>\n One\u00a0of<\/span>\u00a0these tracks \u2013\u00a0Xiang Sisi\u2019s\u00a0<\/strong>Why Not Wait\u00a0for<\/span>\u00a0the Wind\u00a0<\/em>\u2013 amassed over\u00a020 million<\/strong>\u00a0streams\u00a0<\/strong>and \u201ctopped multiple music charts\u201d\u00a0in<\/span>\u00a0Q2.<\/p>\n In<\/span>\u00a0addition, TME facilitated over\u00a0300 live performance opportunities<\/strong>\u00a0in<\/span>\u00a0the quarter\u00a0for<\/span>\u00a0nearly 100\u00a0of<\/span>\u00a0its directly-signed artists.<\/p>\n Meanwhile,\u00a0NetEase Cloud Music<\/strong>\u00a0has signed<\/a>\u00a0a whopping\u00a0819,000<\/strong>\u00a0indie artists to date, who\u2019ve released\u00a04.8 million tracks\u00a0<\/strong>between them.<\/p>\n A number\u00a0of<\/span>\u00a0these\u00a0NetEase-signed acts<\/strong>\u00a0have received label-like services including\u00a0financing<\/strong>\u00a0(via \u2018Cloud Ladder\u2019), plus invitations to sync music\u00a0in<\/span>\u00a0ad campaigns<\/strong>\u00a0for<\/span>\u00a0major brands.<\/p>\n NetEase<\/strong>-signed artists also receive\u00a0A&R resources<\/strong>, whether digitally (\u2018AI Musician\u2019 and \u2018Trainee Musician\u2019) or via offline songwriting camps.<\/p>\n Since 2021 says NetEase, its nine songwriting camps have produced\u00a0<\/strong><\/em>120 tracks<\/strong>\u00a0that have \u201ccollectively garnered more than\u00a06 billion<\/strong>\u00a0plays\u201d.<\/p>\n Concurrently,\u00a0NetEase<\/strong>\u00a0is making its own music via\u00a0\u201cin<\/span>-house studios\u201d<\/strong>. These studios have apparently \u201cproduced and popularized\u00a0multiple hit songs<\/strong>\u00a0across our community and\u00a0external platforms<\/strong>\u201d.<\/p>\n NetEase\u00a0<\/strong>doesn\u2019t make clear\u00a0in<\/span>\u00a0earnings reports whether these \u201chit songs\u201d are performed by\u00a0human artists\u00a0<\/strong>(or not). However, it recently confirmed its biggest \u201cin<\/span>-house\u201d hit\u00a0of<\/span>\u00a0calendar Q2:\u00a0Liang Nan<\/strong>\u00a0(\u4e24\u96be)<\/strong><\/em>.<\/p>\n Through the wonder\u00a0of<\/span>\u00a0Google<\/a> Translate<\/strong>, I\u2019ve tracked it down\u2026 and it\u2019s\u00a0Bieber-esque<\/strong>:<\/p>\nSo what\u2019s \u2018The\u00a0China<\/span>\u00a0Paradox\u2019?<\/strong><\/h6>\n
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