Taylor Swift’s “Midnights” is the most expensive digital album Tencent has ever sold

Taylor Swift’s latest album, Midnights, is out and could set a new standard for China’s digital music industry.

Within a day of its release, the 13-track album priced at 35 yuan or $4.83 has sold nearly 200,000 copies on Tencent’s QQ Music, one of the largest music streaming platforms in China. While $4.83 doesn’t seem like much — the album starts at $11.99 on the artist’s own online store — it’s the highest price ever set for digital albums on the market, due to two things could indicate: upstream costs for producing albums have increased, or Chinese users are increasingly willing to pay for online music.

China’s digital music industry has taken a very different path from that of the West. Music piracy has long been rampant in both online and offline media, so streaming platforms like QQ have come up with a variety of perks to get people footing the bill. Indeed, many paying users of QQ Music have signed up for bundle deals that give them access to other Tencent-affiliated products such as video streaming, manga, or membership of the Tencent-supported online mall JD.com. Subscribers get all kinds of value-added services within QQ Music’s platform, such as: B. Hi-Fi streaming, access to online concerts and customized app layouts.

It’s hard to tell if the $4.83 price tag is the new price norm or simply reflects the fan base for Swift in China. After all, the American artist is one of the few foreign celebrities to reach 10 million followers on Weibo, China’s answer to Twitter. So far, only Jay Chou, the Mandopop (Mandarin pop music) king whose songs are known to everyone of my generation, has matched Swift’s pricing power of 30 yuan per album copy.

After Beijing’s crackdown on internet monopolies, Tencent’s bargaining power in licensing deals could be weakened. For years, Tencent Music Entertainment, the company’s music division, has spent money to secure exclusive rights from UMG, Warner Music and Sony Music Entertainment. That is no longer the case. Swift’s latest digital release, for example, is also available through QQ Music’s arch-rival NetEase Cloud Music.

The good news is that more and more users are paying for Tencent’s music offerings, although the penetration rate remains modest. In the second quarter, TME reported 82.7 million subscribers across its three music streaming apps, up 25% year over year; In total, 593 million people use these services every month, which means only 14% of them pay. In comparison, in the second quarter, 188 million, or 43% of Spotify’s 433 million users were Premium subscribers.

Spotify also has a more profitable product. Looking at music services (TME is a more profitable business overall thanks to its more lucrative live streaming platform that thrives on selling virtual gifts), Spotify’s premium average revenue per user (ARPU) in Q2 was €4.54 (4, $48). TME’s average revenue per paying user (ARPPU) was 8.5 yuan, or $1.17.

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