The Chinese music industry saw 16% growth in its recorded music revenues in 2019 according to the IFPI, but it was also the first country to be affected by the Covid-19 outbreak. Does that make it a canary in the coalmine for the global music industry, in terms of learning lessons from the coronavirus impact, but also the industry’s reaction?
Perhaps so. Music Ally has spoken to a number of Chinese market experts to understand what happened, how the industry responded, and what the lessons might be for the music business elsewhere in the world.
Lesson 1: Less damage than you might expect
General Chinese COVID-streaming behaviour seems to follow worldwide patterns, but the Chinese industry may not be as badly affected as we might think
Streaming data from DSPs was extremely hard to come by, but conversations in industry WeChat channels from the early days when the virus was first hitting had multiple reports of online engagement being greatly increased and streaming behaviour diversifying, as locked-down users listened to other types of music – anecdotal reports which tally with Chartmetric’s recent observations, as discussed in Music Ally’s recent TV show:
Looking back, Alex Taggart of Outdustry, the A&R, marketing and rights management company that operates in China and India, told Music Ally that “there was a significant uptick in paid streaming, and with that came an encouraging lift in engagement metrics such as liking and commenting on songs… probably the result of people having more free time to spend on phones.”
It’s hard to measure the impact on Chinese streaming behaviour as a whole, as lockdown restrictions varied greatly. The New York Times reported that while Wuhan experienced the strictest lockdown, half of the 1.4bn population experienced some, often less strict, measures.
Sources within the Chinese streaming industry told Music Ally that there was a drop in streaming activity from people who normally listen to music – for instance, whilst commuting – but innovative ways to re-engage users may have provided a fillip to their incomes.
Taggart said a slight dip in ad-supported streaming had a silver lining: “it seems likely that the outbreak managed to convert a good number of free users to paid. Even before the lockdowns, we were seeing a general trend toward more paid subscribers, and we believe COVID-19 somewhat supercharged this.”
The effect on the live industry depends on who you speak to. The official line, from the state-owned Global Times, is that events were closed and millions watched music festivals online. However, according to one source in a major city, stringent quarantine rules – enforced via a combination of phone tracking and mass video-surveillance – nipped transmission in the bud, and, in many areas, the negative impact was shorter and less damaging than we might expect. As a result, our source said, their city’s downtown clubs had been open as normal for weeks, “with no masks.”
Lesson 2: Chinese streaming services already embrace live music
One way that China’s largest digital service providers (DSPs) responded was by co-sponsoring large online concerts like ‘Believe in the Future‘, a feel-good event in early May.
One of those DSPs, NetEase Cloud Music has launched a series of initiatives around live performances, including hosting 100 “high-quality live music shows” on its service, for which fans buy e-tickets – with all revenues going to the performers. The company also said that 7,000 musicians have applied to take part in its ‘Bedroom Live Music Festival’, which has so far seen nearly 100 artists perform from their bedrooms to 16 million people. There’s also an ‘Indie Live Music Festival’ that involves broadcasting shows on NetEase from safely-empty venues.
Why is NetEase – ostensibly a music streaming platform – pushing live music so hard? The company says it’s to give independent artists, whose income has been disproportionately affected by the pandemic, exposure to a wider audience. In the immediate post-COVID weeks, “the positive actions of music streaming platforms became more significant and impactful within the Chinese music industry,” said a spokesperson.
NetEase also decided to invest in supporting live artists because the difference between live-streaming and streaming recorded music is not so clearly delineated in China: it’s already a more interactive experience. The DSPs are multi-faceted platforms, with a variety of options for livestreaming video, multiple payment systems, including tipping, and – importantly – two-way social communication.
This platform flexibility allowed artists and labels to transfer events onto DSP’s integrated live-streaming services. Perhaps more significantly, these livestreamed shows gave artists a chance to earn revenue via virtual gifts and tips within the platform.
Tinko Georgiev of Kanjian (disclosure: the partner for Music Ally China, which launched last year) explained how artists were intuitively able to transfer their live activities to interactive streaming events: “People were livestreaming virtual fitness classes and club nights on Douyin [TikTok’s Chinese version] – and they made millions in tips.”
Lesson 3: Livestreams are more than just live performances
What’s becoming popular now is a hybrid of music streaming, artist-fan chat, and live performance – something akin to a Twitch stream, where fans interact with their idol as they play games. In the long-term, Chinese industry insiders say, fans will not be interested in watching a simple livestream of a show, but they will hang around for an interactive live video session with a favourite artist – and they’ll pay for the opportunity.
Taggart suggested that existing Chinese cultural and technological norms around the culture of virtual gifting to favourite musicians, which can be exchanged for cash, has proven to be vital. “In times when their livelihoods are threatened by the lack of a live market, brand deals etc, artists really benefit from having the most direct financial relationship possible with their fanbase,” he said.
Rave Republic, a Singapore-based pop-EDM duo, have been regularly broadcasting on Huajiao, a Twitch-like livestreaming platform focused on online personalities rather than gaming. It’s clear that DJing alone is not enough: the duo chat regularly with the audience, responding to messages in the accompanying live-chat – “How was your yoga today, Alley?” – and thanking viewers for gifts of virtual coins.
The short-term transition to streaming online events will be beneficial in the longer term as it creates new performance options, says Tony Li of audio recognition platform ACRCloud: “It’s a new opportunity – artists and platforms are forced to become more innovative and creative with their performances.”
In the last few months, industry WeChat conversation has moved closer to a consensus that the way to monetise new live-interaction streams may take three forms: a nominal “entrance fee” to take part, Twitch-style tipping, and selling branded artist skins to personalise streaming apps and platforms.
Will the more nuanced payment systems allow artists, post-pandemic, to quickly adapt by creating new income streams in innovative ways? Tony was clear: “Oh yes, for sure.”
Lesson 4: More opportunities for local talent?
Visitors to China must enter a two-week quarantine. So some clubs who have been unable to book foreign DJs have turned to the streaming world for a solution, booking “Douyin idols” to fill their calendars instead.
In an interview with Gig Life Pro, Stephen Dowler of Canadian label Monstercat said, “This idol DJ model is actually growing even more during Covid-19. Bottle service clubs that cannot book foreign DJs are now looking to attractive idol-type local DJs to fill in during this time.” He’s hopeful that clubs will now be forced to start developing – and booking – local Chinese DJ talent as a result of the pandemic.
Kanjian’s Georgiev agrees, saying that Chinese music fans are forced to look for music experiences inside China: “Chinese tourists love travelling to other countries, especially during the May holiday, but they are stuck in China! So the middle classes are spending their money here. And Chinese artists can perform live confidently because of the quarantine conditions.”
But non-Chinese artists, who will surely baulk at the idea of an enforced two-week quarantine upon entering the country, will miss out. Exploring the idea of creating interactive virtual live experiences with Chinese audiences instead may be their only option for a while..
In conclusion: longer term changes may involve widening the services supplied by DSPs, offering a variety of payment opportunities, and embracing a new form of interactive live-streaming
Just as the lockdown conditions of the 2003 SARS crisis forced Chinese businesses to quickly adopt then-new e-commerce options to stay afloat, Covid-19 has already changed how the Chinese music industry is engaging with streaming, at least in terms of content.
The technology needed to pivot and make money was already in place, and artists, labels and DSPs were quick to adapt. Non-Chinese DSPs may consider how they may have been able to support their artists and labels if similar technologies had been built into their mainly audio-only, non-interactive, subscription-only platforms.
It’s been clear for a long time that the music streaming alone is not enough income for most musicians, and now conversations around this topic (like that of #BrokenRecord) are gaining traction, maybe coronavirus offers a moment of reflection for other DSPs, who could expand opportunities for artists using their platform so they can engage with fans and earn money in other ways.
In China the mood is upbeat. Alex Taggart was optimistic that, in general, China’s music market will continue its upward trend: “Bars and restaurants are now slowly and cautiously beginning to open, so we’ll likely see a return of live shows before long. In the south, in cities like Shenzhen, clubs are already publishing their lineups for the coming months. China was already one of the most important touring markets in Asia, but this has certainly been accelerated by Covid-19”