Can Netease Cloud Music, which entered late in the oligarchy era, still overtake corners?

The latest news shows that after the financing rumors broke out, some media asked Netease for verification, but Netease denied the news.

Original title: Online music ushers in the era of oligarchs. Can Netease Cloud Music, which enters late, still overtake corners?

30 creation song lists and 637 updates-In Netease Cloud Music's APP, Netease founder Ding Lei exists as a "senior active user" all year round. Just after 8 o'clock on the evening of the 21st, Ding Lei also forwarded and shared the "Netease Recruitment Magic Jungle" widely spread on Social networks in Netease Cloud Music.

However, compared with Ding Lei's relaxed attitude in the Netease Cloud Music APP, this product, which he personally launched, is not in an easy position on the online music battlefield. Especially recently, due to the news of "CMC and Tencent's QQ Music Merger", public opinion and the market have begun to pay closer attention to every move of Netease Cloud Music.

Launch new financing to cope with pressure?

On July 15, China Music Corporation ("CMC") and Tencent Group jointly announced that they had reached an agreement to merge the digital music business. Simply put, in this transaction, CMC merged its Kugou, Kuwo, Ocean, Rainbow, Yuanquan and other companies with Tencent Group's QQ Music.

Shortly after the news was announced, the market spread that "Netease Cloud Music has launched a new round of financing." Due to the short time between the merger news and the financing news, outsiders have interpreted Netease Cloud Music's financing to cope with the squeeze caused by the merger of QQ Music and CMC Group.

According to reports, Netease Cloud Music has launched a new round of financing with a total scale of about 1 billion yuan, with a pre-investment valuation of 7 billion yuan and a post-investment valuation of 8 billion yuan. It is reported that Netease Cloud Music mainly chooses strategic investors in this round of financing. Before the financing, Netease Cloud Music was wholly-owned by Netease; after the financing, Netease Cloud Music released 12%-15% of its equity. At the same time, the largest shareholder was Netease, accounting for more than 85% of the shares.

According to reports, Netease Cloud Music's current round of financing is mainly used for the following five points: 1. Entering the upper reaches of the industrial chain and purchasing copyrights, especially exclusive copyrights;2. Taking advantage of existing user and big data advantages to support independent studios, artists and sign contracts, create copyrights, and purchase long-term exclusive copyrights at low prices in the early stages;3. Vigorously promote it to students, white-collar workers and middle class in first-tier, second-tier and second-tier cities, and push the product to the top three in the industry; 4. Expand the team to meet the requirements of operating the project as an independent company entity;5. Explore the field of intelligent hardware and grasp the hardware entrance of music products.

In fact, rumors of Netease cloud music financing have a long history. As early as April 2016, it was reported that Netease Cloud Music had launched its first external financing and planned to introduce strategic investors and further integrate high-quality resources.

At the end of last month, news broke that Netease Cloud Music held a low-key PE/VC meeting in Hangzhou, attracting more than 20 institutions including SMG, Haier Venture Capital, Sequoia Capital, Southern Capital, Huitianfu Fund, CCB International, CCB City Investment, Bailian Venture Capital, Haitong Venture Capital, Fosun Culture, and China Guangwen Film all attended.

However, the latest news shows that after the financing rumors broke out, some media sought confirmation from Netease, but Netease denied the news.

Netease Cloud Music has a late episode.

Compared with Kugou, which was established in 2004, QQ Music and Kuwo, which were launched in 2005, Netease Cloud Music, which was officially launched in April 2013, is undoubtedly a late player in the online music market. Although we entered the market for a late episode, Netease Cloud Music maintained a high growth momentum in its development, which was due to the attention of the group and Ding Lei and the user experience of the product itself.

At the beginning of the launch of Netease Cloud Music, Ding Lei admitted that he was a music fan and had been "eavesdropping on Taiwanese pop music channels", playing with cassettes and CDs since his childhood. "Listen to everything but rock", and now I still listen to two to three hours of music every day. The reason why I personally set up a project to launch Netease Cloud Music is because I feel that my current large number of applications cannot meet the needs of users to "find good songs conveniently".

A few years ago, there were reports that during the internal testing of Netease Cloud Music, Ding Lei had sent an internal email to give instructions requiring all employees of Netease's website department to download and register Netease Cloud Music with their mobile phone numbers, and to set up personal profiles. At least 600 songs should be downloaded within three days.

After Netease Cloud Music was launched, Ding Lei personally took the lead and registered an account with Netease Cloud Music under the real name of "Ding Lei" and added a V certificate. Ding Lei, who is resident in the App, often shares singles, song lists, DJ programs and other activities, and publishes his own comments on songs or singers from time to time, and also opens private song lists to netizens.

Ding Lei's emphasis on Netease Cloud Music is also reflected in the investment of funds. According to reports, in the three years since Netease Cloud Music was launched, Netease has invested more than 1 billion yuan in cash alone, and various investments are expected to be nearly 2 billion yuan.

Ding Lei's emphasis on Netease Cloud Music has also enabled this APP to polish up an excellent user experience. Ding Lei not only formed a strong and experienced product team for it, but also used the entire power of Netease to promote it. These constitute a solid and indispensable foundation for cloud music.

In July 2015, Netease Cloud Music announced that the number of users exceeded 100 million. According to the latest news obtained by DoNews, Netease Cloud Music will announce that its users will exceed 200 million on July 25.

When the number of users exceeded 100 million, Wang Lei, senior director of Netease Cloud Music, said,"It took Netease Cloud Music two years and three months from the launch to the number of users exceeding 100 million. Compared with similar products, it took 6 years for Cool Dog Music users to exceed 75 million, and 4 years for Daily Music users to exceed 70 million."

At present, Netease Cloud Music has become Netease's third largest mobile application APP, second only to Netease Mailbox Master and Netease News Client in user scale. According to official data, as of the first quarter of 2016, the total number of effective users of Netease's mailbox reached 860 million, and the Netease news client had 400 million users.

At the same time, in terms of user coverage, the music report for the first half of 2016 released by Bida Consulting showed that Netease's cloud music user coverage reached 30.3%, pressing for QQ Music and Cool Dog Music.

Netease Cloud Music faces a duel.

According to the latest Top 1000 APP list in China released by mobile data agency QuestMobile, Netease Cloud Music's MAU in June 2016 was 34.95 million, a year-on-year growth rate of 249.8%, ranking 68th in the Top 1000 Power List. Compared with the same period last year, the ranking has increased by 97 places. It ranks second only to Cool Dog, QQ Music and Cool Me in music applications, and its growth rate is also much higher than that of the latter few, Cool Dog Music, QQ Music, Kuwo Music MAU increased by 7.7%, 37.8%, and 45.7% year-on-year respectively.

Judging from the above data, if it weren't for the merger of QQ Music and CMC's Kugou, Kuwo, Ocean, Rainbow, Yuanquan and other companies, according to the current development speed of Netease Cloud Music, catching up with its competitors would not be within the reach. With the merger of QQ Music with companies such as Kugou and Kuwo, the online music market structure has changed.

According to data from Analysys think tank, in the fourth quarter of 2015, QQ Music's market share was approximately 40%, and Kugou Music's market share was approximately 32.4%. This means that after Tencent merged with China Music Group, it combined with Cool Dog Music and Cool Me Music to form more than half of the mainland's online music service market.

In addition, public information shows that in terms of the number of users, the number of QQ music users has exceeded 400 million, and the number of daily active users has reached 100 million. The total number of users of Kugou and Kume has exceeded 651 million, and the number of daily active users has also exceeded 100 million. At present, the number of Netease Cloud Music users has just exceeded 200 million.

The merger of Tencent Group and CMC has also had a direct impact on the copyright market. According to data, Ocean Music and Tencent together control 42% of music and lyrics copyright authorizations and 53.1% of music recording copyright authorizations in China, which means that they hold half of the industry's copyright resources.

Currently, Netease Cloud Music cooperates with more than 135 copyright parties including the world's three major record companies (Sony, Warner, and Universal), and its music library contains 5.8 million songs. If we only look at this data, copyright resources are still the shortcoming of Netease Cloud Music. Fortunately, Netease has a good cash flow. I believe that the group and Ding Lei himself will invest heavily in copyright purchases.

Editor: yvonne