Music streaming has emerged as a lucrative business with big names such as Apple, Amazon and Google offering their own digital music platforms in a bid to establish new revenue streams.
In Taiwan, regional digital music platform KKBox is using big data to develop a whole new music app that allows users to enjoy pop music for free.
Owned by Japanese telecom operator KDDI, Taiwan’s KKBox last week announced the launch of its second smartphone app, the KKBox Music Awards. The app enables users to explore and listen to the top music playlists from 2005 up to the present day with the aim of encouraging users to use its music library.
Riding on big data analytics, KKBox announces its list of the most popular songs by the day, week and month, as well as a separate list for new songs. A team of KKBox professionals prepares the lists with the support of user listening data. That makes KKBox one of the most credible music platforms in the region.
While KKBox has been using a subscription-based business model for more than a decade, and users are willing to pay for it, the new app is free for all smartphone users. Even users who have no KKBox account can download the app and enjoy the music library via YouTube and Apple Music. This is the first time KKBox is opening up its song lists to other music platforms in a bid to draw more listeners.
KKBox believes that the music streaming industry needs to think beyond price wars or just offering free service to users. What KKBox wants to do is to change the habit of its users in listening to songs.
The new music awards app is designed to encourage users to interact with its music library and increase their usage of the app.
The company believes that the existing business model of charging users for a monthly fee to enjoy tens of millions of songs as well as fighting piracy is a little bit outdated. It is adopting a more open approach to allow users to listen to KKBox’s song lists on other platforms as a first step.
In addition, KKBox is also exploring new channels to distribute its music library through smart speakers. The company has been working with several makers of artificial intelligence-powered smart speakers in Taiwan to stream KKBox music. The company expects to launch around ten new smart speakers in the first quarter of next year. That should help boost the music streaming industry as a whole.
KKBox is seeking ways to boost its hardware coverage from upstream to serve more users downstream. In fact, it is trying to build a complete chain from hardware and software to an open gateway that enables more parties to access its huge music library.
The company has also launched video streaming and live music show services to lure music lovers.
In fact, the business model for music streaming services is set to change as competing on price alone won’t be sustainable. Tencent Music, which owns streaming apps QQ Music, Kugou and Kuwo as well as the karaoke app WeSing, claims to have more than 800 million monthly active users. But since most Chinese music lovers are still reluctant to pay for online subscriptions, the company is leveraging on its social media edge to attract users to spend on virtual products in the online community.
According to Tencent Music’s filing, its music-centric social entertainment services, which include virtual gifts and premium memberships, accounted for over 70 percent of its 7.8 billion yuan (US$1.14 billion) revenue last year.
On the other hand, its online music service had 23.3 million paying users in the second quarter this year, up from 16.6 million a year earlier. Average revenue per user was 8.7 yuan per month. Revenue subscribers represented only 3.6 percent of its total user base.
Paying customers of its social entertainment services reached 9.5 million in the second quarter this year, up from 7.1 million in the same period in 2017.
The average revenue per user was 111.8 yuan a month, or about 1,341 yuan a year.
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