Photo credit: www.billboard.com
Cloud Music Reports Significant Growth in Subscription Revenue
Cloud Music has announced substantial financial growth, with subscription revenue rising by 22.2% year-over-year. This increase contributed to a remarkable 113% surge in profits, amounting to 1.7 billion RMB (approximately $233.4 million). Overall revenue saw a modest increase of 1%, totaling 7.95 billion RMB ($1.09 billion), according to a company report released on February 20.
The online music services segment experienced a 23.1% growth, reaching 5.35 billion RMB ($734 million). Specifically, subscription revenue grew to 4.46 billion RMB ($612 million) from 3.65 billion RMB in the previous year. However, revenue from social entertainment plummeted by 26.2% to 2.6 billion RMB ($501 million). The company attributed this decline to a more cautious operational strategy and a strong focus on its primary music business.
In its earnings report, Cloud Music highlighted the introduction of enhanced membership benefits as a key factor driving the rapid growth of subscription-based sign-ups. The premium offerings were expanded to include a wider catalog, featuring renowned K-pop labels such as JYP Entertainment and Kakao Entertainment. Additional improvements included personalized recommendations, innovative features, and efforts to cultivate a vibrant community among users.
The enhancements in user experience and content variety resulted in increased subscriber retention and higher engagement metrics, leading to an improved gross margin that rose to 33.7%, up from 26.7% in the previous year. This increase in gross profit margin was partially aided by a one-time adjustment in content licensing fees, which provided an additional 1.3 percentage points.
Cloud Music has also broadened its offerings in long-form audio, including a diverse range of podcasts and audiobooks. Recently launched podcasts focus on various music genres, while self-produced audiobook content has seen substantial growth. Time spent listening to long-form audio increased by an impressive 35.8% in 2024.
Looking ahead, Cloud Music aims to differentiate its content further and enhance its independent artist incubation platform known as NetEase Musician. The company is dedicated to boosting its in-house music production capabilities. With the rising popularity of hip-hop, rock, Japanese ACG (animation, comics, games), and Western music on its platform, Cloud Music has partnered with Modern Sky Entertainment to expand its content offering. Additionally, the company has begun collaborating with Western artists, recently signing an agreement with U.S. musician Galen Crew.
Source
www.billboard.com