That music is a technology-driven endeavour is all the more apparent in the maximal heyday of the Digital Age. Technology and its manifestations such as websites and apps, dictate every aspect of how we consume and enjoy music. Tencent Music Entertainment, the leading online music entertainment platform in China that operates some of the most popular music apps locally and beyond, is one of the most crucial architects of the modern zeitgeist.
At this year's edition of All That Matters 2019, we had the pleasure of chatting with Dennis Hau, Group Vice President of Tencent Music Entertainment, about the company's needle-moving impact and plans for the future.
Hi, Dennis. Thanks for your time. Please tell us what you do in Tencent.
I'm Dennis, the Group Vice President of Tencent Music Entertainment. I've been working in Tencent for over 12 years. In my first eight years, I contributed to Tencent’s international expansion, like its international outreach and JOOX, which was founded by me. They originally wanted to call it Juicy music, but I said I wanted something that's like Google, Yahoo – something that nobody can explain. So we actually invented JOOX. The two O's are actually designed to look like an album.
I was transferred to the China music team in 2015, managing WeSing and QQ music. That's when I started to manage these two big platforms in China. QQ music itself is pretty much a full-blown music streaming service in China.
Is it right to liken it to the Spotify of China?
Yes, you can say that. It's one of the biggest music streaming services in China. But in terms of the business model, other than VIP premium service, as you can imagine in China, originally people are not very used to paying to listen to music. So the VIP service, which is like a premium service where users will have to pay for the VIP membership in order to listen to the VIP pool, is one part of the service we are picking up.
Exclusive content. So if you don't pay for it, you won't be able to listen to it?
You can still listen to some of the music online for free, but you have to pay to listen to others. It's a bit unlike the business model in Spotify where you have to pay to click and listen. That's the reason why we have a more innovative, creative business model, including the digital album. When we publish a song by international singers like Taylor Swift, Rihanna and Ariana Grande, before we put those songs into the VIP pool, we actually sell them individually, just a little like iTunes. Therefore, in that particular period, within one to three months, we see that the fanbase in the China market will rather pay in advance before the songs become VIP.
This business model is very unique in China. Also, we arrange fan-meetings from time to time, sort of like a mini concert with the idols that we can livestream to our fanbase. This also happens in QQ music. To recap, we founded QQ music back in 2005, so it has a very long history. In 2014, we started to think about expanding our ecosystem to singing. We started to include a microphone icon in the playing page, so when users listen to the music, they can also sing. When they click on the microphone, the WeSing app comes out and they can sing that karaoke song on the app. The interesting part is that, while you're singing, the app records it to become User Generated Content (UGC) that you can upload to the platform and share with your friends.
As of now, on a daily basis, the platform generates 10 million UGCs everyday in the form of music content, MV, short videos, etc. This is basically a UGC social network platform, where we provide karaoke tools with the content that users can use to sing. Today, we have 35 million songs in our music library in QQ music, and we have 5.5 million karaoke content on WeSing.
In your expert opinion, how do you think China is influencing the music business as a whole?
I think China itself is a very, very huge market, where the monetisation and value that we can generate from music content has yet to be discovered. This is very important news for music producers around the world. Other than US and Europe, the third-largest market is definitely China. But in terms of monetisation penetration, it's still very low compared to other countries. From our quarterly reports since we went IPO last year, our paying users have increased tremendously to 31 million now.
Under Tencent music, we have QQ music, WeSing and two other broader platforms called KuGou and KuWo. With QQ Music, Kugou Music, Kuwo Music and WeSing, we have 800 million combined monthly active users. This is why we have to leverage on technology to discover good music so that we can distribute it to our huge user base.
From your vantage point at Tencent, why is collaboration important for growth?
The whole Tencent umbrella collaborates with many manufacturers and brands. But for the music part of it, we are trying to tap into the IoT market. We are trying to fulfil our vision of having music available anytime, anywhere.
To do that, we have to believe that we are not that best everywhere. We cannot just create a car. Tencent might do that, but I don't know, I'm a Tencent Music guy now. So we believe Tesla, Nio, can actually bring our music to drivers. We believe these microphone manufacturers like Lenovo and Shure can help users to sing better. We believe people will be able to use voice recognition to get music content, from their smart speaker device and from Baidu, Xiaomi, whom we are working with right now. We are also partnering with other brand names like Uniqlo and Nike on a running station, so that we can allow users to enjoy their music in different scenarios. Like when people are running, they would use the Nike playlist and our running station. When they are driving, they would say "Launch QQ music for me" and then start to listen to music.
The vision is really to partner with all the brands we believe can take care of any particular scenario where users require music. That is actually how we find our partners.
We see Asian music quickly taking over the world, K-pop, Mandopop, J-pop. How is Tencent working to push this Asian wave of music?
Honestly speaking, in the last few years, we’ve had a very close relationship with Korean labels. We invest partly in YG Entertainment, and try to bring a lot of Korean singers onto our platform and to create new trends. Recently, other than just bringing in international singers from Korea and US, where all the biggest superstars are from, we found out that with the growing label industry within China, we realise there are a lot of talent shows where we can grow our local artists and promote them through our distribution recommendation engines.
We are seeing that Asian growth itself is not just Asia, but also mainland China having more superstars coming up in the market. There are domestic entertainment ecosystems generated from traditional media such as TV, where people go through talent shows like Sing! China. We have thousands of these shows now on TV, believe it or not. Those content fees are quite expensive too. [Laughs] I would say this is a very interesting era where China itself is starting to develop its domestic ecosystem, where artists create the music content.
Some of the platforms, even QQ music, are opening up to independent musicians, which we call the Tencent musicians. They can sign up on the platform and provide their Professional User Generated Content (PUGC). Independent labels can upload their PUGC and share via streaming. This is an ecosystem that we're trying to create.
Lastly, what else can you tell us about the future of Tencent music?
I think the most important part is to be able to leverage on state-of-the-art technology in the future and be able to ride the wave. I always wondered if we can leverage on our music apps to watch a concert through a VR device online. Friends of mine have asked me if they can watch an orchestra with other people all around the world, with centralised audio servers distributed through QQ music. When that happens, they will be able to listen to quality music in their room while its live. VR and 5G and all these technology will definitely make that happen one day.
This is a very important business model as well. If you're an artist, you just have to host the concert once in LA, like STAPLES Center, and everybody else who pays for the tickets can watch the concert live. This is a very, very important thing that I think we will have to work towards right away.