Chinese gaming giant makes big bet on electronic dance music

NetEase also runs the second most popular music-streaming service in the country

NetEase

Xinmei Shen

Published: 7:45pm, 18 Oct, 2018

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This article originally appeared on ABACUS

NetEase is set to open its first electronic music school in China next year.

The tech giant might be better known as China's second biggest gaming company, but it's also the owner of the country's second most popular music streaming service. The new school, established in partnership with British music school operator Point Blank, is located in the eastern city of Hangzhou.

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Established in 1994, Point Blank offers a range of courses from songwriting to DJ skills -- with schools in London, Los Angeles, Ibiza and Mumbai, as well as online. Point Blank China will initially offer a year-long music production and sound engineering diploma course, with plans to offer a bachelor’s degree in music production and sound engineering eventually.

This comes a week after NetEase launched an electronic music subsidiary called FEVER, which it says is going to host live music events and "premium electronic music tours."

China's electronic dance music (EDM) scene is growing rapidly. An iiMedia report forecast that the number of China’s electronic music listeners could reach 400 million in 2019, up from an estimated 286 million last year. Though it said NetEase Cloud Music is the most professional music app for China’s EDM fans, the company isn't the only company fighting for a piece of the pie.

In January, rival Tencent Music launched an electronic dance music label called Liquid State with Sony Music. It aims to sign EDM talents across Asia, collaborate with other artists from around the world, and offer their music on Tencent’s three streaming platforms: QQ Music, Kugou and Kuwo.

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Launched in 2013, NetEase Cloud Music had more than 400 million users by the end of last year. With a focus on indie musicians, NetEase Cloud Music promotes the work of these artists and lets users message them directly.

That has helped it grow a user base that's believed to be more picky about what they listen to than the average listener. Aggressive marketing has also helped NetEase expand its music-streaming user base.

NetEase, however, still has plenty to do to catch up with Tencent. NetEase Cloud Music has an estimated 116 million monthly active users -- fewer than Tencent’s three music apps. Kugou alone has three times more users. The disparity has partly to do with NetEase’s smaller song inventory, which its users complain a lot about.

In contrast, Tencent has been holding exclusive rights to many music content. It partnered with Warner Music Group and Sony Music in 2014 to distribute songs in China. It also has an exclusive deal with Universal Music.

That means NetEase and others had to strike a deal with Tencent so that their users can also listen to songs from Lady Gaga or Taylor Swift. And this has put NetEase at a precarious position because Tencent could decide to take back these content anytime it wants. Last year, NetEase had to apologize to users after it pulled a lot of songs from its service because of copyright disputes.

But things are starting to change.

In September last year, China’s National Copyright Administration urged China’s four biggest music service providers and 20 publishers to stop signing and fighting over exclusive deals, so that the industry can foster a “healthy environment”. Authorities also pushed Tencent and NetEase to cooperate more and share their music licenses.

A poll on Chinese microblog service Weibo found that 75% of about 50,000 people surveyed said they would choose NetEase Cloud Music over QQ Music if the two providers held the same amount of music licences.

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