China Entertainment: Starting from 07 Kuainan

Chapter 381 Music Industry Layout

Combating piracy and boosting the record industry are commonplace topics.

Although the anti-piracy alliance established by Lu Yuan has taken a strong stance, it cannot be said to be useless at all in terms of specific results.

But the cost of safeguarding rights is too high.

In the Internet era, pirated resources are easy to obtain, and those platforms will not actively provide download channels. They are the same as Qiandu Music, Xunlei, and Kuaibo.

They are just platforms.

In the P2P download model, resource providers are individuals.

What does user behavior have to do with my platform?

Call the police!

No matter what you say, there are tens of millions of people uploading resources across the country, and the cost of rights protection alone is sky-high.

No law firm would take such a case.

The work is too trivial and the income is low. The fine for a case is only a few thousand or tens of thousands. The input and output are not proportional at all.

In fact, Lu Yuan had anticipated this situation before establishing the anti-piracy alliance.

He also knew that some people secretly laughed at him for being stupid, but he did it anyway.

The Anti-Piracy Alliance is just the first step.

Including the establishment of "Tomorrow's Music Circle" magazine, it is also a piece of the music industry puzzle.

The next step is to invest in an online music platform.

Although Lu Yuan has a good relationship with Tengxun, eggs cannot be put in the same basket. At the beginning of the year, Xinghai Fund registered overseas acquired 8.14% of Kugou’s equity from Pengcheng Zhangying Tianxia.

The price is not expensive, two million US dollars.

In other words, the valuation of Kugou Music by both parties is about 1.69 million.

The predecessor of Kugou Music was Souqiao.com, which was also the earliest professional music search engine in China. Later, Qiandu prepared to acquire Souqiao.com.

But the founder of Kugou didn’t agree.

Therefore, the passive skill is triggered.

Qiandu directly founded the Qiandu MP3 channel, which owns the largest search engine in China. How can Search.com surpass Qiandu MP3.

Then, Kugou founder Xie Zhenyu changed his mind. Since music search couldn’t be done, he would focus on music download + network and local music playback.

Kugou Music came into being.

of course.

Kugou, like other websites, does not have copyright authorization. Let alone Kugou, even Qiandu had no intention of paying at the beginning, until Bu Sheng Records filed a complaint and took Qiandu to court.

After more than a year of litigation, Qiandu Music lost the case and the court ordered compensation.

The case involves a total of 46 songs performed by Hu Yanbing, Huaer Band and others. Bu Sheng Music filed a lawsuit demanding compensation of 46.

The final compensation plan was 2000 yuan per song, with a total compensation of 6.8 yuan.

Subsequently, seven major record companies, including Sony, Universal, and EMI, also took Qiandu to court, but this time Qiandu learned wisely.

There are no download resources in the server, they only provide search services.

In the end, the seven major record labels lost the lawsuit twice.

Boss Lu has also sued Qiandu, and the lawsuit between the two parties has not been concluded yet.

Not only Qiandu, but also Xiami Music, Qianqianjingyin, QQ Music, Tiantian Dongting, Kugou Music and other platforms have all been sued by him. Anyone who has not purchased the copyright will not be sued.

However, except for Qiandu, Boss Lu did not publicize several other lawsuits to the outside world, and both parties chose to deal with them in a tacit understanding in a low-key manner.

Anti-piracy is just a prelude to the plan.

Acquiring Kugou is the second step.

At this time, Kugou’s valuation is not high. Although its monthly active users are tens of millions, it lacks monetization channels.

Most of the revenue from digital music comes from the wireless side, which is basically eaten up by operators such as China Mobile and China Unicom, as well as SP service providers.

With a huge number of users, the cost of the server alone is astronomical.

According to the information Lu Yuan inquired about, Kugou’s revenue last year was only a few million. If Kugou vigorously purchases copyrights, its revenue will directly enter negative numbers.

Even if the copyright fee demanded by the record company is not high, Kugou cannot afford it. Regarding copyright, Lu Yuan contacted record companies, and the four major record companies, Warner, EMI, Rolling Stone, and Universal, only offered one million per year.

This is the package price for all singers, and there is still room for negotiation.

The reason why it is so low is mainly because online platforms rarely purchase copyrights. Leading online platforms such as QQ Music, Kuwo, and Kugou will only give a token amount of money.

Ranging from tens of thousands to hundreds of thousands.

Although the licensing fee is very low, the record company will accept anyone who comes. As long as they are willing to pay, everyone will be good friends.

High or low doesn't matter.

After all, if people don’t pay, there’s nothing the record company can do.

Are you going to sue?

It’s not the music uploaded on my platform, it’s user behavior.

This phenomenon did not fundamentally change until 15 years ago.

In July 15, the Copyright Office issued the "strictest copyright order", requiring major online music service providers to take all unauthorized music works offline.

Otherwise, strict investigation and punishment will be carried out.

Since then, copyright fees have been rising. QQ Music, Ali, Qiandu, and Wangyi have all stepped down and started a war to buy agency copyrights.

Since 15, the licensing fees for more than 870 songs of Milk Tea Lun have increased from 1818 million to million.

In 20, QQ Music spent 5.7 million to purchase the three-year copyright of Milk Tea Lun.

And this is just for a singer.

Xiami Music signed an exclusive copyright contract with Huayan Records, and the fee for 15 years was 2000 million/year. In 18, NetEase Cloud snatched away the exclusive license for a sky-high price of million.

In 17, Tencent spent US$3.5 million + US$1 million in equity to obtain exclusive three-year copyright (national) from Universal Music.

In short, the price increase of music copyright is no less than that of video copyright.

Lu Yuan's involvement in music platforms is certainly not to hoard copyrights.

The layout is small.

Kugou Music is only his primary acquisition target. He does not pursue 100% control, which is unrealistic, not to mention whether the founder of Kugou Music is willing.

The state-owned shareholders behind Kugou would not agree.

It is enough for him to hold more than 51% of the shares. For the rest, he will slowly invest more and slowly dilute other people's shares.

If you are willing to get on the bus, I will take you to eat meat. If you are not willing, I will leave you some soup at most.

Boss Lu wants to build Kugou Music into the Chinese version of spotify (foreign QQ Music). In order to achieve this goal, he also invested in Echo Nest, a smart music digital application platform.

This company is very 'unpopular' and was just established in 08.

But investing in this company cost a lot of money.

Last month, Xinghai Fund reached an agreement with Echo Nest CEO Jim to invest US$1000 million for a 33% stake.

Yes.

1000 million US dollars, only 33% of the equity, an 'unknown' company, and its valuation is higher than Kugou.

In fact, Echo Nest is very famous in the industry. It is a company specializing in music recommendation algorithms.

Recommendation modes such as daily recommendations and guessing your likes that can be seen in every music software in the future were originally developed by this company.

It can be understood as the 'Today's Headlines' in the music field, but Echo Nest does not have its own music playback platform, it is just an algorithm provider.

Investing in Echo Nest is an important step for Mr. Lu’s music expansion.

Free listening + advertising + algorithm recommendation + high-quality sound source + genuine authorization, this combination is an important magic weapon for converting paying users.

At the same time, it is also the key to going to sea.

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(PS: Complaining and driving up copyright fees are completely killing one thousand enemies and losing eight hundred to oneself. Really, those platforms don’t care about people. They burn money first and then monopolize money to make money. Penguin still failed in the end. In 21 years, the market The State Administration of Supervision ordered Penguin to give up its exclusive copyright and pay a high advance fee, shattering the copyright fortress.

The result is chicken feathers all over the place)

(End of this chapter)