Xiami Music, the pioneering Chinese music streaming service owned by Alibaba Group Holding , will close next month after management admitted it missed “crucial opportunities” in the battle with rival Tencent Music.
“We failed to satisfy the diversified needs of our users by acquiring proprietary music content. This is our biggest regret,” Xiami said in a statement last week.On social media, loyal Xiami users expressed grief that their beloved music app was coming to an end. “Xiami’s closing is really affecting me emotionally,” one user commented on Xiami’s official account after the announcement was posted on Weibo, China’s equivalent to Twitter. “I will always love you,” the message added.
“If it’s gone, it’s gone,” he posted on Weibo in response to the outpouring of user regret over the closure. Wang and his family have since moved to Phuket, Thailand, a tourist destination popular among Chinese. Xiami had a playlist of over 30 million songs – including Chinese and Western tracks – and more than 40,000 musicians were posting their work across 1,000 genres, some doing so for free as a way to promote their work.
“The fundamental problem for this type of business is that profits can’t cover the expenses on operations, salaries and marketing,” he said. “Many, including Spotify, still struggle to find a profitable business model.”Two years after the acquisition, Alibaba hired Gao Xiaosong and Song Ke, two veterans of China’s music industry, to run Alibaba Music, which combined Xiami with another music streaming app called TTpod.
In 2015 Beijing introduced several policies designed to clamp down on unauthorised dissemination of copyrighted music, which was costing the local music industry 1bil yuan in revenue losses per year, according to iiMedia Research. The following year, Tencent paid about US$3.5bil for exclusive Chinese copyright to the playlists of the world top record label Universal Music Group.
But the 1% that remained exclusive was what really mattered, according to Li from Equalocean. “One per cent of Tencent Music’s archive of 40 million copyrighted songs translates to 400,000 songs, enough to cover mainstream music fans,” he said.Analysts believe Xiami was the ultimate loser from the policy-triggered sector upheaval, gradually ceding its market dominance to Tencent and NetEase Music, which was established by Hong Kong-listed NetEase in 2013.