Two things have been interesting recently.
One is that Netflix lost nearly 1 million paid subscribers in the second quarter of 2022. Although it is not as bad as the 2 million previously predicted by the market, it is indeed the largest quarter-on-quarter decline in paid subscribers in history. But thanks to Netflix's ARM (Average Revenue Per Membership) growth of 7% year over year, revenue in the Number List quarter rose 13% in constant currency.
Second, after Youku announced price increases following the steps of iQiyi and Tencent Video, after 6 minutes of screencasting, it is necessary to upgrade to Kumiao members with TV screen casting rights on the basis of opening Youku VIP members. This also means that in order to achieve the freedom of screen projection, the user's annual membership fee is 110 yuan more than that of ordinary VIPs.
It is not difficult to see that under the situation that domestic and foreign long-term video platforms are facing revenue difficulties, price increases have become a common choice for major platforms.
Coincidentally, Amazon will increase the prices of the two main packages, Amazon Music Unlimited personal plan and single-device plan, by $1 (or the corresponding local currency unit) in the United States, the United Kingdom, Canada and other markets from May 5; June , Apple Music also raised prices for the first time since 2015, raising its student subscription plan by $1 (or the corresponding local currency unit).
We can't help but make bold predictions. Will domestic music platforms such as Tencent Music and NetEase Cloud Music also follow up with price increases? And after the price increase, will it hit the willingness of users to pay, and then affect the scale of paid revenue? These are what we are curious about.
1. The price increase experiment of "Spotify"
Generally speaking, the current revenue sources of the music industry are advertising revenue and paid revenue. Among them, advertising revenue depends on the scale of users, and the platform sells user traffic to brand owners to obtain advertising fees; while paid revenue depends on the scale of payment and ARPPU (Average Revenue Per Paying User, average revenue per paying user), that is, users directly Pay for content.
As the user dividends of the global mobile Internet are exhausted, whether it is Spotify, QQ Music, Kugou Music, Kuwo Music, NetEase Cloud Music, the monthly active scale of each company is basically stable . In the context of unable to grow rapidly, increasing ARPPU, that is, increasing prices, is the most effective in stimulating revenue.
The platform naturally understands such a simple truth, and there have indeed been some small-scale price increase experiments.
As early as July 2017, Spotify began testing price increases in Norway, raising the subscription price of Premium, Family and Student packages. For example, the Premium subscription fee has risen from the previous NOK 99/month to NOK 109/month, which is quite At $12.12, up 10%.
Spotify's price hikes have proven to have zero negative impact on the growth of Norway's streaming music market, also providing an urgent business boost to a market where streaming subscriber saturation is becoming an impediment to the industry's growth.
In April 2021, Spotify raised three subscription packages (Duo, Family and Student) in 12 markets, including several European regions including the UK and the US, following price increases in more than 30 markets in the first two quarters subscription price. That said, in the 12 months from the end of the second quarter of 2020 to the end of the second quarter of 2021, Spotify increased the price of at least one plan in more than 42 markets.
As mentioned earlier, Amazon Music and Apple Music have also raised the price of subscription fees this year, and Amazon's data currently shows no harm to its user growth.
Back in the domestic market, a subscription plan with similar price increases was also launched. For example, in February of this year, QQ Music launched a "super member" that includes luxury green diamonds, listening to book members, national K-songs, as well as membership music library, digital albums, online performances, etc. with a total of 50+ rights and interests, with a monthly subscription of 40 yuan, The annual package is 348 yuan, which is naturally a lot more expensive than the 18 yuan luxury green diamond. In fact, it can also be regarded as a foreshadowing of price increases.