Tencent Music
How Tencent built a music empire in China by giving away streaming for free and making money from karaoke, tipping, and virtual gifts instead.
Tencent Music launched in 2013 as a streaming service in China. The company licensed music from labels and artists, offering on-demand listening. The model looked identical to Spotify. Users subscribed for ad-free access. Tencent Music believed subscription was the future in China, just as Spotify did in America. The critical insight was understanding what Chinese users wanted beyond music access. Tencent added social features, karaoke, live streaming, and virtual gift giving. Users could watch musicians perform live and send virtual gifts that generated significant revenue. Friends could do it together online. Musicians could monetize through tips and gifts. The platform became a social network.
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