Cloud Music’s revenue from subscriptions grew 22.2% year over year, helping the Chinese music streaming company post a 113% increase in profit, to 1.7 billion RMB ($233.4 million), as revenue increased by only 1%, to 7.95 billion RMB ($1.09 billion), the company announced Thursday (Feb. 20).
Revenue from online music services increased 23.1% to 5.35 billion RMB ($734 million). Subscription revenue increased to 4.46 billion RMB ($612 million) from 3.65 billion RMB ($TK). Social entertainment revenue decreased 26.2% to 2.6 billion RMB ($501 million). The company attributed the decline to “more prudent operational approach” and “a focused emphasis on our core music business.”
The company cited “the rollout of enhanced membership benefits” for the “rapid growth in our subscription-based memberships, further driving robust revenue growth in our core online music business and profitability.” The premium offerings were enhanced with an expanded catalog (including K-pop labels JYP Entertainment and Kakao Entertainment), improved personalized recommendations, “innovative” features and the fostering of a “stronger sense of community,” according to the earnings release.
Improving the user experience and content offerings led to gains in subscriber retention rates, time spent listening and a better gross margin, which jumped to 33.7% from 26.7% in 2023. A one-time adjustment of some content licensing fees increased gross profit margin by approximately 1.3 percentage points.
Cloud Music also expanded its long-form audio content offerings of podcasts and audiobooks. The company launched several podcasts that focus on different music genres, and offered more self-produced audiobook content. Time spent listening to long-form audio jumped 35.8% in 2024.
Looking forward, Cloud Music plans to further differentiate its content offerings, improve its independent artist incubation platform, NetEase Musician, and put greater emphasis on its in-house music production. As hip-hop, rock, Japanese ACG (animation, comics, games) and Western music surged in popularity on Cloud Music, the company added content through a partnership with Modern Sky Entertainment. Cloud Music is also pursuing collaborations with Western artists and recently signed an agreement with U.S. artist Galen Crew.