Tencent Music Leisure (TME) has had a profitable Q1 2025, with Tremendous VIP (SVIP) subscriptions driving income progress. In keeping with the corporate’s earnings report, music subscription income grew 16.6% year-over-year to 4.22 billion RMB ($581 million USD), fuelled by improved month-to-month ARPPU (which elevated 7.5% year-over-year) primarily on account of rising SVIP adoption. This helped Tencent Music obtain $1.01 billion USD (7.36 billion RMB) in whole income for Q1, regardless of a lower in social leisure income.
It’s a mannequin many Western labels try to emulate. In keeping with MIDiA’s streaming pricing technique report, practically three-quarters of surveyed customers within the US who subscribe to streaming or are on a shared plan are thinking about a “Tremendous Premium” streaming tier, and practically one-fifth of present subscribers could be prepared to pay $5.99 for it. Tencent Music’s distinctive place because the dominant supplier in a big subscriber market with comparatively little competitors makes it troublesome for different platforms to copy that success in their very own markets. But there may be a lot that Western DSPs can be taught from TME’s strategy to music streaming and tremendous premium.
TME’s market dominance is exclusive
TME operates three music streaming providers – QQ Music, Kugou Music, and Kuwo Music – in addition to two karaoke apps (WeSing and Kugou Changchang) and two music livestreaming platforms (Kugou Dwell and Kuwo Dwell). With little to no competitors from Western music streaming platforms (Apple Music is the one Western DSP working in China), TME commanded over 60% of the music subscriber market share in China in 2024. This, mixed with China’s place as the most important music subscriber market globally, gave TME the second-largest international music subscriber market share in 2024, crushed solely by Spotify (supply: MIDiA Analysis Music Subscriber Market Share Mannequin 03/25).
TME’s SVIP tier, out there on all its streaming platforms, prices as much as 25 RMB a month, just a little over 3 times the price of its primary premium subscription. SVIP subscribers unlock options like premium audio high quality, particular badges, early entry to merch and reside occasions, and artist meet-and-greet alternatives. Regardless of the comparatively excessive value, SVIP is a well-liked alternative amongst TME platform customers, with over 10 million subscribers as of September 2024. Whereas Spotify is the most important streaming service each by way of international market share and subscriber progress, it faces competitors in additional fragmented Western markets. As such, there will likely be harder competitors for tremendous premium / SVIP tier adoption as a result of music streaming subscribers are break up amongst quite a lot of in style DSPs, every doubtlessly providing their very own SVIP tiers. Nevertheless, a differentiated tremendous premium technique, particularly one centered on rising social interplay on-platform, would spell success for music streaming platforms, even in a time of rising fragmentation.
Social is a technique for Western DSPs to distinguish
TME makes use of its music streaming platforms to gas not simply passive listening, but in addition energetic participation amongst customers and music followers. In TME’s investor presentation this month, the corporate described its platform mannequin as a technique to “pay attention, watch, sing, and play”, giving customers the chance to attach with one another and their favorite artists together with customary streaming options. This permits its apps to perform as each listening and fan engagement platforms. TME’s possession of a number of fandom income streams helps enhance this as properly. The corporate has a stake within the reside occasion house with TME Dwell, along with producing new content material with in-house studios. This possession technique is particularly troublesome for Western DSPs to undertake. The saturated Western reside market – to not point out the present authorized controversy with business big Dwell Nation (outlined by Music Enterprise Worldwide) – makes it unlikely that Western streaming platforms will construct their very own reside occasion infrastructure.
Nevertheless, a Western DSP might differentiate their superfan tier from the competitors by emulating TME’s social performance and emphasis on connections between customers. To date, not one of the main streaming platforms – Spotify, Amazon Music, Apple Music – supply sturdy social options, like profile web page customisation or the flexibility to message different customers. Spotify seems to be transferring in a extra social route with its new “create” tab for playlist-building, however maybe options like these must be made unique to tremendous premium members. In a market the place all of the streaming platforms wish to develop related tremendous premium choices, the primary DSP to go social would have a bonus. From the primary rollout, it’s crucial that Supremium tiers supply a wealth of options that customers really need. A program with excessive value however low reward, even when it is just the beta model, will lose the belief of each early adopters and potential future Supremium subscribers. Nevertheless, with a powerful deal with social engagement and fandom instruments, Western DSPs can create their very own equally profitable SVIP applications.
