A8, start with profit mode

Domestic music websites have never met the blue ocean since the day they were born. Genuine, pirated, original, cover... Any field is filled with gunpowder. In such a red sea, Liu Xiaosong sent his own A8 Music to the Hong Kong Stock Exchange, becoming the first wireless network music concept stock in the Hong Kong capital market. This is an amazing miracle.

For the listing of A8 Music, a critic once said with great disdain: "Music.com, which I have never heard of, went to market?" This embarrassing statement conveys an extremely important message— A8 Music is the grassroots of the Internet world. The ears of critics who are used to listening to the spring and snow may not be sensitive to grassroots music. However, the rule of the Internet happens to be "the more grassroots, the louder". In the past 2008, A8 Music's revenue was as high as 706 million yuan, soaring 147% over the previous year, which is an excellent example.

Liu Xiaosong attributes such performance to "a brand new business model" - it mainly provides the largest UGC original music platform in China www.a8.com, allowing all original musicians to distribute and disseminate their music at almost zero cost Products, and through the Internet, wireless networks and other new media and traditional media to promote and sell.

The advent of the Internet era has provided an open communication field for the "grassroots" to express their psychological demands and realize their dreams.

A8 Music conforms to this trend, providing a stage for grassroots musicians who have persistent music dreams and have not been noticed by traditional record companies to show themselves. "Let the silent majority begin to have the right to express their music." .

Reviewing the development history of A8 music, people will find that under the banner of the Internet, A8 can seize the opportunity at every step, follow and even lead the trend.

Initial Monternet business

Shenzhen Huadong Feitian Network Technology Development Co., Ltd., which is the predecessor of A8 Music, was established in Shenzhen in May 2000. At that time, the company's positioning was "value-added telecommunication services in the field of wireless Internet." content provider". In 2000, Monternet had not yet been established. China Mobile's charging model for SMS at that time was that users who opened the SMS service first paid an account opening fee of 50 yuan, and then paid 5 cents for each SMS. This old-fashioned profit model "keeps out" the masses. Therefore, Liu Xiaosong, who has experience in system integration technology, ushered in an opportunity for development. Immediately, Liu Xiaosong became the first person in the country to propose a "PIM" (mobile and Internet-based) personal information management system.

In 2001, Huadong Feitian cooperated with China Mobile to launch the PIM service based on SMS to the whole country, and it became very popular in the market. This business allows China Mobile to earn 50 yuan for the user's SMS account opening fee, and the communication fee for each SMS is split between Huadong Feitian and China Mobile. Liu Xiaosong, who has a flash of inspiration, almost became a super monopoly of telecom value-added services.

However, with the launch of China Mobile's Monternet business plan in November 2000, operators felt that the PIM business would continue to occupy absolute user data, and they believed that this should have been done by them. Therefore, Huadong Feitian's exclusive agency right of SMS service was cancelled. WAP's first blow made Liu Xiaosong deeply understand the true power of originality.

Transformation to digital music

After a brief respite from SMS profitability, Liu Xiaosong began to think about a new direction for the wireless business. An accidental small success determined the current business model of Liu Xiaosong. In February 2001, Liu Xiaosong published a small short article in the "Shenzhen Special Zone Daily", informing him that he could download ringtones for his mobile phone on his A8.com website. As a result, there were 260,000 downloads that day. He immediately realized that so many people like to use ringtone downloads, which is very commercial value. As a result, A8 Music continued to appear all over the country, and the company quickly stepped up the development of ringtone download products. Users can download single songs at a low price, or download any song for a few yuan per month.

Liu Xiaosong realizes that if an enterprise wants to grow and develop, it must continue to innovate, and it must have its own users in the true sense. After repeated arguments, Liu Xiaosong believes that "music" is something that everyone likes, regardless of gender or age, from ancient times to the present, from prenatal education to requiem music. In today's era of high-tech development, why can't wireless and the Internet be used as the main medium for music transmission? Thus, in 2004, the concept of "TeleMusic" was proposed, that is, a new business model for disseminating and acquiring music through telecommunication means (such as broadband, wireless, etc.). Consumers can use mobile phones, PCs, etc. as terminals to download genuine music anytime, anywhere. The public can download and enjoy high-quality music at low prices.

This transformation has always been a big deal in major media. It reflects Liu Xiaosong's vision and courage to keep abreast of the pulse of the Internet age to a large extent. For A8, the strategy formulation at that time directly determines the future development trajectory. Whether it is a smooth transition or a dead last time depends on the company's capabilities and the entrepreneur's character. And Liu Xiaosong happens to be a dedicated and dedicated person.

In 2004, after investigating wireless games, music and many other fields, Liu Xiaosong officially changed the company's name to A8 Music and decided to transform into a music company. At that time, someone suggested changing the name to "A8 Entertainment", which means that in case of unsuccessful music production, there are other retreats such as games. This proposal was finally rejected by Liu Xiaosong. Liu Xiaosong's determination has its own basis. In 2003, in the United States on the other side of the ocean, Apple launched the iTunes online music store to provide music download services for a fee, and quickly occupied half of the MP3 media player market. The success of iTunes made Liu Xiaosong see that SP has entered a dead end, but wireless music still has infinite possibilities.

This transformation quickly proved Liu Xiaosong right. The subsequent tougher crackdown by the Ministry of Information Industry and operators made the entire SP industry experience the cold of winter. During this period, the share price of TOM among the four major domestic SPs fell by 19.59%, the share price of Kongwang fell by 11.33%, and Huayou Century Down 2.44%. By 2007, TOM Online was quietly delisted, Huayou Century chose to merge with Enlight Media, Linktone sold 51% of its shares to Indonesia, and the focus of another SP giant Kongkong was gradually transitioning to wireless Internet business.

2004, when A8 decided to transform, was also the popular year of the Internet song "Rice Loves Rice", followed by "Two Butterflies" and "Don't Say My Tears, You Don't Care". The singer began to quickly become popular with the help of the Internet. Liu Xiaosong became acutely aware of the power of grassroots music. He was determined to go further than iTunes—not content with simply offering music downloads, but moving toward content, creating a portal for original music.

Find a profit model

For Internet companies, the common method of operation is: firstly to accumulate a huge number of users by providing free services, and then advertisers pay for the cost. But the reality most of them have to face is that about 1.6 billion people around the world use internet data, yet less than half earn enough to attract major advertisers. The products and services provided by many Internet companies are in an embarrassing situation where some people use them and no one pays for them. This is the dilemma of blogging China and the download giant Xunlei.

After experiencing the madness and bubbles of the Internet, many companies have become more and more aware that profit is the way to survive, whether online or offline. Charging users is a difficult problem that everyone has avoided for a long time, but it exists objectively.

At the beginning of the establishment of A8, Liu Xiaosong made a special trip to the United States to investigate the Internet. Others were attracted by the surging hot money and brilliant prospects, but Liu Xiaosong's feeling was: "The Internet is so brilliant that almost everyone is there. Doing the Internet, but an industry that has not yet found a profit model, this kind of situation is definitely not normal."

Therefore, before entering the digital music market, Liu Xiaosong considered the issue of "profit model" the most. He believes that , only after thinking about this problem thoroughly, can there be a series of follow-up actions. He does not agree with the establishment of a platform to accumulate popularity, and then consider how to make a profit.

So, what exactly is A8's profit model?

From the very beginning, A8 has built the original music sharing platform A8.com. On this platform, all users who love music and creation can play to their heart's content, actively compose lyrics and songs, and release them through self-made demos or recording demos for users through the recording studio provided by A8. At the same time, A8 also obtains music licenses from record companies. These songs take the form of free trial listening on the Internet, and the charges are mainly from mobile phone channels—promoting these music through the wireless network and Internet of mobile operators, and converting these music into ringtones and ringback tones And the form of interactive voice response music, and then provide to Chinese mobile phone users.

Because A8's website can collect some original music, A8 can obtain authorization at a relatively favorable price for music works provided by music creators who are not well-known. Once such songs become popular, they can obtain higher profit. In addition, A8 promotes songs through the Internet, traditional channels and wireless platforms, which can increase the popularity of songs and increase the downloads of songs.

Under this model, all music creators can distribute their own music products on this platform at almost zero cost, and they can spread their works to the vast majority of music without the hassle of squeezing the single-plank bridge of "distributing CDs". lovers there. This allows singers to directly connect with the market through the Internet, and many headaches—such as the difficulty in charging music sites, the difficulty in releasing songs for singers, and the serious piracy of genuine music—have been better resolved.

A8 Music does not follow the model of paid advertising, because it seems that it is more feasible to pay through mobile phone than unpredictable advertising revenue. This is because the number of domestic mobile phone users is much larger than that of the Internet, and there are good charging channels and good positioning, which provide convenient conditions for A8's profit model. The more important reason is that many people hold this view: the Internet is free, but the mobile phone is charged.

So far, the A8 original music platform A8.COM has included more than 60,000 original music works from more than 10,000 music creators. Such a huge amount of original content has enabled A8 to obtain income that is unmatched by traditional record companies, while avoiding copyright issues. For example, the original music "I Don't Want to Make You Cry" released on the A8 music platform was downloaded about 7.8 million times, and the revenue was about 16.1 million yuan; , This is an unimaginable performance in the CD era.

Liu Xiaosong believes that it is far from enough to find the commercial value of China's massive original music by simply finding one or two songs on the Internet to make a profit. It must be perfected into a complete value chain. The value chain he mentioned is: collecting original music with the advantage of the network - signing a contract with the creator for the copyright of the song - selling the song to the record company in stages / providing paid MP3 download on the Internet / as a ringtone or ringtone download to obtain revenue. Liu Xiaosong believes that this is just a different way to make music, so that more people can consume genuine music.

In order to fill more content for the original platform, since March 2005, A8 Music has launched a nationwide digital music competition - "A8 Music Original China Competition". This digital music original song competition hosted by A8 Music has won the participation of nearly 10 million wireless and wired users who love music across the country. In just one year, the number of participating songs has reached more than 30,000, and a series of songs have been selected and launched. Excellent musical work. For example, popular songs such as "Seeking Buddha" and "South of Colorful Clouds" were excavated from the A8 Music Platform and the A8 Music Original Song Competition. Through this activity, what A8 Music wants to do is to allow music consumers to easily obtain a good music experience, and to allow creators to get reasonable returns for their creations, promote them through online platforms, and transfer copyrights.

Some people have questioned that A8's profit model is too single, and to a large extent, it is affected by the operator's policy and the cooperative relationship with the operator, and the ability to resist risks is insufficient. In Liu Xiaosong's view, the mobile platform is only a job bowl. What is in the bowl and whether consumers like it are the keys to winning. Moreover, until a better model is found, A8's model can form a win-win situation, not only the singer and A8 can benefit, but the operator can also get a share from it.

Adhere to the market orientation

On A8's original platform, a large number of songs are uploaded every day, most of which are destined to not be popular. To find out of thousands of songs and to make a song popular is like finding a needle in a haystack, there is a lot of chance.

For those download users who have no music foundation, professional issues such as the major and minor key of the song, several measures and one cycle are not their concern, they just want a good sound. At this time, it is necessary to use the ears of consumers to form a song selection mechanism. Only in this way can we ensure that the selected songs are exactly what consumers want to hear.

In addition to the common expert review sessions, experts such as the general manager of MTV, the president of Warner, the DJs and music editors of major radio stations and music stations are invited as professional judges. A8 also has its own judgment standards for music. First of all, A8 will perform an "experience" on the uploaded songs. In addition to checking whether the content is healthy, the machine will also analyze whether the songs are copied or not, and whether they are original. Songs that have passed the "experience" will participate in the internal charts, listened to by special people, and count the length of the songs that each person listens to. Some of these people listening to music are professionals, and some have no music foundation.

Songs with a high percentage of listening will be selected and put on the market, and a simple survey will be done to see their downloads and audience composition. The results of the survey will roughly point out the potential of the song. At this time, A8 will sign a cooperation agreement with the music author in the form of buyout or revenue sharing, and sometimes the song needs to be re-recorded.

Behind this song selection mechanism, two words have been hidden - "market". Although the Internet provides intangible products and services, it still needs to stay close to the needs of users and always pay attention to the market, just like traditional industries. In addition to soft standards such as user preferences, what are the hard conditions of the domestic music market?

Huaqiangbei is one of the most prosperous business districts in Shenzhen. On the crowded streets, someone set up a stall and downloaded songs for them at one yuan per song. Many of the girls and boys queuing up to download are copycats in their hands. This shows that many downloaded songs, whether it is MP3 or CRBT, need to succumb to the playback environment of the cottage. Therefore, some A8 singers will place two low-quality loudspeakers at home to simulate the playback environment of the cottage machine, and see how their songs match the environment to make a suitable CRBT.

Liu Xiaosong believes that the current mainstream pop music market is mainly aimed at young people aged 15 to 25, but in fact the audience of music is very wide, and the key to developing this market is to adapt to the needs of the market.

Provide interactive services

The Internet is experiencing the transition from Web1.0 to Web2.0. Today, the vast number of netizens have felt the huge influence of Web2.0 on the entire Internet industry. If Web1.0 is a data-centric Internet, then Web2.0 is a people-oriented Internet. Netizens have long been tired of the extensive "read-only" content and methods provided by traditional portal websites. "Interaction" and "entertainment" are the two major characteristics of the Web2.0 era.

On the A8 original music platform, singers can not only show their creations to a large number of consumers, but also gain space to fully communicate with consumers, and even talk directly to consumers on the platform. In this way, creators can get feedback from consumers in the first place and make improvements to the work.

The advent of the Internet era has also put everyone in the vast ocean of information, and many users are reluctant to spend too much time shuttling in the information that is useless to them. They have become accustomed to the web 2.0. push method. Liu Xiaosong has a very clear understanding of this: "We should think about users, how users can easily obtain the content they want, rather than a person who first searches in the jungle of the platform, and then searches in the ocean of information. What we want to do is to simplify all the unnecessary links, let the user experience the various manifestations of the goal he is looking for, and let him feel the complete service through different experiences to help him make a decision.”

The giant whale network invested by Yao Ming has put a lot of thought into this. Unlike iTunes, which puts songs on the Internet for users to find songs by themselves through search engines, it carefully categorizes songs and compiles them into multiple Top 100 charts, such as "French Classic Top 100", "Rock Bible Top 100" "and many more. Such a fine classification is like the promotional packaging of commodities in the supermarket, selecting good music. "The cost of downloading a song 100 times is obviously lower than the comprehensive cost of downloading 100 songs each time."

A8 does it more thoroughly. In 2005, A8 launched the mobile online music client software A8box, targeting the fashion consumers between the ages of 17-35. This software uses streaming media technology to listen to the A8's massive music library on demand using the mobile phone's wireless network. What's even more amazing is that this software can organize and analyze the user's historical music listening behavior, determine the user's music preferences, and automatically synchronize songs similar to the user's listening preferences to the user's music player.

If it is said that the establishment of the original music platform is A8's move to the upstream of the industry chain by grasping the copyright, and occupying favorable terrain, then A8box is following Apple's iPhone to the terminal to intercept customers. Up to now, A8box has cooperated with mobile phone manufacturers such as Dopod and Nokia, with more than one million users, and said that it "will further connect with different types of mobile phone hardware and platforms". At the same time, A8 also plans to launch a prepaid card business, where users enter their passwords and purchase music services directly from A8 Music's own independent WAP website through A8box, which not only expands the settlement channels, but also effectively avoids excessive reliance on operator fees.

Some organizations predict that by 2010, the size of China's wireless music market will reach about 2.7 billion yuan, and by 2015, it will reach 30 billion yuan of market space. Behind the numbers, online music is showing amazing achievements and fascinating colors. As Liu Xiaosong said: "The boom in mobile music will be unstoppable, and we must seize the opportunity to seize the digital music market." There is no doubt that only those who follow the rules of the game in the Internet age can win the praise of the market.

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