Netease Cloud Music, China’s second-largest operator of music streaming services, has reported double-digit growth in streaming and music subscription revenue for the first half of 2025.
However, the company’s overall revenue declined due to a large YoY drop in turnover from its social entertainment services division.
The company saw a 15.9% YoY increase in revenue from music services, to RMB 2.97 billion, or USD $415 million at the average exchange rate for the second quarter.
Within that figure, revenues from membership subscriptions rose 15.2% YoY to RMB 2.47 billion ($346 million) from RMB 2.14 billion in the same period a year earlier.
The company said the growth was driven by an increase in the subscriber base, which was partly offset by lower average revenue per paying user (ARPPU) due to a change in the subscriber mix.
NCM said the number of monthly active users (MAUs) “maintained steady growth momentum,” but did not disclose specific figures.
Among the company’s strategic priorities going forward, NCM said it plans to “cultivat[e] our users’ willingness to pay and subscribe to premium offerings by improving user experience, deepening user engagement, enhancing membership privileges and broadening consumption scenarios.”
NCM noted that during H1 it had expanded its relationships with copyright holders – including deals with South Korean K-pop companies RBW and Starship Entertainment – but also stressed its expansion of in-house music and the importance of the independent artists on its platform.
The company said it now works directly with 819,000 independent artists, who have contributed 4.8 million tracks to the Netease Cloud Music platform.
That’s up from 611,000 independent artists and 2.6 million tracks as of the end of 2022.
The company noted it had recently rolled out new “roles” for the artists on its platform, including “AI Musician” and “Trainee Musician,” which it says will “provide fresh opportunities for budding music creators to grow and contribute to the diversity of our content creation ecosystem.”
NCM has also partnered with various brands in a program that allows indie artists to create theme songs and background music for ads, which “boosts musicians’ visibility and provides them with valuable commercial opportunities.”
The company said its in-house music initiative has also shown results. “Our in-house studios have successfully produced and popularized multiple hit songs across our community and external platforms” since the start of the year, the company said.
“By supporting independent musicians and developing in-house music, we actively promote the growth of original Chinese music.”
NCM also said it’s “cost-effectively” expanding its long-form audio library, including self-produced audiobooks and podcasts.
Revenue drops, operating profit soars
Despite the strength in its music segment, the company reported a 6.0% YoY decline in overall revenue, to RMB 3.8 billion ($525.3 million). This was due to a 43.1% YoY drop in revenues from social entertainment services, to RMB 859.8 million ($118.9 million), from RMB 1.51 billion a year earlier.
Both Netease Cloud Music and its larger competitor, Tencent Music Entertainment, have seen precipitous drops in revenue in their social entertainment divisions driven by a crackdown on online gambling by Chinese authorities.
“By supporting independent musicians and developing in-house music, we actively promote the growth of original Chinese music.”
Netease Cloud Music
In its latest earnings report, NCM suggested it is shifting its focus away from social entertainment towards its “core music business.”
The company’s gross profit declined 2.3% YoY to RMB 1.39 billion ($192.2 million), but its operating profit surged 40.8% YoY to RMB 844.5 million ($116.7 million) while pre-tax profit jumped 31.3% YoY to RMB 1.07 billion ($147.9 million).
NCM attributed the increase in part to a deferred tax credit of RMB 849.8 million that arose from “cumulative tax losses incurred by a wholly-owned subsidiary.”
The company’s gross margin improved to 34.6%, which it attributed to “increased business scale, strong monetization of our core online music business and ongoing cost optimization.”
Netease Cloud Music stock closed the trading day Thursday (August 14) down 4.8% on the Hong Kong Stock Exchange, trading at HKD $270.20 (USD $34.50) per share.Music Business Worldwide
