As the world’s most populous country, China should have the potential to become the world’s most profitable music market, yet it is far away from that—China was the 12th largest market in 2016, with $202 million in revenue compared to the US’s No.1 ranking of $5.3 billion. But there are important differences in the way music is consumed that may give China a business edge. Led by internet firms like Tencent, China has adjusted to the digital future of music more quickly, with a whopping 96% of music revenue from digital releases and 75% of that number coming from streaming sales.
Chinese tech giant Tencent surpassed Facebook in market value this November, and is the first Asian company worth more than $500 million. Unlike Facebook, which earns 97% of its revenue from advertising, online advertising only represents 16.9% of Tencent’s revenue, according to the company’s Q3 2017 report–lagging behind domestic competitors like Alibaba in terms of ads gain. Determined now to gain a larger slice of the digital advertising market, Tencent focuses on improving targeting and algorithms to intensify ads on its ubiquitous platform WeChat while not undermining the user experience, as well as leveraging opportunities in the company’s other products and services, including mobile games.
The sharing economy exploded in China this year, with companies for all kinds of shareable objects taking part in this new business model. While there are businesses familiar to Westerners—shared offices, cars and rides—there are also ideas that seem a little kooky, such as shared basketballs and umbrellas. Although some call it innovative, many realize these companies are just “rental 2.0” companies, assisted by digital technology. As the concept reaches fever pitch, however, it is also facing a reality check, especially as many firms, ballooned by venture capital funds, start to show signs of failing.
Historians say that paper currency was invented by the Chinese during the Tang Dynasty. Today, their descendants are taking the lead again: Young Chinese are abandoning cash. Shop anywhere in China–from a grand shopping mall to a small street vendor–and you can use your smartphone to pay. Of course, the wide acceptance of smartphones and 4G internet is one thing, the rise of fintech firms like Ant Financial is another. Yet to seriously phase out cash, authorities and professionals are pursuing something more than just QR codes: digital currencies based on blockchain technology. Despite the cracking down on unfavorable operations like ICOs, China is studying blockchain in a rather serious way.
WeChat is not just a messaging app. With nearly a billion active users, it is used to make voice calls, play games, read news, hail cars and more. With WeChat Pay, people use the app to send money and pay bills by scanning a QR code, and friends and families use WeChat to send lucky money during festivals. For many, WeChat is already indispensable. How did the company grow? What were the key decisions and strategies? In the fierce competition between WeChat pay and Alibaba’s Alipay, who will win? There are many questions about WeChat, but the app’s success is certain—for now.
At the enormous Pacific Department Store on Shanghai’s Huaihai Road, barriers block the street entrances and windows are shuttered. The store, which was one of the largest on one of the city’s busiest shopping streets for nearly two decades, closed in January. The shell of the store now sits incongruously opposite the K11 mall, which has been thriving ever since implementing a smart re-think of the shopping mall concept a couple of years ago. The lesson of the different fates of these two shopping centers is clear—adapt or die. Retail is not declining in China, it’s just changing.
On the surface, digital publishing would seem to be at an early stage in China. Observers say that traditional publishers are not pushing e-editions of their books very hard, and until recently, the government, which is still the industry’s dominant shareholder, has not put its weight behind the format. Look more closely, however, it’s clear that a new publishing ecosystem is already taking shape in China, but it’s not the Amazon co-prosperity sphere model. Instead, digital publishing platforms are becoming the dominant channel for young writers.
The rise of e-books and reading on digital devices has changed every part on the publishing production chain, affecting everyone from the editors, to the designers, to the marketing and sales people. Editors are spending more time on acquiring books and less time working on manuscripts. Designers become more flexible and strategic: they need to make sure a book won’t be ignored by skimmers who only glance at thumbnails on websites, and must ensure that texts are well-laid-out for reading on many kinds of mobile devices. But they’re not who need to change most. It’s the marketing and sales people who face an ever-more-challenging job.
Over the past two years, the Big Five publisher’s share of the e-book market on Amazon has dropped from 43% to roughly 23%. Publishers Weekly’s Apple iBook Bestseller list also includes self-published authors: on the Feb. 17 list, three of the top ten best sellers were self-published. As these numbers suggest, digitalization is not just changing which books reach the market, but how they are put together. For writers, choosing independent publication is no longer the shameful last resort it once was, and for average writers, this path raises the odds of success from nil to slim.
Digitalization has changed book reading, book production and book marketing, and it may ultimately even change the nature of books. Amazon’s Kindle e-reader sold out in 5.5 hours after it was first released in November 2007 and remained out of stock until April 2008. All over the world, a similar shift has been underway—slower in markets where bookstores and book sales are regulated, such as France and Germany; faster in more open markets, such as China, where more than 2 million digital book titles are now available and nearly half of all books sold are sold online. Yet surprisingly, most book buyers still end up with print books.