NetEase (09999) released its 2023 Q3 financial report. NetEase CLOUD MUSIC achieved a gross profit margin of 27.2% and a gross profit of 537 million yuan.

On November 16th, NetEase (09999) released its 2023 Q3 financial report. In the third quarter, NetEase's performance was steady, with a net income of 27.3 billion yuan. Under non-GAAP, the net profit attributable to the company's shareholders from continuing operations was 8.6 billion yuan. Research and development expenses reached 4.3 billion yuan for the quarter, with total R&D investment exceeding 12 billion yuan for the first three quarters of this year. NetEase CLOUD MUSIC achieved a net income of 2 billion yuan in Q3, with the gross profit margin further improving to 27.2% and a gross profit of 537 million yuan. The growth of gross profit margin for CLOUD MUSIC was mainly due to the increase in subscription revenue and the continuous improvement of cost structure. In Q3, NetEase CLOUD MUSIC continued to focus on content ecology and product innovation, continuously deepening user participation in the music community, and steadily improving profitability. Hot music copyrights continued to be updated, with both quality and popularity of music sales. In the third quarter, NetEase CLOUD MUSIC reached copyright cooperation with artists like Bai Mi Fan, Li Yuchun, and "The Band's Summer," with many popular songs and classic band songs being available on the platform. (G)I-DLE's new album "Ifeel" sold over 480,000 copies on NetEase CLOUD MUSIC, breaking the 10 million yuan mark in total sales and leading the digital album sales chart for the 2023 year. NetEase CLOUD MUSICCloud Studio and FIRST Youth Film Exhibition's joint project "Sound and Vision Relativity" received high praise. The consumption scene for audio content continued to expand, with post-2000s becoming the main consumers. The radio drama "Changxiangsi" became the fastest audio novel to exceed 10 million plays, ranking No.1 on NetEase CLOUD MUSIC's audiobook chart. In August, NetEase CLOUD MUSIC, together with 36Kr Research Institute, released the "Post-2000s Long Audio Consumption Trend Report (2023)," which pointed out that long audio users show obvious characteristics of youth, with post-2000s accounting for 72% of users. Almost half of post-2000s users have paid for long audio content, and the Internet of Things will become an important channel for post-2000s to listen to long audio content. With the increase in disposable income for post-2000s, their willingness and ability to pay will further increase, providing commercial support for platform content and services. Embracing AI music opportunities, helping musicians improve efficiency in creation. Since 2018, NetEase CLOUD MUSIC's audio and video laboratory has been researching the combination of music and artificial intelligence, assisting musicians in improving their creative efficiency. The audio and video laboratory has created the industry's first full-process music AI production system, integrating leading technologies such as popular trend analysis, lyrics and composition, singing, mixing, and MV production, as well as song popularity prediction, providing comprehensive support for music market analysis, creation, and promotion. In August, NetEase CLOUD MUSIC and Xiaobing Company jointly launched the Chinese-style themed program "Wind and Snow," which appeared at the first People.cn AI Night hosted by People.cn Co., Ltd. and impressed the audience with virtual singer Chen Shuiruo's exquisite singing skills. In the future, the platform will also provide comprehensive, systematic, and platform-based support for AI music works in collaboration with the NetEase Musician brand, professional promotion planning team, and promotional resources, exploring a new era of human-machine collaboration in music creation. In August, the first music recommendation intelligent feature "Private DJ" was officially launched, and two new tones were launched recently, expanding NetEase CLOUD MUSIC's advantages in personalized music recommendations. Over the years, NetEase CLOUD MUSIC's unique personalized music recommendation has always been one of the core attractions of the platform. The platform will continue to explore the empowerment of AI capabilities in intelligent recommendations, playback effects, and other basic music services, providing better user experience. Exploring the new forces of original music and expanding the local music content ecology. As a leading domestic platform for original music, NetEase CLOUD MUSIC continues to optimize support programs such as the "Stone Plan" and "Cloud Ladder Plan" for musicians, enhance the platform's commercialization capabilities, bring more actual income to the community of original musicians from various revenue sources, and enrich the platform's content ecology. Furthermore, NetEase CLOUD MUSIC is expanding its "localized" content ecology, such as establishing nine regional competition areas for the fifth season of the Stone Plan and launching the "Sound of Near Places" local music promotion plan, providing regional-themed original music content to music fans from different areas and exploring new directions for discovering potential musicians with unique qualities from a regional perspective. It also organizes music activities targeting student groups, such as campus singer competitions and campus tours. Deepening the value of copyrights and sharing the commercial dividends of copyrights. As the core development path of the industry, online music business has entered a new stage of deep content value development and redistribution of commercial dividends from copyrights. NetEase CLOUD MUSIC's copyright distribution platform Cloud Village Exchange has distributed over 1 million songs this year, with over 10 billion content distributions. It covers dozens of distribution scenarios, including short video platforms, karaoke, IoT, games, film and TV variety shows, operators, overseas platforms, and public broadcasts. In September, NetEase CLOUD MUSIC officially launched a music store section and reached a cooperation agreement with the largest offline chain of HELENS small bars in China, providing genuine authorized and customized music services for stores. At the same time, NetEase CLOUD MUSIC is helping Chinese original music go global and creating substantial overseas royalty income for musicians. This year, the number of songs distributed overseas exceeded 100,000, with over 10 billion plays. High-quality original content such as "Thoughts are All Starry Rivers," "Account Logged Out," and "Emily" have been distributed to over 200 countries and regions worldwide, with 17 songs receiving over 100 million plays. The dissemination speed has exceeded expectations. In the future, NetEase CLOUD MUSIC will continue to focus on the healthy development of online music business, and the continuous growth in subscription membership will further enhance company profits and lay a solid foundation for future development. The platform will continue to empower musicians from all aspects, including creation, dissemination, and revenue, helping improve the development environment for Chinese original music and promoting more excellent original music to gain popularity and contribute to the prosperity of China's digital culture.