This document analyzes NetEase Cloud Music. It includes a SWOT analysis which notes limited music copyrights, reliance on internet access, personalized recommendations, and an active user community as strengths, and many competitors and privacy issues as weaknesses. It also contains a Porter's Five Forces analysis of high market entry costs, many competitors, large user base with price sensitive subscriptions and songs, and specialty in communities. Finally, it proposes a blue ocean strategy analysis using an ERRC grid to reduce emphasis on rankings and eliminate sound effects while raising subscription, UI design, recommendations, and community.

1. Analysis of
NetEase Cloud Music
Group menber: Zhang XuantingLun LixinSun liChen YeYu yun

2. T
W
O
SWOT
• Limited copyright of
music
• Needs of internet
flow
• Personalized
recommendation
• Active community-
user stickness
• Too many similar
competitors in China
• Privacy issue
• More and more
people are willing to
pay for copyright of
music
S

3. S
• Provide personalized
recommendation to users
• Create a sense of community for
users and thus improve their
stickness to the Netease Cloud
Music

4. W
• Nowadays, all the music applications
in China strive for the music
resources, and as for Netease Cloud
Music, it just has limited copyright of
music.
• Many services of the music platform
rely on the internet flow. This
technical requirement also leads to
the weakness.

5. O
• It focuses on the freemium
model, and now more and
more people are willing to pay
for copyright of music, which
means its profit pattern
becomes much more mature.

6. T
• Fierce competitions of the music market
There are too many similar competitors in
China, such as QQmusic, Kugou,
KooWo and Xiami.
• Privacy issue
It has connection with social platforms,
thus some information of users may be
exposed.

7. Porter’s Five Forces
• The time and cost of entering this market is
relatively high because most of Chinese
music’s copyright has been bought by the big
music APPs, and these APPs, including QQ
Music, Kugou Music and NetEase Cloud
Music, have taken a large market share. It
would be quite hard for a new entry to
challenge the habit of use.

8. Porter’s Five Forces
• There are quite a large number of competitors
in this market, and users mainly focusing on
the resources, have weak loyalty to the APPs.
The switching cost is mainly about money and
time due to the prepaid subscription fee and
re-download process.

9. Porter’s Five Forces
• The number of users are large. There are two
types of price sensitivity of music APPs. Users
are more sensitive to monthly member fee and
less sensitive towards the price of digital albums
or songs.

10. Porter’s Five Forces
• The specialty of NetEase is its user community,
users left lots of comments and stories related
to the songs on it and this function is
outstanding than other APPs. However, as long
as the users cannot find the songs they want to
listen to, they switch to other APPs which have
those songs easily.

11. Porter’s Five Forces
• It cooperates with a lot of famous music
providers and has some unique resources such
as The Voice of China and Singer.

12. The Bussiness Model Canvas

14. Blue Ocean Strategy
——ERRC Four Actions Framework

15. Sound effect SubscriptionRanking list UI design Personalized recommendation Community
NetEase MusicKugou Music
Low
High

16. ERRC Grid
ERRC
Reduce
 NetEase reduce the emphasis on ranking
lists
 Kugou: Ranking lists of top music (Areas,
popularity, languages)
Raise
 Subscription
 UI design
 Personalized recommendation of song
menu
 NetEase eliminate the function of
sound effects
 Kugou pays much attention. Eg. 人声
，低音， HIFI ，丽音 , 3D (similar to
filters)
 High quality user community (Sharing,
comments, exploring)
Eliminate
Create

17. Thank you