KKBOX is cloud-based streaming music service which lets its users listen to music instantly online or cache songs on their smartphones, PC’s and other devices. In 2004, KKBOX was founded by a group of programmers with a shared passion for music and technology. KKBOX was initially launched in Taiwan and it became one of the first Asian benchmarks of success to market legal, online access to copyright protected music using Digital Rights Management (DRM) technology. KKBOX was dominating market in 2008 by 80% market share. In 2015, KKBOX announced that its cumulative users have reached over 10 million, with up to over 1600 registered celebrities and artists. KKBOX features over 20 million legal soundtracks, which includes the largest Chinese music library in the world.
About 300 people are employed in KKBOX. It is now available in Taiwan, Hong Kong, Macau, Japan, Malaysia, Singapore and Thailand.
Founding:
KKBOX launched its first PC application in 2005. It’s adoption rate was not high in the beginning and it struggled a lot in its few years. KKBOX managed to achieve strong traction when Apple’s iPhone was introduced to market. In 2006, they started KKBOX Music Awards ceremony, which was held in Taiwan. This event is one of the most famous events in Asia and it has held consecutively for 11 years, in which various artists have performed and are honored.
In 2007, KKBOX and BlueGenii released Wireless Music Box which allows user to listen music anywhere. In 2009, the music streaming startup expanded to Hong Kong. In 2010 the KDDI Japan cleared out many of its small shareholders by acquiring majority of KKBOX stake. In 2011, when Taiwanese smartphone maker HTC was doing really well, it bought 11 percent of KKBOX’s share. Over the course of next two years KKBOX expanded to Singapore, Thailand, Malaysia, and Japan.
KKBOX is supported on multiple platforms through internet connected applications. It is available on Windows, Mac, Android, IOS, OS X, Bada, Symbian, and some versions of Java’s phone. KKBOX has also started to support Apple Watch and Android watch since 2015. KKBOX has setup a live show “KKBOX x LIVE” since 2014 for its subscribers to enjoy the live music on the app. KKBOX previously started its own show ticket service, called KKTix, which was later merged with the WalkieTicket technology
Founders:
In 2000, Chris Lin and his fellow Stanford alumnus, Lambert Chien and Mark Hsu (Hsu left year after) jointly founded the company Skysoft which is Parent company of KKBOX.
Kwan Chiun (Chris) Lin is founder and CEO of KKBOX. Lin attended Boston University and majored in manufacturing engineering, after which he pursued a Master’s at Stanford University in Operations Research. Lin takes a leadership role in planning development strategies and oversees product development and overseas expansion.
Business Model
KKBOX offers its subscribers unlimited access to the largest database of Chinese, Taiwanese, Cantonese, and other Asian Music.
KKBOX has Asian roots, but it has a remarkable collection of English songs which allows it to compete its Western competitors. It works on freemium basis as the site has both “pay-per-month” buyers and free service users.They offer 7 days free trial of premium account and 2 months trial of premium users you get registered through Starhubs Music.
KKBOX gives unlimited legal access to the music database to its premium service subscribers which costs about $9.90 per month. Non-paying KKBOX subscribers can only listen to 5 complete songs per day. The program also allows its users to create their own music playlists and offers to listen music with loved ones. Its subscribers can stream and download music from across multiple platforms (e.g., PC/Mac, smart phones, feature phones, IPTV/Internet radio, etc.) with a single monthly subscription fee.
There is a popular feature in KKBOX which is called “running lyrics/karaoke” which allows users join in karaoke style by watching the music lyrics along with playing a song. Users are also able to back up their music playlist on KKBOX servers, which can be retrieved easily anytime. The only drawback is the lack of integration with major discovery apps.
Now, KKBOX offers variety of music, entertainment news, and organizes its own concerts in countries where it is operating. Lambert Chien, the Chairman of KKBOX says:
“KKBOX is unique in a way that it is not only a software that finds you music, it is also an entertainment newspaper, a pop-music magazine, and a community for music lovers. The essence of a successful subscription service is to let your members feel privileged. You will find that element throughout our service.”
Competitors:
The core rival of KKBOX is Spotify, which is a Swedish startup launched in 2008. Spotify provides digital rights DRM-restricted content from record labels including Sony, EMI, Universal and Warner Music Group. It had 20 million by December 2012, 5 million of whom are paying users. As of December 2012, the catalogue provides approximately 20 million songs.
Spotify uses a Freemium model which offers free basic services and more advanced features are offered to premium users. Spotify generates revenue from advertisements and premium subscriptions. Spotify free users can play music for unlimited duration with 3 minutes per hour playing of advertisement while the premium users can experience ad-free music playback. Moreover, a premium user access higher quality (320kbps) and offline music which through which premium users can download DRM encrypted songs which can only be played with Spotify software. Spotify does not have own music so, users have to download songs through third-party provider.
The Target market of KKBOX is East Asia so it has tremendous database of Chinese (or Asian) song which makes it most popular music streaming service of Asia. Spotify, on the other hand features a greater collection of western music, but it doesn’t meet the demands of the Asian user.
KKBOX also has the advantage of the in-app music store which allows users to download their favorite songs they with simply a click. It accounts for a great ratio of the revenue of KKBOX. Mr. Lin, the CEO of KKBOX takes this competition in a positive way and he is not worried about the spreading of Spotify in Asia, as he said: “I admire Spotify and there’s a great deal of things that we can learn from each other and we are really keeping our eyes close to what they are doing. We are competing in Taiwan, Hong Kong, Malaysia, Singapore, and soon in Thailand I believe. I think in the countries we’re at we are pretty much ahead and dominant,”
Investors
KKBOX was started with initial funding from Adobe, Orix , China Development Industrial Bank and ChungHwa Telecom. In 2009, its release and success in Hong Kong attracted Japanese telecom Giant KDDI Group, which acquired majority share (76% stocks) of KKBOX’s stocks. KKBOX and KDDI’s online music service LISMO were merged together under the name KKBOX. In March, 2011 KKBOX received investment from well known Taiwanese Smartphone company HTC. In 2014, KKBOX raised $104M from Singapore’s GIC, a government owned investment firm to refines it technology and expansion overseas.
Partners:
KKBOX has partnered with handset vendors, telecom companies and music labels. Currently KKBOX partners with only one handset vendor ”HTC mobile”
It has telecom partners in many countries in which it operates. In Taiwan KKBOX partners with Chunghwa Telecom, TStar, Fareastone and Taiwan mobile. These companies generate direct revenues from access and bandwidth charges for music downloads. For example Chunghwa Telecom does not provide exact figures about revenue contributions from KKBOX, but its revenue increased by 2.7 percent (NT$23.7 billion) in 2009. Chunghwa has accepted that online music streaming services were a significant contributor to this growth. The other telecom partners includes 3 telcom, 3 broadband and SmarTone partners in Taiwan; Singtel and Starhub in Singapore; AIS and KDDI in Thailand and Japan respectively.
KKBOX has formed partnerships with many local and international music labels and publishers. It is also collaborating with popular social media companies such as Facebook, Twitter, MSN and Yahoo. KKBOX also popular press partners (including Apple Daily, CNA News, Focus Media and Next Media). The editorial staff of the company comprises about 30 editors, who interviews music celebrities and features their columns/articles in partner publications.
In 2010, KKBOX had about 5 million users with about 0.4 million premium users and was worth about $100 million. Now KKBOX has 2 million premium subscribers through which it generates its revenue. KKBOX has streamed more than 20 billion songs by the end of 2015. The most number KKBOX users resides in Taiwan (41%) followed by Thailand (23%), Japan (20%), Hong Kong (10%), Malaysia (5%) and Singapore (2%). It generates 68% of its revenue from Taiwan, 25% from Hong Kong, 4% from Japan and 3 % from Malaysia and Singapore. In home market (Taiwan) KKBOX has over 4.5 million users and 340,000 paid subscribers. Given that the Taiwan’s total Internet population is 13 million, it is one of great success for KKBOX.
Although, the data about KKBOX’s financial status is private, founder and COO, Chris Lin has publicly stated that the company is now profitable for last six years.