A long-term shift towards subscriptions can’t come fast enough for Tencent Music Entertainment, China’s largest digital music company and stakeholder in Spotify and Universal Music.

Revenues and net profits in the six months to June, the company’s first half year, were both down, as weaker advertising and lower music sales undermined the period. Subscriptions, on the other hand, increased in number and in value.

The group reported total revenues of RMB6.91 billion ($1.03 billion), representing a 14% year-over-year decrease and a 3.9% increase on a sequential basis.

Net profit was RMB892 million ($133 million). Using a non-IFRS approved method net profits amounted to RMB1.07 billion ($159 million), but still showed an 8.3% decrease year-over-year.

The number of paying users for music increased by a quarter to 82.7 million, though average revenue per music user dropped to a monthly mean of RMB8.5.

The number of paying users on the social media side of the business decreased by 28% to 7.9 million, but average revenue per social entertainment user increased 11% to RMB170 per month.

The group described the current economic conditions in China as “complex and evolving.” The Chinese government is currently simultaneously battling unusually high levels of unemployment, a property market crisis and the activity-suppressing side-effects of its COVID-zero strategy. Unlike many western economies, where central banks are increasing interest rates in an attempt to quell inflation, China on Monday cut two key lending rates. These were intended to keep the economy from slowing and were interpreted as bearish by many investors.

During the six months to June, Tencent Music saw advertising revenue decline. And it cut back on promotions, causing its revenue from social entertainment to drop. Revenues also fell due to lower income from supplying music to other platforms – something that Chinese regulators had sought when they broke up Tencent Music’s contractual grip on foreign music giants. The group has not yet brought costs into line with revenues and admitted that it is “taking measures to manage costs effectively and improve overall efficiency.”

In other areas, management proclaimed good news. These included better original content production, strengthened partnerships, improved technology and more integration with other parts of the Tencent empire. (Tencent is set to announce its half year results on Wednesday.)

After the reporting period, Tencent Music saw some six million sales for Jay Chou’s new album “Greatest Works of Art.”

RSVP today