Soda Music users continue to expand, but FY26E growth is slowing significantly

Overview

This report summarizes an expert call held by Nomura's China Internet team on June 23, 2026 with an expert on Soda Music, the unlisted music streaming platform under ByteDance. The core discussion focused on user growth, Douyin traffic diversion efficiency, time spent, copyright issues arising from AI-generated content, offline event-driven user acquisition, and willingness to invest in the fan economy. The report does not constitute a formal rating on Soda Music or ByteDance.

Core views

Soda Music remains in the user expansion phase, but its growth momentum is slowing. The expert expects DAU to reach about 60mn by the end of 2026, implying about 50% YoY growth in FY26E, a clear slowdown from the nearly 100% growth rate in 2025. The main reason is that the pool of convertible traffic from Douyin is nearing saturation, reducing marginal traffic-diversion returns. The platform's differentiation lies in interest-based recommendations rather than traditional search, but average daily user time has fallen from the 60-70 minute peak to about 50 minutes, indicating that competition in online entertainment and an expanding user mix are pressuring stickiness. On monetization, AI-generated adapted content may improve appeal to lower-tier users, but copyright disputes and the passive takedown mechanism bring long-term governance risks. Offline events are positioned more as low-cost user acquisition tools rather than a high-investment fan-economy business.

Analysis framework

The report uses an expert call summary format to assess the platform's user growth, content supply, copyright governance, and offline monetization direction through qualitative judgments and key operating metrics from experts related to Soda Music under ByteDance. The analytical focus is not valuation modeling, but identifying marginal changes in China's music streaming and online entertainment competitive landscape through first-hand interview signals.

Methodology notes

• Expert interviewsExpert call

  Obtain operating and competitive developments through industry or company-related experts

  This report mainly draws on the June 23, 2026 expert call and distills key points such as Soda Music's DAU, MAU, user time spent, user acquisition methods, AI content copyright, and offline event strategy.

• Operating metrics analysisDAU/MAU and user time spent

  Use active user scale and time spent to judge platform growth quality

  The report uses about 50mn DAU, 150mn MAU, an expectation of about 60mn DAU by year-end, and about 50 minutes of average daily usage time to measure Soda Music's scale expansion and changes in user stickiness.

• Competitive analysisSubstitution competition in online entertainment

  Different content formats compete for user time

  The expert noted that online entertainment activities such as reading novels and watching short dramas compete with Soda Music for user time, causing average usage time to retreat from its peak.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Soda Music

  Core subject of the report; ByteDance's unlisted music streaming platform

  Strengths

  Interest-based recommendation mechanism, traffic diversion from the Douyin ecosystem, and low-cost user acquisition potential in lower-tier cities and campus events.

  Weaknesses

  Slowing DAU growth, user time spent falling from its peak, high dependence on Douyin traffic diversion, and passive copyright governance.

  Comparison

  Compared with traditional search-based music apps, Soda Music places greater emphasis on interest-based recommendations; however, its user time also faces competition from online entertainment content such as novels and short dramas.

  Risks

  Saturation of the convertible traffic pool, pressure to govern AI-generated infringing content, limited willingness to pay for subscriptions, and weak ROI in offline and fan-economy activities.

• ByteDance

  Parent company / source of ecosystem traffic for Soda Music

  Strengths

  Owns strong traffic entry points such as Douyin, which can support user conversion and content distribution for the music business.

  Weaknesses

  There may be competition among internal music apps, and the marginal effect of traffic import is declining.

  Comparison

  The ByteDance ecosystem can allocate user time across short videos, music, short dramas, and novels, but these scenarios also compete with one another.

  Risks

  Declining efficiency of internal traffic reallocation, tighter regulation on fan culture, and potentially rising content copyright responsibilities.

Key data

• Soda Music DAUAbout 50mn, as of May 2026According to the expert.
• Soda Music MAUAbout 150mn, as of May 2026According to the expert.
• Year-end DAU expectationAbout 60mnThe expert expects this to be reached by the end of 2026.
• FY26E DAU YoY growthAbout 50%Lower than the nearly 100% growth in 2025.
• Average daily usage timeAbout 50 minutesBelow the previous peak of 60-70 minutes.
• Main user acquisition methodsDouyin traffic diversion, small sponsored offline events, music festivals in lower-tier cities, and campus eventsThe expert believes the marginal return from Douyin traffic diversion is declining.
• Rating/target priceNot providedThis report is a meeting summary, not a formal stock rating report.

Impact & implications

For China's Internet and new media sector, the Soda Music case shows that content platforms can still achieve rapid expansion through ecosystem traffic and recommendation algorithms, but once the internal traffic pool nears saturation, growth quality will depend more on content differentiation, copyright governance, and low-cost user acquisition efficiency. For the ByteDance ecosystem, Soda Music can complement music content consumption scenarios, but the return on investment for large offline concerts and fan-economy spending is relatively low, making a light-asset, sponsor-funded small-scale event strategy more likely in the near term. For music rights holders, AI-generated adapted content bypassing paywalls creates an ongoing challenge, and the platform's passive takedown mechanism may increase copyright enforcement costs.

Risks

• The marginal return from Douyin traffic diversion is declining, and Soda Music's pool of convertible users is nearing saturation.
• Average daily user time has fallen from the 60-70 minute peak to about 50 minutes, indicating pressure on stickiness.
• AI-generated adapted songs bypass paywalls and may trigger ongoing rights protection efforts by copyright holders and higher content governance costs.
• Lower-tier users have limited willingness to pay for subscriptions, which may constrain monetization efficiency for music streaming.
• Large idol concerts and K-pop-style fan economy activities are constrained by regulation, margins, and operating capabilities, making ROI unattractive.
• Online entertainment formats such as novels and short dramas compete for user time.

What to watch

• Whether DAU can reach about 60mn by the end of 2026.
• Whether DAU YoY growth continues to come in below the expert's FY26E expectation of about 50%.
• Whether average daily user time can stabilize at about 50 minutes or recover.
• Whether Soda Music strengthens proactive copyright screening and governance for AI-generated content.
• The conversion efficiency of sponsored offline user acquisition such as music festivals in lower-tier cities and campus events.
• Whether more visible resource competition emerges among ByteDance's internal music apps.
• Changes in regulation around fan culture and offline entertainment activities.