Ladies and gentlemen, good evening and good morning, and thank you for standing by. Welcome to the Tencent Music Entertainment Group Fourth Quarter and Full Year 2021 Earnings Conference Call. Today, you will hear discussions from the management team of Tencent Music Entertainment Group, followed by a question and answer session. Please be advised that this conference is being recorded today. Now I will turn the conference over to your speaker, host today, Chief Strategy Officer, Mr. Tony Yip. Please go ahead, sir.
Thank you, operator. Hello, everyone, and thank you all for joining us on the call today. TME announced financial results today after the market close. An earnings release is now available on our IR website at ir.tencentmusic.com, as well as via Newswire services. Today, you'll hear from Mr. Cussion Pang, our Executive Chairman, who will start the call with an overview of our recent update. Next, Mr. Ross Liang, our CEO, and I, Tony Yip as CSO, will offer additional thoughts on our product strategies, operations, and business developments. Finally, Ms. Shirley Hu, our CFO, will address our financial results before we open the call for questions. Please note that this call may contain forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors, and details of the company's filings with the SEC. The company does not assume any obligation to revise or update any forward-looking statements as a result of new information, future events, changes in market conditions, or otherwise, except as required by law. Please note that the company will discuss non-IFRS measures today, which are more thoroughly explained and reconciled to the most comparable measures reported under the IFRS in the company's earnings release and filings with the SEC.
You're reminded that such non-IFRS measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure. Other non-IFRS measures are not uniformly defined by all companies, including those in the same industry. With that, I'm pleased to turn over the call to Cussion Kar Shun Pang, Executive Chairman of TME. Cussion Kar Shun Pang?
Thank you, Tony. Hello, everyone, and thank you for joining our call today. We concluded 2021 with resolute execution of our mutually reinforcing dual engine content and platform strategy. As we strengthened our pan-entertainment content ecosystem and enhanced our content production and promotion capabilities throughout the year, we further diversified our business model, grew our market influence, and most importantly, kept on attracting and engaging users and holistically addressing the needs of our music stakeholders. We are also committed to continuous product innovation through which we optimize users' experience across our four pillars of music entertainment, listen, watch, sing, and play. Ultimately, these initiatives help both of our company and the music industry to achieve healthy development and prosperity.
Empowered by our content strategy and compressing original content production, its licensing, operation, promotion, and monetization, we are expanding our efforts in augmenting the scale and fortifying the quality and competitiveness of our music catalog. To cultivate high-quality artists and songs and promote a flourishing original content ecosystem, we have been focusing on building a more effective set of original content production capabilities. We have led the industry in original content production and promotion by developing and implementing a host of advanced tools and technologies. Examples include our 5sing platform, which provides an online community for lyricists, songwriters, and musicians to pair, communicate, and trade. During the demo stage, our proprietary predictive model enables forecasting and data mining for songs with blockbuster potential by determining intricate user preferences and analyzing melody, lyrics, voice, and rhythms, which in turn makes original song production more cost-effective.
Furthermore, we have developed a number of content production promotion tools which integrate our internal and external promotion resources, providing a one-stop service to musicians. These advanced tools and technologies allow us to effectively identify and increase support for potential hits. Notable standout include Lonely City, Gu Cheng, which stood to the number one spot in the charts within the Chinese ancient style category upon release, triggering a tremendous wave of buzz on social media with nearly 1 billion streams in the fourth quarter, as well as multiple songs pushing over 100 million streams in the same quarter, such as Painting Stream, Hua Yi Xian - Perfect Couple. Pretend I have been married to her. I'm not Andy Lau. Deeper interaction with IPs in the broader Tencent ecosystem has also increased the influence of our original music.
In 2021, TME joined hands with 46 IPs in the Tencent Pan- Entertainment ecosystem across gaming, animation, literature, variety shows, film and television, and more, to produce and release 117 original songs. In the fourth quarter, we teamed up with the League of Legends: Wild Rift to launch the industry's first e-sports music production Bootcamp, ushering in the beginning of our long-term original content production cooperation with TJ Sports. Further crossover collaborations also produced the hits, such as the theme song from the acclaimed romance film, B for Busy, song by Mao Buyi, which topped the various charts. The theme song for the game Soul Land, song by Angela Zhang. We also empower indie musicians by creating a spiritual home for them via our Tencent Musician platform.
As of the end of the fourth quarter, the number of indie musicians on our Tencent Musician platform reached 300,000. With the ongoing improvement of our end-to-end services from song production and domestic and overseas promotion, all the way to artist and repertoire development, incentive plans, performance resources, copyright protection, and career training, our Tencent Musician platform has become the platform of choice for many indie musicians, especially young ones, further promoting the variety and diversity of our musicians ecosystem. First, Tencent Musician platform leverages powerful internal and external resources to provide musicians with a rich variety of artistic inspiration and creation scenarios. For example, in the fourth quarter, we cooperate with the Mercedes-Benz music creation initiative, She's Mercedes, to encourage the use of music to record her stories.
340 groups of participating musicians composed 1,290 original songs through the Tencent Musician platform, highlighting female creativity in music. Second, with multidimensional promotional capabilities, both on and offline, Tencent Musician platform has become a hotbed for hit songs. With the enthusiastically shared release of QQ Music 2021 year-end music review, Time Never Forgets, for which we managed the entire production, release, and promotion process, achieved over 20 million first-day streams, setting a streaming debut record within the indie musicians category. We also recommend Flowers All the Way by Wen Yixin to multiple offline New Year's Eve performances hosted by influential TV channels, where it earned widespread accolades among listeners with its authentic story and inspirational theme, and topped the major music charts in the fourth quarter. Notably, daily streams exceed 15 million directly following these performances.
Going forward, our Tencent Musician platform will carry on harnessing these advantages and ecosystem resources to foster a richer repertoire of original music and support more indie musicians. Alongside our music production initiatives, we have been enriching our content library to safeguard our comprehensive content offerings. Kugou has made Chinese ancient style a breeding ground for massive hits through its IP, New Ancient Rap, by organizing singing competitions, music galas, launching music charts, and other online and offline activities in the fourth quarter. Hip-hop has become another value booster for our platform, and we are proud to have built a reputation among users and in the industry as a go-to destination to discover hip-hop music. Our QQ Music Rappers Alliance brand fits in deep collaborations with hip-hop celebrities and record labels, which we augment with music contests, national live tours, and other events.
In 2021, we helped the Chinese ancient style and hip-hop artists and songs to reach a broad fan base, with more than 4,000 songs in these two genres combined making their way onto various music charts. Turning to our live events offerings. In 2021, we upgraded TME Live to become an increasingly comprehensive performance platform, reinforcing our overall online and offline content ecosystem. For 2021, TME Live further strengthened its brand and escalated its industry influence by hosting a total of 56 live performances with captivating interactive and virtual experience. In fourth quarter, we organized online shows featuring a rich lineup of domestic and global megastars such as Zhou Shen and Adele. Among these, Henry Lau's 2021 birthday concert was particularly innovative and rewarding, given its embedded online payment and artist merchandise options.
TME Live has also extended downstream to support the diverse development of our musicians through initiatives such as The Fourth Page, which has attracted approximately 10,000 indie musicians, applicants and has been widely followed on social media. We helped our artists gain significant growth in streaming volume and fan base. By the end of the fourth quarter, 25 of our musicians had performed over 120 original works on TME Live various offline stages. In the future, we expected to extend more on offline events and festivals to up-and-coming musicians, expanding their influence and efficiency, promoting talent through high-frequency performances. As the leading music and audio entertainment platform in China, we have created trendsetting award ceremonies such as the Tencent Music Entertainment Awards, TMEA, to present and reward the industry best and brightest artists and their era-defining work.
On December 11, 2021, we hosted the first star-studded TMEA in Macau, featuring 46 groups of artists including Jay Chou, Zhou Jielun, Mayday, Wu Yue Tian, Rene Liu Ruoying, Cai Xukun, Teens in Times, Shidai Shaoniantuan , and Joker Xue Zhiqian, as well as a successive play of 58 hits. By combining our promotion powers with other Tencent resources, we set an audience record with over 10 million views, far more than the previous two TMEAs. With that, I conclude the update on our progress with content. Now, I would like to turn the call over to Ross, who will share more about our platform strategy. Ross, please go ahead.
Thank you, Cussion. Hello, everyone. Moving on to our platform strategy. In the first quarter, QQ Music, Kugou Music and Kuwo Music all released a major version upgrade, incorporating refresh product concepts as well as optimized operations, UI design, and technological innovations. We leverage the companionship that music embodies to invite users to listen, watch, sing, and play, engaging them deeply in these four pillars of music entertainment. To bolster our listen pillar, we strive to provide a masterful audio experience with innovative listen features and optimize the sound quality and effects. The latest version of WeChat allows users to send songs from the TME music library directly to friends on WeChat. Our Leap of Heart, Yuexin function, which has been adopted by more than 5 million users, enables one user to listen to songs another user is listening to with simple one-click following.
Furthermore, our interactive playlist can be joined, built, and edited by multiple users. These cutting-edge functions allow user to break through the barriers of time and place while dynamically integrating listen with social interaction. Technology is crucial component that differentiates the listening experience we offer. We continued to optimize the smart recommendation feature on QQ Music to help users to discover high quality music more efficiently. As evidenced by 66% more music streams attributable to the feature in the fourth quarter compared with the same period last year. Additionally, our patented audio processing technology delivers a cool smart track function, through which users can separate songs into adjustable tracks to create individualized listening experiences. We have also refined our vertical operations through Kugou Music's scenario-based music, which targets users wellness needs such as fitness and sleep hygiene.
Our sleep-inducing delta brainwave music has been streamed over 26 million times since its launch. First, our second pillar adds another dimension to the user experience, making content more visually memorable. We satisfy the natural expansion of music users, the visual needs with video content, effectively improving the efficiency and accuracy of music discovery, while increasing users' engagement levels. In the fourth quarter, QQ Music's video content sustained its year-over-year growth of more than 100% in both unique visitors and video views. Furthermore, our musicians continuously benefit from our cooperation with WeChat Video Account in music promotion. We joined the launch of the Netherlands initiative at Tongping Jihua as a task-based model to incentivize indie musicians to produce original songs and video content in October, and initiated a reward-based editing challenge for the hit song La La in December.
Through our collaboration with WeSing Video Accounts, daily video views of our musicians' works uploaded to WeSing Video Accounts reached 50 million by the end of 2021. Next, for the Sing pillar, we introduced the in-room memberships and added new video accounts and a casual game, such as Karaoke Farm, Gefang Nongchang , and Karaoke Town, Gefang Xiaozhen , to the latest version of WeSing online karaoke room to make the overall karaoke room experience more fun and socially engaging, leading to a growth in karaoke room audience time spent in the fourth quarter. We also introduced an online service model featuring on-demand vocal accompaniment, which effectively mobilized the karaoke KRs on the platform and reward their sing talent.
Finally, we launched our Elder Care Mode, Guanhuai Moshi , designed to address the seniors' unique needs with bigger fonts, cleaner UI design, and a more relevant content. The fourth and final pillar of our comprehensive entertainment offer is Play, which we expect will unlock an entirely new class of virtual interactions on TME's platform. In the fourth quarter, we launched China's first virtual music playground, TME Land, and hosted its first online music festival in on New Year's Eve in 130,000 sq km virtual setting. Participants flocked to the event to party virtually with their friends and world-renowned DJs such as White Stone, Lumen, and Dexter King in the form of brand-new 3D avatars. We also recently released the QQ Music's MPets and the Kugou Music's Music Pets to provide companionship to our music users.
Millions of users have already adopted their virtual pets, demonstrating their song's popularity, particularly among the young demographic. Leveraging our ongoing interconnections with Tencent ecosystems and the resulting broadened promotion capabilities, we attract a wide group of users and encourage them to enjoy our music and video content through efforts, including, but not limited to. First, we partner with WeSing Video Accounts to live stream Mayday's New Year's Eve concert by TME Live, which captivated a total of 14 million viewers in the Tencent ecosystem. Second, we cooperate with Tencent Games on the debut of Eason Chan's Lonely Warrior, Gu Yong Zhe, the Chinese theme song for the animation Arcane, League of Legends: Ying Xiong Lian Meng : Shuang Cheng Zhi Zhan, each of which was streamed more than 400 million times in the fourth quarter, reaching number one on multiple music charts.
Third, during the release of Tencent Video's hit drama, Sword Snow Stride, Xue Zhong Han Dao Xing, TME's long-form audio offers of the same title were played 1.4 million times daily, with a quarterly growth right over 500% during the first month of the show's season. In 2022, TME will keep on strengthening its collaboration with Tencent IP ecosystem and utilizing their methodology in promotion, promoting more hits. As we continue to bring our users and the creative differentiated content and tools, long-form audio has proven itself to be an effective complement to our portfolio of music apps. In the same way as we cultivate original music content, we are building a closed-loop system for podcasters with initiatives spanning content production, promotion, and monetization.
Among our podcasters, there are eight that have achieved the milestone of 100 million cumulative streams, demonstrating the power of our podcaster ecosystem, including podcaster Miss Dear, Xiao- Lu Jie Jie. Bedtime Story Box, 完 故 事 盒 子, a chart-topping children's book noted for its entertainment and educational value. On the content production front, we co-create XiaoGuo, the first ever audio variety talk show. Don't Stop, 脱 口 秀 不 要 停, is pushing the boundaries of audio talk shows to further expand our reach in the audio market. We continued to cultivate our vibrant podcast ecosystem and expand the production to enrich our differentiated long-form audio content offering. In the fourth quarter, long-form audio MAUs exceeded 150 million, representing 65% year-over-year growth, and its DAU increased by 86% year-over-year.
Last but not least, we are committed to fulfilling our social responsibilities. In the fourth quarter, we implement multiple charity initiatives, including the release of Hearing the Inaudible Music, a charity album recorded with low-frequency sound for people with mid- and high-frequency hearing impairment, as well as our 2021 A Little Red Flower Music Season campaign, in which more than 500 musicians participated to compose 2,300 songs for charity. Working hand in hand, our platform and dynamic content strategy progressing creates a substantial force, immersing our users in a comprehensive music and entertainment experience that covers our platforms, programs, and the latest innovations. With that overview, I'd like to pass the call to Tony to review our business operations. Tony, please go ahead.
Thank you, Ross. Hello, everyone. In terms of operating results in the fourth quarter, our online music MAUs were 615 million, representing a 1% year-over-year decline, primarily due to churn of our casual users underserved by other pan-entertainment platforms. In the fourth quarter, our IoT services achieved year-over-year MAU growth of 39%. The growth was primarily attributable to our diverse content and our broad variety of smart IoT devices, which continue to enhance our ability to roll out and promote new music content. Despite the impact on advertising and digital album sales from industry headwinds, our online music revenues maintained sustained growth in the fourth quarter, mainly driven by continuous growth in subscriptions. With a net add of 5 million during the fourth quarter, paying user penetration reached 12.4%.
At the same time, user retention remained largely stable. Advertising revenue growth moderated and was negatively impacted in the fourth quarter due to industry adjustment. Meanwhile, we continued to devise creative ad solutions to serve brands' diverse needs, such as the branded playlists launched in the fourth quarter. We will continue to innovate our product portfolio and diversify monetization models to better serve users and artists. Along this line, we launched the Artist Subscription [Foreign language: 超 级 订 阅], an add-on subscription giving users access to customized video and audio content and other privileges from specific artists while helping artists grow a dedicated hardcore fan base. Moreover, in the fourth quarter, we introduced Putao Mall [Foreign language: Putao 商 城], to retail items from a growing lineup of collaborative artists.
Sought-after items in the fourth quarter included Jay Chou's limited edition action figure, Music King Chou. As well as Roy Wang's physical album, Summer Time, which sold 260,000 physical copies, setting a new industry record and fulfilling fans' increasing desire to collect physical albums. Throughout 2021, we increased our efforts to build communities at the forefront of trendy culture and strengthened our brand image with a youth-oriented portfolio of products and campus and college campus initiatives. Our pioneering app, Bodian Music, is particularly popular among the younger generation. We upgraded Bodian to version 2.0 in December 2021, which features a fresh and sleek UI design and allows listeners to swipe through video-based music content with a smart recommendation function.
To meet Gen Z's demands, we also developed a number of on-campus initiatives, such as Voila Campus, [Foreign language], a record label for campus musicians. Our on-campus campaign, 2021 Campus Voice, [Foreign language], which we discovered promising campus musicians such as Josa and JCTX, [Foreign language], together with their chart-busting original songs. Now let's turn to our social entertainment services. MAUs and paying users were lower quarter-over-quarter amid increasing competition and changing macro environment. While rolling with the ups and downs inherent in this environment, we are working on continued product innovations and building more verticals in social entertainment. For WeSing, which has singing at its core, we are establishing a content generation ecosystem that makes user participation easier and more fun.
We now provide users with a virtual stage background and avatar for video recording, as well as the option to create a personalized short video by simply recording the voices with a semi-finished video supplied by WeSing. We also improved chorus functionality to allow even the shyest user to join a chorus while retaining the anonymity by not displaying the face. This simplified creation process has led to an improved video publishing rate and increased user enjoyment in the fourth quarter. In terms of our international expansion efforts, we entered into a definitive agreement in March 2022 to acquire a controlling stake in M&E Mobile Technology Limited, which currently operates Japan's leading karaoke app, Pokekara, to enrich our karaoke experiences as well as broaden our reach in international markets.
For our live streaming services, in response to increasing competition, we plan to heighten our focus on differentiating content offerings by expanding our audio live streaming content, cultivating talented music podcasters, hosting cross-platform events, and enriching our virtual interactive product offerings. We are utilizing our live streaming platforms to provide our musicians with a starting point for their careers while presenting us with options for talent discovery and cultivation. QQ Music Live Streaming is giving more and more musicians a voice and a stage through audio live streaming, evidenced by the consistent quarter-over-quarter growth in the number of streamers and users. In 2021, a total of 12,000 musicians live streamed on QQ Music Live Streaming platform. Meanwhile, Kugou Live is building a professional training ground for talented live streaming hosts with high potential by mapping out customized career solutions for them.
In the fourth quarter, musicians discovered by Kugou Live released 64 new songs with over 1 billion total playbacks combined, including Wen Yixin's Flowers All the Way, 文 艺 星 一 路 成 花, Fan Ru's Time, Please Slow Down, Fan Ru 时 间 你 慢 走. The power of our platform and ecosystem was also showcased in our Tencent Music Live ceremony, TMLC, the industry's first integrated cross-platform live streaming competition event. It brought a double-digit increase in traffic to our live streaming platforms, generated a new record of 630 million social media views. While traditional live streaming is facing challenges, we believe the Metaverse reimagines a new era of interactive entertainment.
In addition to the virtual playground, TME Land and virtual pets we just mentioned, virtual idols are another area where reality is increasingly merged with fantasy. Shanbao, our self-created Chinese ancient style virtual idol, was successfully adopted in a wide range of cross-field use cases in the fourth quarter, including collaborations with popular games, emoji and soundmoji packages, conference hosting, offline performances, and more, showcasing the viability of virtual IP monetization. In summary, our effective growing dual engine content and platform strategy puts us in the driver's seat for the music industry's sustained prosperity as we continue to engage and stimulate user while satisfying our stakeholders' multifaceted needs. With that, I would like to turn the call over to Shirley, our CFO, for a closer review of our financials.
Thank you, Tony. Hello, everyone. Next, I'll discuss our results from financial perspective. In the fourth quarter of 2021, our online music service revenues continued to grow, driven by rapid growth in music subscriptions. Social entertainment business were negatively impacted by competitions and a changing macro environment. Our total revenues for Q4 2021 were RMB 7.6 billion, down 9% year-over-year. Our online music revenues were RMB 2.9 billion this quarter, up 4% year-over-year. In the fourth quarter of 2021, music subscription business continued to grow rapidly with revenues of RMB 1.95 billion and a year-over-year growth of 24% as we benefit from expanded sales channels and paying user loyalty due to high-quality content and services we provide.
Online music paying users grew to 76.2 million, up 36% year-over-year, representing a 5 million net add sequentially. Monthly ARPU was RMB 8.5 this quarter, compared to RMB 9.4 in the same period last year, as we offered more effective promotions to attract users and cultivate their willingness to pay for music. Revenues from advertising dropped on a year-over-year basis as our advertising business continued to be negatively impacted by the industry adjustment, but increased sequentially due to seasonality. We have taken several steps to mitigate the impact, such as enhancing product quality, adding more creative ad solutions like branded playlists, and partnering more closely with Tencent to reach more advertisers. These initiatives will bear fruit over time and mitigate short-term headwinds, and we remain positive about our advertising business in the long run.
Subscription revenues and sales of digital albums also dropped on a year-over-year basis and sequentially. Social entertainment services and other revenues were RMB 4.7 billion, down by 15% year-over-year, as we face the intense competition from other paying entertainment platforms and a changing macro environment. To adapt to the changing environment and stabilize revenue streams, we have differentiated our content offerings by expanding our audio live streaming and enriched our virtual interactive product offerings such as TM Event. We are also expanding our international footprint for our WeSing business, as discussed earlier. Gross margin in Q4 was 28.8%, down by 3.6% year-over-year due to the following factors. First, gross margin for WeSing declined as we increased revenue sharing ratio during the year.
Second, given the continuous growth in music subscription revenues, our revenue mix shifted with revenues from online music, which generally have a lower gross margin, accounting for a higher percentage of revenues. Third, revenues from audio live streaming, whose gross margin was relatively lower, also grew and accounted for a higher percentage of revenues. In addition, increased investment in new product and content offerings such as long-form audio, also impacted the margin. Now moving on to operating expenses. Total operating expenses for Q4 2021 were RMB 1.8 billion or 24% as a percentage of total revenues, as compared to 20% in the same period last year. Selling and marketing expenses were RMB 750 million, down by 3% year-over-year. During the quarter, we continued to make efforts in managing external promotion channels efficiently and better utilizing our internal traffic.
Excluding the impact from TMEA event, as the event of 2020 was held in Q1 2021, selling and marketing expenses would have dropped even more. General and administrative expenses were RMB 1.1 billion, up by 18% year-over-year, driven by a higher number of employees in R&D as we invested in product enhancements, technology innovations, and more diversified product offerings. Excluding the impact of amortization, RMB 66 million from the acquisition of Lazy Audio, G&A would have increased by 10% year-over-year. Our effective tax rate for Q4 2021 was 11.5%. Our net profit was RMB 577 million, and the net profit attributable to equity holders of the company for Q4 2021 was RMB 536 million.
Non-IFRS net profit was RMB 873 million, and the non-IFRS net profit attributable to shareholders of the company was RMB 832 million. Non-IFRS net profit margin was 11.5%. As of December 31st, 2021, our combined balances of cash equivalents, term deposits, and short-term investments were RMB 24.7 billion, representing an increase of RMB 236 million from Q3 2021. In March 2022, we won the bid to acquire certain land use right in Shenzhen at RMB 1.05 billion, and the first half of such consideration was already paid. Next, I'll briefly discuss our performance for full year 2021. Our total revenues for 2021 were RMB 31.2 billion, up 7% year-over-year.
Revenues from online music services were RMB 11.5 billion, up 23% year-over-year, to which music subscription revenue is the largest contributor. Our music subscription business grew rapidly throughout the year with annual revenues of RMB 7.3 billion and a 31.9% annual growth rate. Revenues from social entertainment services declined slightly by 0.1% year-over-year, given the increased competition and the changing macro environment. Net profit attributable to equity holders of company under IFRS and the non-IFRS were RMB 3 billion and RMB 4.15 billion respectively. Finally, I'll close my prepared remarks with some comments on outlook for 2022. In 2022, our core music business, particularly music subscription and advertising, are expected to grow and reach operating break-even for full year 2022.
We are taking various actions to improve ARPPU and expect to see a slow recovery in 2022. Additionally, we are tightly controlled on content costs with increased requirements on our ROI. For social entertainment services, with challenges from competitions and the change in market environment, we are tightening our cost controls and adjusting revenue sharing ratios to maintain healthy growth margin while keeping revenue scale. Furthermore, company-wide, we are focusing on our core business and taking actions to control high content and the related costs, improve high content efficiency, and closely monitor ROI to reach each channel for marketing expenses. Finally, under the overall macro environment, we continue to invest meaningfully in new products and services, including long-form audio and international business, with a focus on investment returns and future growth potentials. This concludes our prepared remarks. Operator, we are ready to open the call for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. For the benefit of all participants on today's call, please limit yourself to one question. If you have additional questions, you can re-enter the queue. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Eddie Leung with Bank of America. You may now go ahead.
Good morning, guys. Thank you for taking my question. We noticed the user base declined sequentially a bit in the fourth quarter. Just wondering, heading into first quarter of 2022, given the current COVID situation as well, could you share with us the traffic trend you are seeing? Similar to that, could you also talk a little bit about the traffic or usage, not just the user base, but you know, for example, the number of streams, time spent of users, in 2021, despite the slow growth of your user base.
Just wondering if all these features and content development on the platform have any impact on the usage of the existing users? Thank you.
I'll take a first crack, and then perhaps Ross can also supplement. In terms of our online music MAU, we saw a slight decline by 1% in the fourth quarter on a year-over-year basis, primarily as a result of churning of some of our casual users served by paid entertainment platform elsewhere. I think it's important to note that within the mix of that music MAU, QQ Music actually saw a year-over-year increase in its MAU, whereas Kugou Music and Kuwo Music saw a bit of a decline.
The reason for that difference is because QQ Music is the first flagship app to fully and completely implement our four pillars of music entertainment experience, sing, watch, listen, and play to its full extent with more community features and social features and focus among the younger demographics. We're pleased to see that these initiatives are starting to bear fruit. As we work towards streamlining and making more product enhancements along the same lines also to Kugou Music and Kuwo Music, you know, we are hopeful that we will see some improvements in the MAU throughout the rest of the year. Now
然后来突出自己的特色。同时我们也会关注酷狗音乐在年轻用户，就在我们Z时代里面，它的一些影响跟渗透，去提供更好的针对于年轻人的音乐内容，让他们通过这个内容的建立和功能的优化，让酷狗本身，酷狗音乐这边有一个比较好的，能够基本上能够降低它下降的一个趋势。如果它这边的趋势能够稳住的话，那么对于我们整体集团的音乐流媒体这边的MAU和活跃用户数来说，都有比较好的一个增长。但是我们整体还是按照我们整个的预计，估计还是一个趋于平的一个，因为它整个行业本身对于短视频整个行业的影响，那么我们认为整个的音乐流媒体部分的MAU会在2022年保持一个相对平稳的态势，在我们的努力之下。
Thank you, Ross. I'll do a brief translation. Ross was talking about the main challenges facing our MAU with respect to Kugou Music, primarily because of the long history of the app, and it has more room for improvement. In particular, this year, we focus on smart recommendation, better operations among our music catalog, expanding into more vertical scenarios, based listening, such as exercising and sleeping scenarios, focusing more on Gen Z younger demographics. With all these initiatives, we hope to stabilize the MAU decline.
Overall, you know, with QQ Music you know, starting to see growth in particular around its iOS user base, given this improving brand image among the young demographics, we do expect this to be able to stabilize the music MAU for the rest of the year.
Got that. Thank you.
Our next question comes from Alicia Yap with Citigroup. You may now go ahead.
Hi. Good morning, management. Thanks for taking my questions. I have a question, follow up on the outlook. In light of the latest macro and also the competition, any color management could share with us the latest business is trending, how the business is trending into the first quarter this year? And also over the course of 2022, any qualitative color how we should expect the online music growth rate and also the social entertainment revenue growth rate? And specifically, if you could also provide some color on the expectations for online advertising revenue growth this year. Thank you.
Okay. In terms of outlook for Q1, we currently expect total revenues, on a year-over-year basis to decline by around mid-teens. In particular, live streaming continue to face competition and a challenging macro environment. Secondly, we're in the process of adjusting our advertising business model to embrace changing environment and industry adjustments. Thirdly, former master licensing contracts have been renewed as non-master licensing contracts, and these have an impact on sub-licensing revenue falling away this year. In terms of full year 2022, we currently expect total revenue, on a year-over-year basis to decline by around mid-single-digit%. While all the above factors also apply, we do expect to see a recovery from these factors in the second half.
In addition, for the full year, we expect to be able to grow online music subscribers in terms of subscribers by approximately 20% on a year-over-year basis. That translates to an average quarterly net adds in online music subscribers to be between 3.5 million-4 million. Now, I think we have to understand the context is that over the past three years, we have prioritized a growing subscriber base ahead of ARPU. As a result, we have seen some ARPU decline. You know, for example, in Q4, our ARPPU declined by 9% year-over-year. However, we continue to believe there is ample growth potential for subscription services over the long run, and that view remains unchanged.
As we plan ahead for this year, we want to focus not only on the quantity of the subscriber growth, but also on the quality of the overall revenue stream. We look to take a more balanced approach in growing subscribers, as well as maintaining a more stabilized ARPPU. We will also seek to supplement our subscription revenues with advertising revenues, both of which we expect to have ample long-term growth potential within our business, despite short-term headwinds as it relates to advertising. Through a variety of cost management initiatives to improve efficiencies, we believe our non-IFRS adjusted net margin is expected to be in line in 2022 compared to 2021.
In particular, as Shirley mentioned, you know, as a result of very healthy growth in our core online music business, which is online music subscription and advertising, excluding long audio, we expect to continue to see improving margin trend and achieve profitability at a operating profit level for the core online music businesses, excluding long audio.
Our next question comes from Alex Poon with Morgan Stanley. You may now go ahead.
Thanks, management, for taking my question. My question is related to our overall net margin into 2022 and 2023. Previously, because we have our live stream business, social entertainment business, high margin business, growing slower than our music, there is a mix change and resulting in lower net margin. How should we think about the trend in 2022? Because just now you also mentioned that we are controlling some of the revenue sharing ratio and headcount, et cetera. Can we see some stabilization in the decline in net margin sometime in 2022? Thank you.
Okay. Shirley, do you want to take that?
Okay. We expect that net margin in 2022 will be stable compared to net margin in 2021. Online music revenues continue to grow as paying users increase and advertising. Paying users will increase 3.5 million-4 million each quarter. We will balance between ARPU-ARPPU and the paying users increase. We expect the ARPU through the year 2022. Additionally, we are taking tightening controls to content cost to increase content investment ROI. The gross margin of online music will keep increase in 2022, and we expect the music business will be breakeven at the operational level. The social entertainment revenue will be under pressure in 2022 because the competition from other platforms and the macroeconomic factors. We will control the revenue sharing ratio of WeSing, increase WeSing gross margin.
Gross margin of live stream business on Kugou and the Kuwo platform also will keep stable. We expect that the audio stream and the international business have quite good growth, but the revenue share ratio of the new business are higher than the radio live streaming. They have the negative impact on gross margin. In 2022, the one main reason for the pressure on the gross margin will be the revenue mix because low gross margin revenues such as online music, audio streaming, live streaming increased rapidly and the high gross margin revenue such as live streaming decreased.
For the operational expenses, we will reach the requirements of ROI of marketing and the sales expenses and cut the low potential profitable projects and focus on our core business, control the headcount and reduce cost to improve the efficiency of headcount. For the long form audio, we will continue investing on this new business. We will try multiple way to expand the monetization of long-form audio and control the content cost of long-form audio. Expect that long-form audio break even on gross margin level. We believe when we take all these ways, our net profit margin will be kept stable in 2021 compared to the 2021. In 2023 is long term.
I believe we can increase our net profit margin. Yeah.
Our next question comes from Charlene Lu with HSBC. You may now go ahead.
Thank you for taking my question. Actually, they have already been asked. I'm good now. Thank you very much.
Our next question will come from Wei Xiong with UBS. You may now go ahead.
Sure. Thank you, management. I just want to follow up on the point of the online music paying user growth because we have seen that number has consistently grow at the high end of your target for the past year. I wonder, could you share what's driving that very robust growth, and which channels do you see to have the most effective way in terms of acquiring new paying users? In terms of paying ratio, because we have again set a target of 20% growth this year, is there a target of the paying ratio if we look at longer term and what kind of the ceiling that we're looking at here? Thank you.
In terms of driving our you know long-term growth in the subscriber base, there are actually many tools that we can leverage. Obviously, you know, providing premium content and attractive content and also providing an overall high quality of service to our subscriber base is very important. These include content and privileges that users are able to access. You know, privileges include maybe unique access to digital albums or unique contents that are offered by TME Live. In addition, we are actively expanding multiple channels and also exploring joint membership partnerships with external parties and also with internal opportunities. For example, you know, we do cross-selling campaigns between music subscription and long-form audio.
We also do joint campaigns with external parties as well. In addition to that, as our IoT business reaches a large enough scale and continues to grow at a fast pace, you know, the subscription for IoT device could also act as an effective cross-marketing campaign for us. Finally, price promotions periodically are also an important driver. Now, as I mentioned, I think it's important to see that the context of the very strong growth over the past few years is obviously all of the things that I've mentioned. We prioritize more on the subscriber growth over the past three years over ARPU.
We're at a stage where we think the whole industry will benefit, not just TME, by focusing more on the quality of service and less on price promotion. Thereby, you know, we see a lot of value in music subscription services that users will learn to appreciate over time. This approach would help us lay a stronger foundation for the long term as well, which is why, you know, we seek to strike a better balance between subscriber growth and ARPPU growth.
You'll be also focusing on the advertising base, business model as well? Yeah.
Yeah. I think, as Cussion mentioned, that's right. At the same time, we'll, you know, this approach will allow us to better manage between growing our paying subscriber and also maintaining our non-paying free user base, you know, which is still a vast majority of our user base. To be able to effectively generate monetization opportunity from the free user base, you know, this approach would also give us more flexibility to adapt to a prospective competitive landscape.
One example of the new ad monetization model we are currently beta testing among a small group of users is that, you know, for free users, you know, some of them are given an option to opt in to watch a video ad, in exchange for being able to unlock the subscription service for short period of time. For example, if you watch a 30-second or 60-second ad, you might be able to unlock a 30-minute or 60-minute period, where you can enjoy the subscription service. The benefit of that is we'll be able to generate ad revenues from the free users, that may otherwise be difficult to convert to subscribers. After these users have had a taste of enjoying the premium subscription service, it may actually increase their conversion to become subscribers.
That could help us grow advertising revenue and also help us over time increase the conversion amongst the free user base. It's a good balance that allows us to manage.
Yeah. Exactly. We are also seeing the trend that when a user is going to pay for the monthly subscription or they are going to watch the ads and put in some of the other efforts in order to get the right to enjoy the more premium content, they will be more active on our platform. We are seeing that we are continuing improving the overall quality of our users. Also, just like Eddie mentioned during the question sections, it will also increase the stickiness of our users as well in terms of the usage of the content.
Our next question comes from Thomas Chong with Jefferies. You may now go ahead.
Good morning. Thanks, management, for taking my questions. May I ask about our M&A strategies for this year, given we have just closed a deal with a controlling stake for Pokekara in Japan? Also just want to get a sense about how would the deal impact the Q1 revenue. My second question is about, in the press release, we talk about coming back to Hong Kong by way of introduction. Just want to get a sense about management thoughts in this regard and the timeline that we should be anticipating. My final question is about the social entertainment revenue. When should we expect it to be stabilized in the future? Thank you.
Sure. In terms of M&A, you know, as you know, we adopt a very prudent approach to obviously capital management. We are constantly on the lookout for attractive M&A opportunities. We're focused on strategic investment opportunities that provide synergies and that are complementary to our core businesses. The recent acquisition of M&E Mobile Technology Limited fits that criteria. They operate the leading online karaoke app, Pokekara, in Japan. So it plays very well into our experience in managing the world's largest online karaoke product. It also allow us to broaden our international footprint into Japan, which previously, you know, we do not yet have a presence.
In terms of Hong Kong listing, to provide our shareholders with an additional trading venue and protection amid the changing regulatory environment, we have already commenced the process of pursuing a secondary listing in Hong Kong through a listing by way of introduction. It is important to note that this is a direct listing without offering new shares. The idea behind that is to allow shareholders to be able to enjoy the benefits of an additional listing without the impact of dilution. In terms of timing, obviously, I think we are working very hard, but we need to obtain a number of regulatory approvals, and we'll continue to work very hard to move things forward in an expedited manner.
To the extent that we have major developments, we'll make the appropriate announcement. Finally, around with regards to social entertainment revenue trends. Overall, you know, first quarter, we'll still see some challenge. Seasonally, Q1 is always a difficult quarter because during the Chinese New Year holidays, a lot of the live streaming hosts they go on holiday. As a result, you know, the revenues tends to be a bit weaker. In addition to that, you know, there are changes to industry adjustments, you know, around taxation that effectively increase the cost of doing business for many of the live streaming hosts. So, some of them need to readjust their activity levels.
Overall, what we try to do is to stabilize the decline. We believe Q1 would be a challenging period. As we look forward into the rest of 2022, we do think that we will start to see some gradual recovery, you know, referencing Q1 as a low base. The initiatives we're taking to drive that recovery include, you know, continuous revamping of online karaoke room in WeSing. As we mentioned on the script, you know, we are adding casual games, such as Karaoke Farm and Karaoke Town, to broaden our revenue streams. You know, in the last quarter, we also mentioned that we are enabling more inter-room and cross-room interactions.
All of this resulted in our WeSing online karaoke room revenue achieving a year-over-year growth in the fourth quarter, even though the traditional live streaming revenue within WeSing recorded a decline. The second area of major initiatives to help drive the recovery is audio live streaming, which is a complementary use case to our core music listening experience. We are seeing some strong growth in both user base and revenues, and it will continue to grow. We'll continue to grow our audio live streaming business in China, as well as to leverage our expertise to expand our presence overseas and monetize through audio live streaming in our overseas products such as WeSing, as well as our newly acquired Pokekara, as well as M&E product portfolios.
QQ Music Live Streaming is also our flagship in terms of audio live streaming. We are seeing our revenue growing at a strong double-digit year-over-year level. Users, performers, revenues are all continuing to ramp up. Throughout 2021, we've attracted 12,000 musicians to live stream. It's becoming a go-to place for musicians to connect and interact with the fan base via live streaming. We continue to expect a good double-digit year-over-year growth rate for 2022 for our audio live streaming. Yeah, that's it.
Yeah, regarding the M&A strategy, I would like to emphasize that our strategy is not just simply doing some of the financial investment, but rather we would like to invest in a company that will have synergy to our core business. As the example that you point out, regarding the Pokekara, which really suitable to our overseas development on our WeSing platform. This is one of the projects that we'll be looking forward. Besides the platform side, we were also focusing on some of the content investments as well. During the past three to four years, we have been proactively involved in doing some of the joint production of the music content with many different music labels.
We are also investing in some of the music labels as well, setting up JVs. I think that is also another example of showing that our M&A strategy is we want to build a more synergistic business together with our core strategies. Regarding we have a very strong cash base, our cash reserve is around RMB 25 billion in our company. I think that we will continue to get the best use of this as our advantages. When the right opportunity comes out, we are more than happy to do more investment in order to help the company grow and ensure our success in the long term. But again, we will do it in a prudent way.
Yeah. Operator, we have time for one final question.
Okay. Our final question comes from Shu Qin Chong with CICC. You may now go ahead.
Thank you. Thank you, management, for taking my question. My question is related to TME Land. We launched TME Land at the end of last year, and this quarter's earnings conference call was also held at TME Land. Can management share more color about TME Land? How does it help to develop our business? How does management see the music industry's opportunity in the Metaverse? Thank you.
Ross, would you like to add color?
TME Land is one of our first attempts at Metaverse. Later, actually, in the virtual world, actually, it serves as a representative. Later, actually, in the virtual world and metaverse, we will do more experiments. TME Land will be an event venue. Later, there will be various more distinctive scenes. For example, Jielun, Zhou Dongyu's Venice ancient castle. We will build different scenes and hold various distinctive concerts under these scenes, including something like virtual avatar, a real virtual avatar concert. This is how we can become a relatively event gathering place. On another level, we will continue to apply TME Land's technology to our virtual karaoke, such as online karaoke. In this way, users can be in different, including some, listening rooms, right?
Users can be in such a singing scene and dancing scene, and they can all use their own avatar to interact with friends and various people in this world. From this, we can discover more opportunities for monetization. Finally, we will in this month explore the entire QQ Music, the entire music app, the metaverse usage scenario. We may release some more relatively specialized, professional metaverse version at the end of the year. In it, everyone will have their own music room. Users can decorate their own avatar in it, they can also decorate their own room, they can put their own collected music in it. Their friends can visit their room in it, and they can several people can use different instruments to play together.
At the same time, we will also soon launch a VR album, that is, we can build a special room for each singer. In this room, there are various albums released by the singer in the past. Users and friends can go to such a VR album, using according to a real environment to visit. For example, it can have different sound effects, a different visual experience. Just like through metaverse, we can create a listening environment on the entire music platform that is more similar to the real environment. The entire TME Land will be one of our metaverse representatives. In fact, in this whole year, on various music platforms, we will explore various aspects of the use scenario of metaverse.
In terms of TME Land, it is our flagship Metaverse initiative into the virtual world. You know, there are many use cases of TME Land. The first is that we'll be using it as an event hosting venue for special events, you know, such as one that we hosted in the Countdown Gala. There will also be special settings that are customized for particular artists. You know, we'll be partnering with more and more artists to develop special settings for him or her. We'll also be hosting virtual concerts for these artists. Some of them may be a virtual avatar concert whereby the artists are immersing into this environment through an avatar and performing through an avatar.
Secondly, we'll be applying the TME Land technology into the online karaoke room as well as a virtual nightclub types of setting, which encourage users to interact with one another in this virtual setting, and therefore, extract new user engagement and monetization opportunities. Thirdly, keep going looking ahead into 2022, QQ Music will see an upgrade with a metaverse feature where user will have its own individual room, where you can put your own music into that virtual room, friends can come and visit. You can listen to the music together, you could play instruments together.
For artists, you know, we'll be also opening a kind of virtual showrooms for partnering artists to display all of their albums in this virtual world. Users can come into this virtual showroom, listen to all the music under different audio effects. Effectively, what we're trying to do is create a parallel world that in parallel to the current physical world and the current 2D environment, but there's a parallel 3D environment that can mimic the physical world as much as possible in a virtual setting. I think, thank you very much for all of your questions, and thank you for joining us today. Feel free to contact TME's Investor Relations team if you have additional questions.
This concludes today's call, and we look forward to speaking with you all again next quarter. Thank you and goodbye.
Thank you.
Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.