Ladies and gentlemen, good evening and good morning. Thank you for standing by. Welcome to the Tencent Music Entertainment Group 2021 Second Quarter 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. We'll turn the conference over to your speaker host today, Ms. Millicent Tu. Please go ahead, ma'am. Thank you, operator. Hello, everyone, and thank you all for joining us on today's call. Tencent Music announced its quarterly 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 Kar Shun Pang, our Executive Chairman, who will start the call with an overview of our recent updates. He'll be followed by Mr. Ross Liang, our CEO, and Mr. Tony Yip, our Chief Strategy Officer, who will offer additional thoughts on our product strategies, operations, and business development. Finally, Ms. Min Hu, our CFO, will address our financial before we open the call for questions. Please know 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 statement, 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 also 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 International Financial Reporting Standards in the company's earnings release and the filings with the SEC. You are reminded that such non-IFRS measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure and other non-IFRS measures are not uniformly defined by all companies, including those in the same industry. With that, I'm very pleased to turn over the call to Cussion, Executive Chairman of Tencent Music. Cussion, please. Thank you, Millicent. Hello, everyone, and thank you for joining our call today. As we announced on July 26th, Tencent recently received an administrative penalty decision issued by the State Administration for Market Regulation of the People's Republic of China, the SAMR. We sincerely accept the decision and will continue to strengthen our operations in accordance with all regulatory requirements, drive innovation, and fulfill our social responsibilities. In compliance with the requirements of copyright license exclusivity, we will operationally focus on the dual flywheels of content and platform to deliver high-quality products and services to users, and foster innovation. We have taken several important steps in this regard. Specifically, as Executive Chairman, I'm responsible for enriching our content ecosystem, whether licensed or self-produced, as well as expanding our capability within the music industry to offer additional value services and solutions to artists and users. Our CEO, Ross, oversees our platform and product strategies and is responsible for further deepening TME's partnerships with Tencent's ecosystem. Ross will elaborate on this in a moment. We will continue to deepen our partnerships with hundreds of music labels to expand our licensed content coverage in alignment with the new requirements and work to provide more and better content offering to over 600 million music users through our multidimensional product portfolio. We are pleased to report that we have been consistently making breakthroughs in diverse music verticals, including new hits, Chinese ancient style, hip hop, and music for gaming, movies, television programs, and variety shows, demonstrated by a comprehensive coverage of songs and particularly full coverage of hip hop variety shows. We are also raising our profile among the younger generation by expanding cooperation with leading content IPs whose programs such as The Collection of Chinese Ancient Style [non-English content], and the Rappers' Alliance [non-English content]. This, in turn, has resulted in a sequential increase in user engagement from young users. While bolstering our offering of copyrighted music, we have also been working closely with our upstream value chain, artists, and other partners to create and produce more differentiated content. For example, we began to work extensively with Tencent across multiple businesses. Over the past few quarters, we partnered with prominent artists such as G.E.M. [non-English content], Jackson Yee [non-English content], and Angela Chang [non-English content] and produced over 2,000 chart-topping songs across gaming, film, literature, and comic categories. We also recently played a role in co-producing the theme song of the popular movie, "Cliff Walkers," [non-English content], directed by a highly regarded Chinese film director. From creating the theme song itself to leveraging our talent pool to bring a famous artist on board to perform the song, we are pleased to be able to contribute to this award-winning project. I'm also pleased to share our progress in cultivating and promoting indie musicians. During the second quarter of 2021, through the Tencent Musician Program, our roster of indie artists achieved triple-digit year-over-year growth, with their song streams showing consistent increase both year-over-year and quarter-over-quarter. Musicians view us as a reliable partner given our well-structured financial incentives, which for the first time included a revenue-sharing mechanism for the lyricists and songwriters. They are also attracted by our efforts to pioneer enhanced copyright protection based on blockchain technology, helping indie musicians to uphold copyright without imposing financial burdens on them. On top of that, our appetite for cultivating blockbusters on the Tencent Musician Program platform has grown significantly. For example, within three months of its release, with collaborative cross-platform efforts from QQ Music, Kugou Music, and Kuwo Music, the song "Coming in Late," [non-English content], accumulated more than 1 billion streams and inspired numerous cover versions. In the future, we will strive to build a closed-loop system for musicians' discovery and management through multi-dimensional support, including more financial reward, copyright protection, and education and training for musicians, all of which reflect our desire and determination to help musicians grow and succeed. We have also upgraded our platform's promotional capability and further developed our artist and repertoire A&R capability. For example, we connected lyricists and musicians with entertainment program producers and helped our musicians such as Sunny Li, [non-English content], [non-English content], Lambert, and Mira [non-English content] and list and perform on top variety shows such as "The Treasure Voice 2," [non-English content], and "Our Song Season 2," [non-English content], providing them a new stage on which to shine. Finally, TME Live, our online merged offline performance brand, continues to bring new opportunities to the company with a strategic focus on omni-channel promotion and monetization. On the online side, we host monthly concerts for top artists to include new interactive monetization features such as ticketing, VIP privileges, and merchandise to create a holistic and more immersive user experience for online live performances. On the offline side, TME Live is expanding its footprint with a plan to launch offline initiatives, including daily live performances in key cities such as Beijing and Shanghai, in collaboration with the Tencent Musician Program and the local tourism industry. We are also working with Playhouse to organize weekly indoor music festivals, merging the offline party experience with rich online features. With our progress update in content, I would like to pass the call to Ross, who will share more about our platform strategies. Ross, please go ahead. Thank you, Cussion. Hello, everyone. Since I became CEO in April, my focus has been on strengthening our platform's competitiveness and finding new ways to serve our users better through visualization, socialization, and community building. Over the past few months, we have made good progress on this front. With respect to visualization, we are applying shared middleware and architecture, which is crucial to further enhance video content offering across our platforms. Kugou Music continued to enrich embedded MVs on its streaming page, and we are pleased to see that its DAU penetration is increasing quarter-over-quarter. QQ Music just launched a new version feature in immersive feed in August with expanded user case and more diverse content. We anticipate these efforts will increase video views and the amount of time spent by users on our platforms. Our socialization and community-building efforts include several new initiatives, all of which are still work in progress. One, we are upgrading the synchronized listening feature in QQ Music to encourage interaction among friends. Two, we recently launched the Putong Planet, which connects users with a common taste in music more efficiently through targeted matches to inspire a connection among strangers. Three, we are upgrading recent online karaoke rooms to make online singing more fun and social engaging. The new version will offer a broader suite of online singing experience, including different party sizes, ranging from solo and duet to small and large groups, as well as catering to different needs, such as singing on demand, singing along on demand, singing practice, inter-room PK, and cross-room activities. Four, we will soon launch WeSing Virtual Live Room to provide a new entertainment experience combining metaverse and live streaming. In the future, we will expand metaverse live streaming to more use cases, provide richer interaction opportunities, and a more imaginative virtual reality experience. We have also made progress in partnering more closely with broader Tencent ecosystem, another strategic move supporting our long-term success. During the second quarter, we deepened collaboration with Weixin Video Account. This is an important step for us to, one, enrich the music video content on both TME platforms and Weixin Video Account. Two, leverage Weixin to expand our promotional capability and screen. With the location of video traffic to TME platforms, enhance private domain traffic and interactions to increase room for monetization in the future. As a first step, recently, QQ Music, for the first time, joined forces with Weixin Video Account and presented Elegant Summer Live, an online event featuring well-known musicians and bands. Our next step will be strengthening the interactions between artists and the users by cultivating private domains for musicians, which in turn will improve music content interactions on each of our platforms. We further harness WeSing's powerful social network to boost user engagement and music-focused collaboration. First, QQ Music launched a new feature which allows users to update their WeSing status with the songs they are listening to, making sharing more dynamic and fun. Second, users can now customize their WeSing ringtones with selecting music from Tencent Music. Third, by leveraging WeSing's translation AI technology, QQ Music now supports high-quality translations of English songs into Chinese. Last but not least, we worked with Tencent Video to enhance exposure of video content. For example, within two weeks of release, a well-known Chinese singer, Li Jian's newly released album, "Forget Yourself, Forget Time," [non-English content] received half a billion social buzz, and its title track topping the QQ Music chart. We look forward to sharing more examples in future quarters. Long-form audio is an effective complement to our music products and content portfolio, and value add to user engagement. During the second quarter, we restructured this business unit to further streamline our two-pronged product strategy. We continued to enrich our licensed titles and accelerated our pace in adding podcasts for content diversification. As NBA China's official strategic music partner, we have cultivated an NBA podcast ecosystem, attracting a broad range of sports fans looking for new and creative ways to enjoy sports content. With this improvement, long-form audio MAU grows over 90% year-over-year in the second quarter. As one of our industry-leading innovators, we launched our NFT digital asset platform based on blockchain technology. We will seek to offer more tools for artists to active users, broader exposure, and unlock monetization opportunities. In conclusion, there is still a lot of work to be done, but we have made a good start and have a clear line of vision ahead. I would like to turn the call over to Tony to discuss business highlights and the important area of our focus. Tony, please go ahead. Thank you, Ross. Hello, everyone. Online music mobile MAUs were 623 million in the second quarter. Despite some churn of casual users resulting in a year-over-year decline, MAUs were up slightly on a sequential basis. In terms of user engagement, core music users have become more engaged with our platform, as total user time spent was up year-over-year and quarter-over-quarter. In addition, paying users become more active on our platforms after they have subscribed to our service when compared to before they subscribed, which means as our paying user base grows, not only does this improve our overall monetization, the level of engagement on our platform coming from this core group of users also increase. We continue to expand our scope of services to the IoT market. As a result, our IoT MAUs recorded a year-over-year growth of 43% during the second quarter. As a new music content consumption channel, IoT enhances our ability to effectively roll out and promote new music content to a wider audience in a broader set of use cases in users' daily lives, making our services more ubiquitous and more convenient to our users. We're pleased to report that growth momentum in our online music services continued into the second quarter. As a result of effective marketing and continued progress in adding high-quality music content into the subscription plan, the number of paying subscribers to our online music services grew to 66.2 million, with record high net adds of 5.3 million paying subscribers during the quarter. Our paying subscriber ratio grew to 10.6% in the second quarter, up from 7.2% during the same period last year. On a year-over-year basis, user retention continued to improve and average revenue per paying user remained healthy, reflecting users' growing willingness to pay for high-quality music content. Advertising revenues delivered robust year-over-year growth rate in the second quarter. Ad revenue benefited from an expanding pool of advertisers from a variety of industries, increased ad inventories and eCPM on a year-over-year basis, as well as optimized ad display. However, growth in the second quarter was lower than our expectation, as they were impacted by regulatory guidance on app launch splash screen ads to improve user experience. We will continue to improve the user experience of our ads to comply with the guidance, and we'll also invest in new ad formats to meet the needs of diverse advertisers. Turning to our online music products. We further refined product positioning within our multifaceted portfolio. For example, we further bolstered QQ Music's image as a young and trendy brand. First, we continue to add popular and trendy content to meet the younger generation's demand for Chinese Asian Style music, hip-hop and ACG genres, as well as music within variety shows. Second, we deepened our presence into schools and college campuses through online and offline activities such as on-campus competitions and graduation ceremonies. Notably, the 2021 QQ Music Graduation Concert spurred nearly half a billion social buzz. Third, our new functions, such as synchronized listening and Putong Planet, will further boost interactions among users. Finally, as our Putong community has become a cultural hotspot for young users, we are attracting more artists such as Cai Xukun, a pop star who just released his new album, Unknown Me, on our platform. Switching gears to our social entertainment services. Both MAUs and paying users declined quarter-over-quarter due to intensified competition with other pan-entertainment platforms. In response, Ross elaborated earlier regarding our areas of focus to strengthen our competitiveness, and we look forward to sharing more progress in the future. For WeSing, in addition to the new WeSing initiatives that Ross just laid out, during the second quarter, we adopted technology to include an immersive chorus accompaniment sound effect to mimic a large-scale graduation ceremony, as well as multidimensional scoring system to sharpen our recording tools. These improvements have led to a more enjoyable user experience while recording songs, which in turn spurs increased engagement among users. For our live streaming services, amidst increasing competition, we will steadily embrace the latest industry guidance and remain firmly committed to promoting a healthy and sustainable ecosystem for our users and performers. In this regard, during the second quarter, we continued to make progress with contributions from QQ Music's live streaming and category expansion, adding thrust to our efforts. With a dedicated tab fueling additional traffic within QQ Music, QQ Music's live streaming recorded solid growth and is on track to further scale up into the second half of 2021. In terms of category expansion, Kugou Live continued expanding its exposure in the Chinese ancient style category with 33 themed events launched in the second quarter alone. one highlight for our live streaming is that we introduced our first cross-platform live streaming event to extract operational synergies across TME's live streaming platform. In June, Kugou Live and WeSing jointly hosted the first cross-platform competition, giving live streaming performers broader exposure to both platforms and an effective way to tap into a new audience base, effectively increasing the vibrancy of both platforms. This resulted in significantly higher revenue for participating hosts during the event, attracted more paying users to participate, as well as more first-time paying users to send virtual gifts for the first time. Moving forward, we plan to replicate the successful events into new cross-platform opportunities. 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. Our total revenues for Q2 2021 were CNY 8.3 billion, up 16% year-over-year, driven by strong growth in online music services, particularly in music subscriptions and advertising. Our online music revenue were CNY 3 billion this quarter, up 33% year-over-year. In the second quarter of 2021, our music subscription business continued to grow rapidly, with revenues of CNY 1.8 billion and a year-over-year growth of 36%. Net adds of paying users number were 5.3 million in Q2 2021, up 41% year-over-year, which set a new record high for quarterly net adds of paying users. This was a result from our continuous improvements in product and content, expanded sales channels, and effective marketing campaigns. Monthly ARPPU was CNY 9 this quarter, compared to CNY 9.3 in the same period last year, as we offered more effective promotions to drive rapid growth in paying users this quarter. Our Q2 advertising revenues had strong growth year-over-year, but it was lower than our expectation, as they were negatively impacted by a new guidance on splash ads issued by regulators to protect the user experience. The year-over-year growth was mainly because we partnered more closely with Tencent and provide better advertising solutions to serve our customers, leading to increased ad availability, enhanced efficiency, and improved eCPMs. To comply with the new guidance and mitigate its impact on our revenues, we are directing more resources to explore new advertising formats, such as streaming page pop-ups and flip page, and other innovative products to meet the needs of diverse advertisers, which may take time to bear fruit. Social entertainment services and other revenue were CNY 5.1 billion, up 7% year-over-year, primarily driven by growth in revenues from Q2 live streaming. Facing the competition from other entertainment platforms, we are making efforts in retaining existing and attracting new performers and improving efficiency in redirecting traffic from music platforms to live streaming platforms. We are also revamping product features and exploring more diversified initiatives to maintain steady revenue scale in social entertainment services. Additionally, advertising revenue on WeSing platform contributed to year-over-year growth. However, we observed the growth was slowing down as the business was also negatively impacted by the new guidance issued by regulators, as discussed above. Gross margin was 30.4% in Q2 2021, down 0.9% year-over-year, due to increased revenue sharing ratios for WeSing to strengthen our platform's competitiveness, as well as increased investments in new product and content offerings, such as long-form audio. Moving on to operating expenses. Total operating expenses for Q2 2021 were CNY 1.7 billion and was 21% as a percentage of total revenue as compared to 19% in the same period last year. Selling and marketing expenses were CNY 669 million, up 16% year-over-year. The increase was due to higher user acquisition expenses and promotional spending on new products, such as long-form audio, to enhance our product's long-term positioning. General and administrative expenses were CNY 1 billion, up 39% year-over-year, driven by a higher number of employees in R&D as we invest in product enhancement and technology innovations. For example, we are applying the share the music waiver and we recently launched the Putong Planet and will soon launch WeSing Virtual Live Room. Additionally, post-acquisition awards and share-based compensation expenses for previous management team and amortization of intangible assets arising from the acquisition of Lazy Audio of approximately CNY 6 million also contributed to higher general and administrative expenses this quarter. Taking out the impact from the acquisition of Lazy Audio, G&A would have increased 30.1% year-over-year. Our effective tax rate for Q2 2021 was 11.5% Our net profit was CNY 871 million, and the net profit attributable to equity holders of the company was CNY 827 million. Non-IFRS net profit was CNY 1.16 billion, and the non-IFRS net profit attributable to equity holders of the company was CNY 1.12 billion. Non-IFRS net profit margin was 14.5%. As of June 30th, 2021, our combined balances of cash equivalents, term deposits, and short-term investments were CNY 26 billion, representing a decrease of CNY 1 billion from Q1 2021, primarily driven by payment for stock repurchase. Cash generated from operating activities had a positive impact on the combined balances. Looking forward, we'll expand our investment in self-produced content and the Tencent Musician Program to foster innovation, promote the development of the online music streaming industry, along with other industry participants, and better serve our music users. Furthermore, we will keep focusing on new products, such as long-form audio and revamping existing product features for our long-term growth. This concludes our prepared remarks. Operator, we are ready to open the call for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, 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, and if you have additional questions, you can re-enter the question queue. At this time, we'll pause momentarily to assemble our roster. The first question will come from Alicia Yap with Citigroup. Please go ahead. Hi. Good morning, management. Thanks for taking my questions. I wanted to follow up on management remarks regarding these potential business operation impact that you're expecting post the regulatory fine. Would that be more on the subscription trend that you're expecting, or is it more on the difficulty to convert more future paying user? What kind of offsetting measure, in your mind, that you plan or have done to minimize the impact? Would it be possible to push more on the freemium model with higher online ad revenues potential? Thank you. Thank you for your question. I'll take the first part of the answer, and then perhaps others from management can add. I think as you know, towards the end of July, there was a penalty decision by the regulatory authorities pursuant to which, among other things, we have to implement a rectification plan to terminate exclusive music copyright licensing arrangements within 30 days from the date of that decision. We sincerely accept that decision and are committed to complying with all the requirements fully and in a timely manner. While the decision will have an impact on our music business, it is worth noting that all the music that has been available on the platform will continue to be available on the platform to our users, and we'll focus on strengthening our operations in accordance with the regulatory requirements. We'll also focus on better serving our users through product innovation, which Ross and Cussion has elaborated on, and we'll also focus on fostering the healthy development of musicians and the music industry as a whole. Let me pause there and see if others in management have other things to add. I just would like to add is, Alicia, thank you for your questions. I think that one of the key competitive edge of TME is we employ the dual flywheel strategies. Which means that we do not just have the music platform, but again, as we mentioned, we also is committed to continue to develop our content ecosystem. Which will make us to be in a more long-term healthy development and create values for our users. As you mentioned, frankly speaking, we definitely will follow the decision by the regulators. We will comply on it and in a timely manner. Also, we are seeing that it do have some impact on our day-to-day operations, but I don't think that is going to have too much impact on our, for example, driving our online subscriptions. As you see, I think we are still in a really good momentum, because the users has been educated, and they really see the value of music, and they are willing to pay for music as long as we are providing high-quality content to them. We still have the confidence that our online music services will be driving in a healthy manner. As I mentioned, we continue to extend our footprint and working together with different industry partners, especially on the content creation side. Not just the upstream for the content production, but we are also doing the downstream, which are organizing more and more like the online and offline music concerts. This is not just a regular concerts, but we also have some creativities and new features for the online interaction with the users. I think that all of these, the dual flywheel strategy will help us to continue to create value for our user in the long term. Thank you. Sorry. [non-English content] Yeah, we are also in discussion with Tencent Video to cooperate in the area of joint subscription. That's a work in progress, and we'll update everyone in the next quarter. Okay. Thank you. Okay. Next question. The next question will come from Alex Poon with Morgan Stanley. Please go ahead. Thank you, management, for taking my question. My first question is regarding the exclusive content. Could management share roughly how much streaming volume overall and behind the paywall is driven by exclusive content? What is the%, roughly, from independent musicians at this moment, and how would this mix change over time? That's my first question. My second question is regarding user acquisition, because from now on, we'll have less exclusive licensed content. Do we expect we will spend more on user acquisition? How much right now we are spending on acquiring new users? Apart from CAC, just in marketing, do we have to increase more discounts to attract new users? Such that, how will our music ARPU trend in future? Thank you very much. Hi. I'll answer the first part of the question, and then regarding acquisition costs and ARPU, Shirley can address that. We do historically have exclusive content on the platform and also as part of the subscription plan. Although, it's also worth noting that there is a fair amount of non-exclusive content within the subscription plan also. Specifically with regards to the indie musicians streaming share, that has been growing steadily over time. We intend to continue to grow that over time as more and more musicians join our Tencent Musician Program, and we're committed to supporting the development. As more and more of them join to the platform, we are able to discover and work closely with the promising new talent to be able to jointly create music together. I think that brings new opportunities for us in the content creation area as well. In terms of how it affects our subscribers, I think it is important to note that the users have been educated over a long period, over a number of years, to subscribe to a music service. It is a fairly consistent monetization model across the industry. From a regulatory standpoint, we believe the regulators are also keen to promote the overall healthy development of the music industry, and having a viable and long-term monetization model is an important part of that. I think we will continue to focus on delivering high-quality products and service to users through the dual flywheel of content and platform that Cussion and Ross mentioned. We add more quality content, whether it is licensed or whether it is co-produced or perhaps going forward, there may be increasing self-production as well. We'll be adding more high-quality content into the subscription package and as well as more privileges behind the subscription plan to make it an attractive offering to grow the user base. As of Q2, we continue to see healthy growth in our net adds, which recorded a record high net adds in the second quarter, as well as we continue to see a healthy improvement, a continuous improvement in the retention rate for our subscribers. Alex, thanks for your questions. I would like to add a little bit more color regarding the Tencent Musician Program. I think we have been doing really good work since we launched the Tencent Musician Program back in 2017. After four years of hard work, I think that we have achieved a very remarkable result. We are seeing that it's not just in terms of the quality of songs or the number of songs that have been distributed through our platform, but I think that we are really creating value for the musicians and the music creators, like, for example, the IP right protection. We also have developed an open platform which can help our users and also the musicians to distribute and register their music with us. We help them to distribute through the Tencent ecosystem and also other outside channels as well. We also try to focusing on helping the musicians. They are not there on their own. We try to do some collaboration between the and also other professional producers as well. We try to bring them all together, and the most important thing is to continue to produce high quality of music. This is very important that we will continue to do. We are always focusing on creating value for the musicians as well. We want them to do their hard work and be rewarded. We also have continued to enhance our revenue sharing and reward system, which let our younger generation musicians to continue to make a living on our platform. After the four years of hard work, we have been achieving a lot, and I think that we are in the really good progress. The last but not least, I would like to mention is the TME Live. We have this kind of online and offline concerts and music festival. We can also letting our Tencent musicians to start to participate in the TME Live event as well, and also in our live event, like the online broadcast as well. There's a lot of things that we can work, and I still strongly believing that this is one of the key competitive advantage of TME as a total ecosystem that we build for our users and also the music creators. I hope that the answer will help your questions. [non-English content]. App for online music Oh, sorry. Tony Yip. Yeah. We have on walls, yeah, open end. Yeah. Please. Sure. In terms of user acquisition from a platform perspective, our strategy continues to be a multi-product portfolio approach, whereby, in addition to the three major music apps across QQ Music, Kugou Music, as well as WeSing, we continue to incubate and expand our footprint into other segments with new products. Within each product, the overall strategy is to focus on videoization, social as well as community building. As an example, within Kugou, they've recently launched a new feature, which allow users to upload and generate video content and also facilitate user interaction around those video content within the music app. Similarly, QQ Music launch an immersive full screen video feed to provide and enrich video content within the music platform. Through these measures we hope to acquire more users. Now, Shirley, please go ahead. Yes. About the app of online music services, we expect that will be stable in the future quarters compared to Q2. We will balance the promotion campaigns and the rapid growth of our subscribers. We expect our subscriber numbers can have very good performance in next quarter. Thank you management. The next question. For sharing the full picture. Thank you. The next question will come from Eddie Leung with Bank of America. Please go ahead. Good morning. Just a question on gross margin. We notice a slight dip in the gross margin. We understand that there could be a few reasons. For example, you guys expanding content. In addition, we also know that from some other live streaming companies, the revenue sharing ratio to live streaming hosts in the industry could be increasing. Finally, we also understand that there has been more long-form audio content. Could you give us a bit more color on the few factors, how they affect your gross margin, and how should we think about it in the upcoming couple of quarters? Thank you. About gross margin, you said that the reasons why our gross margin decreased in the Q2. In the next quarters, we expect the revenue sharing ratio for WeSing will be continue increased, and the investment on new products and the content offerings, such as with long-form audio, also be increased. This is the one aspect. The second, we expect our social entertainment will be under pressure. This business gross margin is generally higher. The revenue mix shift will from social to music. That will also be some negative impact on our gross margin. For the exclusive license copy to drive cost, in the short term, we have not very clearly impact on our cost structure, because WeSing collect the label, and the industry also need time to change their operational. We believe the cost structure will be stable in the near term. In long term, WeSing, the cost structure of music will be changed from high minimum guarantee to revenue sharing. That will be positive on our gross margin. In conclusion, we believe, in the next quarters, our gross margin will be under pressure. Perhaps I'll add a little bit more context behind that as well. I think, in terms of the outlook for the full year 2021, we currently expect the total revenue year-over-year growth rate to be approximately 10%, with online music revenue growth around 30%. We continue to see healthy operating leverage coming through for online music. I think, within the online music business, it continues to grow very nicely. While on the other hand, social entertainment revenue for the full year is expected to be roughly flat on a year-over-year basis due to the weakness in live streaming, as well as the margin reinvestments that Shirley talked about. Now within online music, we continue to expect strong year-over-year growth for subscription revenue, with paying user net adds continuing the pace of between 4 million to 5 million per quarter. On the other hand, while ad revenue is expected to continue to see strong growth, as we mentioned in the prepared remarks, the growth rate is expected to be lower than previously expected, as that business is impacted by regulatory guidance relating to the launch ads in order to improve user experience. Within social entertainment, the weakness we're seeing in live streaming is due to a combination of macroeconomic impact on paying users spending behavior. It's also a result of competition with short video platforms for users and for performers. Also a result of conservative adjustments we are making to the live streaming operations to comply with regulatory directions in the areas of content, safety, and tipping behavior. Therefore, I think, taking all this into account, in terms of margin, we do expect the second half to see a further pressure in the margin as a result of the upward cost pressure in terms of revenue sharing to live streaming performers, the weakness in revenues that have a higher margin in the past, and also reinvestments into new business and end products. Thank you. Next question please. The next question will come from Thomas Chong with Jefferies. Please go ahead. Hi. Good morning. Thanks, management, for taking my questions. My question is about our long-term business trend. Given that we are seeing softness in the second half, do we still stick to our long-term subscribers target? My second question is there any taxation impact coming from the preferential tax rates that we need to think about in terms of the net margin side? On that front, can management also comment about any data protection and privacy issues that we need to think about in our music apps as well as on our advertising business? Thank you. Sure. I'll address most of that question, and then Shirley can talk a little bit about tax. Well, first of all, in terms of data protection, we are committed to complying with the relevant regulatory requirements in the areas of data privacy and data protection. I think that's an important priority within the company, and we continue to improve our operations to being compliant. Then in terms of long-term growth trend, we're confident that despite the short-term weakness in some of the business, specifically relating to live streaming, we're confident about the long-term trend of the business. As I mentioned, the net adds for our subscription of between 4 million to 5 million per quarter, we expect that to continue. I think it's worthwhile also coming back to our long-term strategy, which is the dual flywheels of content and platform, because that's the plan that we continue to execute on. With respect to content, our goal is to build the most comprehensive content ecosystem covering a broad spectrum of music and audio offering. On the one hand, we'll continue to enhance and broaden our cooperation with label partners to expand our content library. While on the other hand, we'll also partner with upstream content partners, we'll partner with artists and indie musicians, to co-produce differentiated content or even self-produce differentiated content. Thirdly, we'll continue to foster the development of indie musicians. I won't elaborate there, as Cussion has talked a lot about. Fourthly, we'll deepen our cooperation with Tencent Group in the area of content production, with businesses like Tencent Video, Tencent Pictures, Tencent Games, China Literature, to co-produce music content together to better capture the full value of their existing IPs. In fact, we've already co-produced two dozens of chart-topping songs relating to games, movies, literature, comic IPs in cooperation with prominent artists, such as G.E.M. and Yi Yangqianxi. As we mentioned in the prepared remarks, a theme song of the popular movie, is also a production from TME. I think that's a comprehensive content ecosystem strategy that we pursue. Then within our platform, we aim to strengthen our core competence around music, audio, and social user experience. Specifically, as Ross Liang mentioned, there are kind of four main areas. Number one, in the form of visualization. We continue to enhance the video features across all of our platforms. As an example, we launched the video feed within QQ Music, an immersive full screen video feed. As a second example, we will continue to deepen the cooperation with Weixin Video Account. Secondly, we'll continue to emphasize on social and community building. As an example of that, QQ Music launched the Putong Planet, a social feature that connects users with common music taste. We also launched new features that allow users to update their Weixin status using songs they're listening to. There's also opportunity for us to deepen our cooperation in Weixin in the area of social and community. Thirdly, long audio is a highly complementary content and service to our music users. As we have seen in the past from the actual results providing audio content to music users actually help increase the stickiness of the platform and increase the overall time spent, and provide a more attractive content across both music and audio, which is differentiated compared to other competitors in the industry. I think finally we continue to operate a multi-brand and multi-product strategy. Each product within the portfolio have its unique positioning that covers a unique user segment that has this very strong leadership in, and we'll continue to sharpen the operational synergies that we'll extract across the platforms and R&D efficiencies that we'll extract across the platforms through middleware architecture building. I think that's the overall strategy that we intend to pursue and we're committed to executing on that. About the tax rate, we think and believe that our ETR will be stable in the next quarters because we do not take into consideration of the professional tax rate HNTE companies are entitled to when calculating our effective tax rate until the application is approved. That will be no impact on our net margin. Yes. Got it. Thank you. Next question. The next question will come from Piyush Mubayi with Goldman Sachs. Please go ahead. Thank you for taking my question. Shirley, you talked about how you move away from the current contract structure with the labels. Could you just generally speak about how you position on a competitive perspective versus the other company when MGs are taking into account, and how this is likely to evolve? That would be great. That's my first question. Second, the other company that was looking to go public, they talked about a social ARPU that was significantly above yours. Does that represent an opportunity for you? If so, how would you exploit that? Thank you. Yeah, I talked about the contract first. First of all, we would like to reiterate that we will strictly follow the direction of this, and we will continue to renegotiate our license contract with our partners and change all the exclusive contracts into a non-exclusive contract within a month. We are now in progress to discuss the details with them. As you know, it will also involve some of the detailed discussion regarding the business term. We are in progress to talk about the details, and we really want to settle this in a timely manner. Also in other ways, we are also talking to some of the other content partners that we do not have a contract with before, because they have some of the other exclusive contracts with other platforms. We will be fully committed to bring in the best quality of music and continue to expand our music library for our users. Besides the licensed content, we are also committed in doing our self-productions and co-production with our partners. In terms of the margin side and in terms of the business side, I think that all of the co-produced or self-produced content will have a more superior margin. This also will help us to continue to lower our content cost from this aspect. Shirley, you want to mention about the second part? Okay. The social entertainment app. About social entertainment app, we expect that will be under pressure in the future quarters. We do some adjustment automatically by ourselves, because we think the regulator will be tighter on this part. We will change our operational method and make this business more healthy in the future. We believe if we can expand the usage of our social entertainment platform, such like WeSing platform, and our visual karaoke room can be get positive effect, we can have a chance to increase our social entertainment app in next year. We think we have many methods to increase this part, such as we can coordinate all the performers in our platform, such as WeSing, and Kugou and Kuwo. We also can use our public domain traffic in karaoke platforms and build more revenue on this part. We believe in next year, our social entertainment revenues can have a good performance and revenue can be stable, and a little increase. [non-English content] Okay. Two points. First, within the social entertainment ARPU, the Kugou live streaming ARPU is historically higher. Whereas the WeSing ARPU is historically lower. Within live streaming, we are actively building a middleware architecture that leverages the Kugou capability onto WeSing Live Streaming so that we could improve efficiency. While the focus is more on the paying users for WeSing, through these middleware architecture building, we hope to extract increased efficiency and thereby should add some value to the overall revenue generation. Secondly, we pioneered for the first time in the industry recently, a cross-platform live streamer PK competition across Kugou Live and WeSing. Specifically, that happened in June, where we hosted the first-ever cross-platform competition. It gives the live streaming performers an opportunity to tap into the other platform's audience and thereby increase their exposure. The result we've seen is a significant increase in the revenues of participating performers, as well as attracting more paying users to participate. Even those that have never sent virtual gifts on the platform, they're attracted to participate for the first time. We hope to replicate that successful event into more cross-platform opportunities. I'll also add that within social entertainment, our plan specifically within WeSing is that we're undergoing a major product revamp to improve user retention. The revamp is centered around strengthening WeSing's core competence around singing and social interaction. WeSing will be upgrading the online karaoke room to make singing more fun and socially engaging. The new version of the karaoke room would offer a wider suite of singing features from solo to duet, to small group singing to large group singing, as well as to allow the audience to pick the song they want the main singer to sing or allow the audience to sing along together with the main singer, as well as to enable cross-singing room interaction. WeSing would also soon be launching a virtual live streaming room to pioneer a new entertainment experience that brings live streaming into a metaverse-like environment. In the near future, in that environment, performers can choose the avatar to perform their live streaming and interact with audience in this virtual setting. In the future, we'll expand this metaverse-like environment to more use cases, and provide richer interaction opportunities, and more imaginative virtual interactive experience. Thank you, Tony. Next question. The next question will come from Alex Yao with JPMorgan. Please go ahead. Good morning, and thank you management for taking my question. Just a couple of quick follow-up on the previous questions. Number one, regarding the usage weakness on the social entertainment side. Are we losing the WeSing users, or are these users still on Kugou/Kuwo? We are losing their usage and time spent on the live streaming activities on the platform. Number two, I think, Tony, you mentioned the revenue outlook for the social entertainment for the full year is flat, which implies the second half revenue will decline on a year-over-year basis. Can you guys help us understand the monetization weakness into second half? Because on one hand, you guys mentioned the increasing monetization efforts such as cross-server PK initiative across the key live streaming platforms. On the other hand, if I'm not mistaken, Shirley mentioned you guys are modeling, doing different strategies and moderating the monetization on these platforms. Any color on the revenue weakness into second half for social entertainment will be helpful. Thank you. Sure. From our social MAU perspective, the year-over-year decline is across both the WeSing as well as live streaming. The key reason for that is competition coming from other pan-entertainment platforms, such as short video. We've talked about the action plans and the product revamp and the areas that we'll be doing to better retain users and reacquire the traffic. In terms of revenue weakness in the second half of social entertainment, the weakness, as I mentioned, it primarily relates to live streaming revenue weakness in the second half. That's a result of threefold. First, the macroeconomic impact on paying user spending behavior. Secondly, continued competition, specifically from, in particular from short video platforms for users, and also competition for performers. Thirdly, we're also making conservative adjustments to the live streaming operations in order to comply with the stricter regulatory directions that we are facing as an industry overall. I think the impact of these items obviously have a bigger impact. We are mitigating these impacts through a number of measures that we talked about, such as the cross-platform competition, such as the new features that a new product revamp that we're doing within social entertainment. That will take time to fully compensate. We are now approaching the end of the conference call. I would now like to turn the call over to your speaker host today, Ms. Millicent Tu, for closing remarks. Please go ahead, ma'am. Thank you everyone for joining us today. If you have any further questions, please feel free to contact the IR team. This concludes today's call, and we look forward to speaking to you again. Thank you and goodbye. Thank you. Thank you, everyone. Thank you. Thank you. This concludes today's conference call. Thank you for attending today's presentation. You may now disconnect.