(Yicai Global) Aug. 19 -- NetEase Cloud Music, China’s second-largest music streaming platform, said its first-half loss shrank 93 percent from a year earlier as an increase in paying users boosted revenue.

NCM’s net loss was CNY270.8 million (USD39.8 million) in the six months ended June 30, versus CNY3.8 billion (USD560 million) a year earlier, according to the financial report the unit of gaming giant NetEase released yesterday. Revenue jumped 34 percent to CNY4.3 billion.

Despite a more challenging industry environment and macro headwinds, the Hangzhou-based company said its membership paying ratio reached 21 percent in the period, up from 14.2 percent a year earlier.

That showed the “resilience of our business and high demand for the cloud music, immersive music experience along with users increasing willingness to pay for premium content,” Chief Financial Officer Charles Yang said later on an earnings conference call.

NCM signed copyright deals with top labels in the first half, including Linfair Records, SM Entertainment, and TF Entertainment, adding more popular music tracks from influential singers and groups such as Angela Chang, Super Junior, Girls' Generation, Exo, and Tfboys.

“Based on our high quality and young user community, our ongoing initiatives in content enhancement and premium and innovative functions for subscribers have collectively contributed to the increase in paying user conversion over the past year,” the company said.

NCM’s monthly active users stood at CNY182 million with its daily active users over MAU ratio remaining over 30 percent, while gross margins continued to pick up, reaching 13 percent in the second quarter compared with just 4 percent a year ago.

The firm’s shares [HKG: 9899] ended little changed today, closing down 0.3 percent at HKD70.30 (USD8.96) each, after earlier gaining as much as 3.5 percent. The stock has slumped 66 percent since the company went public in Hong Kong last December.

NCM filed a lawsuit in April against its biggest rival, Tencent Music Entertainment, for alleged copyright infringements, claiming platforms run by Tencent Music, such as QQ Music, Kuwo, and Kugou, had been pirating music and bulk plagiarizing popular songs.

Tencent Music's parent company Tencent Holdings was fined CNY500,000 (USD76,250) by anti-trust regulators in July last year for its 2106 acquisition of Kuwo and Kugou. The Shenzhen-based internet giant was also required to give up its exclusive copyright to music labels.

An NCM executive said that with government and industry efforts, copyright has returned to a non-exclusive status, resulting in a significant drop in copyright fees and allowing music platforms to offer more content. In the exclusive copyright era, unreasonable fees led to the bankruptcy of many companies, including Xiami Music, they added.

Editors: Dou Shicong, Futura Costaglione