The music industry’s $10 billion darling isn’t from Sweden. And it isn’t from America, either.
According a new report published by Bloomberg, there’s a music company that is actively seeking funding at a $10 billion valuation ahead of their IPO. A source close to the company said says this behemoth is willing to sell 3% of its shares to strategic partners, including record labels.
So who is this company? That would China’s own Tencent Music Entertainment Group.
After merging last year with China Music Corp., Tencent Holdings spun out its music division group. Last year, it held around 62.45% of the company. Oh, Tencent also owns WeChat (small detail). Beyond that, Tencent Music Entertainment Group operates music streaming and karaoke apps.
The company seeks to maintain its dominant position in the Chinese streaming market. Next year, analysts forecast that the market will reach 4.37 billion yuan ($664 million) in subscription revenue. Accordingly, forging deals with record labels would help Tencent Music secure vital streaming rights in the country.
All of which sounds just like Spotify. But, in a totally different sphere of influence.
The music entertainment group currently has deals to distribute songs from popular artists, including Beyonce and Taylor Swift. It has inked deals with Universal Music Group, Sony Music, and Warner Music Group. In addition, Tencent Music has deals with influential record labels, including Huayi Brothers Media and South Korea’s YG Entertainment.
In China, the company competes against Alibaba and NetEase. According to Bloomberg, the music entertainment group is currently “scooping up content to cater to users who turn to the web for entertainment and want services tailored to personalized preferences.”
Tencent primarily distributes music through its QQ Music, Kugou and Kuwo apps. Combined, the apps have over 600 million monthly active users. Like Spotify, the apps provide free-to-stream and subscription service. It makes money through advertising, subscription, and sub-licenses to other companies, including competitor NetEase.
Tencent hasn’t responded to inquiries. Bloomberg had previously reported that the music entertainment group “was planning for an IPO.”