The music industryâ€™s $10 billion darling isnâ€™t from Sweden. Â And it isnâ€™t from America, either.
According a new report published by Bloomberg, thereâ€™s a music company that is actively seeking funding at a $10 billion valuation ahead of their IPO. Â A source close to the companyÂ saidÂ says this behemoth is willing to sell 3% of its shares to strategic partners, including record labels.
So who is this company? Â That would Chinaâ€™s own Tencent Music Entertainment Group.
After merging last year with China Music Corp., Tencent Holdings spun out its music division group. Â Last year, it held around 62.45% of the company. Â Oh, Tencent also owns WeChat (small detail). Â 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. Â Next year, analysts forecast that the market will reach 4.37 billion yuan ($664 million) in subscription revenue. Â Accordingly, forging deals with record labels would help Tencent Music secure vital streaming rights in the country.
All of which sounds just like Spotify. Â 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. Â It has inked deals with Universal Music Group, Sony Music, and Warner Music Group. Â In addition, Tencent Music has deals with influential record labels, including Huayi Brothers Media and South Koreaâ€™s YG Entertainment.
In China, the company competes against Alibaba and NetEase. Â According to Bloomberg, the music entertainment group is currently â€œscooping up content to cater to users who turn to the web for entertainment and want services tailored to personalized preferences.â€
Tencent primarily distributes music through its QQ Music, Kugou and Kuwo apps. Â Combined, the apps have over 600 million monthly active users. Â Like Spotify, the apps provide free-to-stream and subscription service. Â It makes money through advertising, subscription, and sub-licenses to other companies, including competitor NetEase.
Tencent hasnâ€™t responded to inquiries. Â Bloomberg had previously reported that the music entertainment group â€œwas planning for an IPO.â€