While Chinese streaming giant Tencent Music Entertainment’s announcement that it was planning to go public in the US was in and of itself major news, a revelation that both Sony and Warner Music would each be dropping a cool 200 million on the company before they even filed has served to further spice things up in the industry.
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Guest post by Bobby Owsinski of Music 3.0
The giant Tencent Music Entertainment (TME) streaming service out of China has filed for an IPO to go public in the US, which is a big deal in itself. What’s just been revealed is that both Sony Music and Warner Music have invested $200 million in the company prior to the IPO according to the SEC F-1 filing, which makes the offering even more interesting.
Both Sony and Warners made a pretty good profit when Spotify went public, with Sony making around $750 million after selling half of its shares, and Warners make $500 million after selling all its shares. The companies most likely hope that they’ll make a similar haul from the Tencent offering, although this time they have actual money in the game. Their previous shares in Spotify came as a result of licensing negotiations.
When both Sony and Warner sold their Spotify equity they shared the money with their artists. Most likely that won’t happen with the Tencent deal though, since this is money coming directly from the companies and not part of a music licensing deal.
Tencent entering the market is a good thing for artists, songwriters, labels and publishers as it provides another outlet for streaming music and another potential revenue stream. It could also be an entry into Asia, which is rather difficult for most Western artists as that territory is dominated by local artists (think J-Pop and K-Pop). Being available in a catalog doesn’t necessarily mean people, especially from another culture, will consume it, but the first step is to be available on the top streaming service of the locality, which is Tencent. Spotify and Apple Music are available there but don’t have a large footprint.
That said, you have to think that the offering will be successful or Sony and Warners wouldn’t be investing in it. So get ready for another player in the space.