Beyond their own huge music services Tencent has huge stakes in Universal, Warner, Spotify and others.
Tencent is a huge Chinese company and with their music sector, Tencent Music Entertainment (TME), they are making its mark on every section of the global music industry. Their biggest business is in their own huge music services in China but they seem to be on a mission to have a stake their many competitors.
TME took a $100 million stake in Warner Music following their IPO last week, giving them 4 million shares worth 0.8% of the major label. It has since been revealed that TME’s majority owner, Tencent Holdings, has also bough a stake in Warner for the same amount, for almost 2% overall.
Of the three major record labels, Tencent has a much more significant stake in the highest earning of the big labels. Tencent Holdings owns a huge 10% of Universal Music Group, a stake worth $3.36 billion at the time of the deal earlier this year. It was originally thought they were seeking 50%, which would have had a serious impact on their global influence in the music industry.
Whilst Tencent don’t have any known stake in the third major label, Sony alternately have $200 million in shares of Tencent along with Warner Music. Whilst Tencent’s arms reach far and wide into many other music businesses, there is a trend of trading of an equal share in their own business.
Like Spotify for example, the West’s most notorious and popular music streaming service. Spotify and Tencent Music Entertainment both made an investment in each other and their streaming service businesses back in 2017, when they both operated in separate territories to each other. Between Tencent Holdings and TME, they own 9.1% of Spotify.
Closer to home, Tencent made a $115m investment in India’s most popular streamer ‘Gaana’ shortly after their Spotify deal. It seems that their investment wasn’t made for a stake in the company but instead to allow them to work closely with the service on building their products.
In April of this year, TME made an undisclosed investment in another Chinese music company Radio Music Warehouse. It seems that one of Tencent’s main strategies, beyond running it’s own hugely successful services in Kugou, QQ Music, and Kuwo, is investing in as much of the wider music industry as they can.
Whether this intimates some larger plan of overall stake in the global industry or is just simply investing in fellow businesses they feel are profitable, we don’t know. Safe to say, whatever the case, Tencent are doing very well in the music business. Last year TME earned over $1 billion and grew their userbase by 50%.