Tag: Tencent Music Entertainment

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China’s EV darling Nio turns to Hong Kong and Singapore amid US delisting risk

Nio, an electric vehicle upstart from China, is planning to list its shares in Singapore, which will make the city-state the third base where it trades as geopolitical tensions between China and the US heighten.

Nio said on Friday that it is seeking a secondary listing of its Class A ordinary shares “by way of introduction” on the Singapore Exchange Securities Trading Limited, a way to list securities already in issue on another exchange.

The company’s shares will continue to be primarily listed and traded on the New York Stock Exchange, where it debuted back in 2018. Earlier this year, Nio completed a secondary listing in Hong Kong.

The announcement came after the US Securities Exchange Commission added over 80 companies to a list of mostly Chinese companies facing expulsion from US exchanges, which includes Nio and other tech behemoths like microblogging platform Weibo, video streaming site Bilibili, e-commerce platforms JD.com and Pinduoduo, Tencent Music Entertainment (Tencent’s music streaming empire), and gaming company NetEase.

Li Auto and Xpeng, which are Nio’s rivals in China, are also on the list.

The delisting watchlist represents a longtime standoff between accounting authorities in China and the US. In 2020, the Trump administration passed a bill demanding more visibility into the books of US-listed foreign firms, zeroing in on the auditing practices of Chinese entities. But the policy has not sat well with countries reluctant to turn over the data of their homegrown businesses, fearing national security risks.

A handful of Chinese tech companies have acted preemptively by pursuing secondary listings well before they were put on the watchlist. The Hong Kong Stock Exchange saw a wave of “homecoming listings” by giants like Alibaba, JD.com and NetEase, which would help them attract investors at home who are more familiar with their businesses while hedging against the risk of being kicked off US bourses.

Chinese EV startup Nio’s journey to the West

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Apple Music expands Chinese music reservoir via Tencent deal

Apple Music users around the world will soon have access to more Chinese musicians. Tencent Music Entertainment, the online music subsidiary of Tencent, said Tuesday that “record labels and artists” who are part of its “Music Cloud” program can now distribute their works through Apple Music.

This isn’t the first time Tencent has joined hands with a major online music giant from the West. In 2017, the Chinese internet firm entered a share swapping agreement with Spotify. The deal didn’t include content sharing.

TME’s announcement is vague and the partners are tight-lipped about the details of their arrangement. The weight of the deal hinges on what exactly TME’s “Music Cloud” is. This is what it means in the firm’s own words:

As a new global music distribution platform launched by TME, TME Music Cloud will also adopt ‘content self-management,’ ‘online distribution and promotion,’ ‘settlement of royalties,’ and “music data insights,’ providing global level omni-channel distribution for a wide range of partner labels and creators. At the same time, TME’s industry resources and Tencent’s social ecology will offer comprehensive assistance to content creators in content production and promotion as well as commercial realization.

From the sound of it, Music Cloud will serve small-time artists who lack distribution and marketing help from big record labels.

Over the past four years, TME has built a platform for independent musicians, where they can distribute their works, attract fans, host virtual concerts, and eventually generate income. In return, TME gets licensing rights to their works.

The real moneymaker for TME, however, is its rights to top pop musicians like Jay Chou. The Taiwanese singer is so valuable to its user loyalty that TME brought a case against NetEase Music for infringing Chou’s copyrights in 2017.

Over the years, TME had splurged hundreds of millions of dollars securing exclusive music licenses from Universal Music, Warner Music and Sony Music Entertainment, collectively known as the “big three” record labels. But China’s antitrust crackdown on its tech industry has started to break down TME’s thick walls. In July, the country’s market regulator fined TME for “unfair” market practices and told it to give up exclusive online music rights.

It’s unlikely that TME will share its expensive licensed music with Apple Music, otherwise, the partnership will come with a big price tag. We will know more when the partners decide to bring more details to light. For now, the prospects of reaching a global audience will certainly keep emerging Chinese musicians excited.

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Tencent Music now has joint labels with all ‘big three’ record labels

The music streaming arm of Tencent is further tightening its ties with the “big three” record label companies, its major licensing partners. Tencent Music Entertainment announced Tuesday that it has formed a new joint label with Warner Music Group, following similar deals with Universal Music Group in August 2020 and Sony Music Entertainment in early 2018.

The collaboration will take advantage of “Warner Music’s global resources and experience in supporting artists’ careers, as well as TME’s massive influence in mainland China’s music and entertainment market,” TME says in an announcement.

The joint label established with UMG similarly aims to bring international artists to China, one of the world’s fastest-growing music markets, and take Chinese musicians abroad.

Alongside the label deal, TME and WMG have signed a multi-year licensing agreement, an extension of their decade-long collaboration.

TME has ongoing licensing relationships with all three major record labels and some have manifested in equity relationships. In January, a Tencent-led consortium increased its total stake in UMG to 20%.

TME also operates some of China’s most popular online music services. Through its family of music streaming apps including QQ Music, Kugou Music and Kuwo Music, TME collectively commands 622 mobile monthly active users as of the fourth quarter.

Paying ratio remains relatively low, however, with 9% of the users paying in the quarter, up from 6.2% in the previous year.

But TME has another major revenue stream that distinguishes it from Western streaming services like Spotify: social entertainment. This category includes the karaoke app WeSing which monetizes through the sales of virtual gifts, which are bought by users and sent to performers they appreciate. It mirrors real-life fan-idol interaction.

The segment contributed $854 million to Q4 revenue, compared to $423 million generated from user subscription and digital music sales.

Tencent and Universal Music to take Chinese artists global under joint label

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Tencent-led consortium will lift stake in Universal Music to 20%

Tencent is further strengthening its ties with music giant Universal Music Group as it continues to dominate the Chinese music streaming market.

A consortium led by Tencent and comprising Tencent Music Entertainment, the internet giant’s music spinoff, is set to buy an additional 10% equity stake in UMG from French media conglomerate Vivendi SA, TME said on Friday.

The round values UMG at 30 billion euros, or $36.8 billion, and will increase the consortium’s stake in the music company to 20%. TME continues to hold a 10% equity interest in the consortium, of which other members are not disclosed.

“The transaction reinforces TME’s commitment to strengthening its strategic partnership with UMG. TME looks forward to an ongoing and deeper collaboration with UMG as both companies work together to bring unparalleled service and product offerings to artists and fans in China’s booming music entertainment market,” the company said.

The transaction is expected to close in the first half of 2021 and is subject to regulatory approvals, TME noted.

In August, TME and UMG said they were launching a joint label to discover, develop and promote Chinese artists domestically and to the world.

Tencent and Universal Music to take Chinese artists global under joint label

Tencent has been pally with all three music label giants, which have been licensing content to the Chinese firm’s music-focused apps. Both Warner Music and Sony Music Entertainment bought shares in TME when the latter went public in Hong Kong.

Warner Music’s SEC filing earlier this year showed that it had sold a small stake to Tencent. And one should be reminded that Tencent also had a deal with Spotify from 2017 when the two swapped stakes.

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Tencent and Universal Music to take Chinese artists global under joint label

Digital entertainment titan Tencent continues to drum up its music ambitions. On Tuesday, Tencent Music Entertainment, majority-owned by Tencent with a 55.6% stake, announced establishing a new joint label with its licensing partner Universal Music Group to discover, develop and promote Chinese artists domestically and to the world.

TME, which spun off from Tencent and went public in the U.S. in 2018, commands the lion’s share of China’s music streaming industry through three apps — QQ Music, Kugou and Kuwo. It also operates other music-related businesses, including live events and a popular karaoke app.

651 million users streamed music through TME services in the second quarter, but only 47.1 million were paid subscribers, signaling a much lower conversion rate compared to Spotify, which did a share swap with TME in 2017.

Licensing fees take up a big chunk of streaming services’ expenses. Cultivating its own artists will give TME more control over music content and eventually reduce dependence on content IP owners.

TME hopes that the new label will enable it to “produce new music loved by the younger demographic, bringing in iconic music stars, innovative music works, and more breakthrough music genres to the global music market, ultimately providing music fans in China and around the world with a spectacular music entertainment experience,” said TC Pan, the group’s vice president of content cooperation.

Break with precedent

As part of the announcement, TME also said it signed a multi-year extension of licensing agreement with UMG.

Concurrent with the news is, noticeably, UMG’s licensing deal with TME’s Chinese rival NetEase Cloud Music. This departs from the precedent of TME’s monopoly on streaming Western mainstream music in China. For years, TME had spent heavily on exclusive rights from UMG, Warner Music and Sony Music Entertainment. It further deepened ties with WMG and SME, which bought shares of TME when it went public.

The setup triggered an antitrust investigation into TME last year. It forced TME’s domestic rivals including NetEase to sublicense its catalogs, often at above-market rates, and indirectly prompted smaller players to develop their own artists. NetEase, for instance, is known for developing indie musicians.

NetEase CEO William Ding has been a critic of exclusive music rights. In a February analyst call, he labeled the practice ‘unfair and unreasonable’ and called for an end to it. He achieved his goal.

Speaking on NetEase’s latest licensing tie-up with UMG, Ding remarked: “The partnership further strengthens NetEase Cloud Music’s position as a go-to platform for high-quality international music and marks a great step forward for China’s music industry as a whole.”

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Tencent Music bets on China’s crowded podcasting space

Listeners of podcasts, audiobooks and other audio shows are estimated to number 542 million in China this year, according to a third-party survey by marketing firm iiMedia. It’s a healthy jump from the 489 million users recorded in 2019, and it no doubt has attracted new players to the game.

That includes Tencent Music Entertainment (TME), the Tencent spin-off that is sometimes regarded as the Spotify of China but differs on many fronts in practice. The group’s main line of businesses goes beyond music streaming to encompass virtual karaoke, live streaming and audio content, a category that has recently seen a big push from the firm.

In its newly released quarterly report, TME said it has made “significant progress in expanding” its audio library by adding thousands of new adaptions from popular IP pieces and works from independent producers. This intensifies competition in what is already a crowded space.

Like Spotify, TME is late to voice-based content, an umbrella term that can include everything from podcasts, audiobooks, radio stations to more innovative listening experience like audio live streaming. This sector in China has for years been occupied by leading companies Ximalaya, the main investor in San Francisco-based podcasting firm Himalaya, and Nasdaq-listed Lizhi.

TME’s thrust into audio content holds no immediate promise, for there is still no obvious path to profitability. Chinese users are known to be reluctant to pay for digital content, and when they do, say, for educational and self-improvement podcasts, the enthusiasm tends to fade quickly. Deep-pocketed platforms often resort to offering content for free to gain market share, relentlessly forcing out smaller contestants. The result is that everyone needs to find more indirect ways to monetize.

Lizhi, for instance, primarily generates revenues by selling virtual items through its live, interactive audio sessions, while the contribution from user subscriptions and advertising remains paltry. The seven-year-old company hasn’t turned a profit, recording a net loss of 133 million yuan or $19.1 million last year.

Indirect monetization is nothing new in China’s internet industry. Tencent, most famous for its WeChat messenger, notably relies on gaming revenues that its social networking products help drive. TME, similarly, gets the bulk of its money by selling virtual items in music-themed live streams, while only 6% of its 657 million monthly active users on music streaming apps are paying. The MAU growth has also come to a standstill as China’s online music market saturates; from 2017 to 2020, TME added only 50 million new users to its music streaming services. The question is whether the music titan can breathe new life into the adjacent audio sector.

Posted on

Tencent Music bets on China’s crowded podcasting space

Listeners of podcasts, audiobooks and other audio shows are estimated to number 542 million in China this year, according to a third-party survey by marketing firm iiMedia. It’s a healthy jump from the 489 million users recorded in 2019, and it no doubt has attracted new players to the game.

That includes Tencent Music Entertainment (TME), the Tencent spin-off that is sometimes regarded as the Spotify of China but differs on many fronts in practice. The group’s main line of businesses goes beyond music streaming to encompass virtual karaoke, live streaming and audio content, a category that has recently seen a big push from the firm.

In its newly released quarterly report, TME said it has made “significant progress in expanding” its audio library by adding thousands of new adaptions from popular IP pieces and works from independent producers. This intensifies competition in what is already a crowded space.

Like Spotify, TME is late to voice-based content, an umbrella term that can include everything from podcasts, audiobooks, radio stations to more innovative listening experience like audio live streaming. This sector in China has for years been occupied by leading companies Ximalaya, the main investor in San Francisco-based podcasting firm Himalaya, and Nasdaq-listed Lizhi.

TME’s thrust into audio content holds no immediate promise, for there is still no obvious path to profitability. Chinese users are known to be reluctant to pay for digital content, and when they do, say, for educational and self-improvement podcasts, the enthusiasm tends to fade quickly. Deep-pocketed platforms often resort to offering content for free to gain market share, relentlessly forcing out smaller contestants. The result is that everyone needs to find more indirect ways to monetize.

Lizhi, for instance, primarily generates revenues by selling virtual items through its live, interactive audio sessions, while the contribution from user subscriptions and advertising remains paltry. The seven-year-old company hasn’t turned a profit, recording a net loss of 133 million yuan or $19.1 million last year.

Indirect monetization is nothing new in China’s internet industry. Tencent, most famous for its WeChat messenger, notably relies on gaming revenues that its social networking products help drive. TME, similarly, gets the bulk of its money by selling virtual items in music-themed live streams, while only 6% of its 657 million monthly active users on music streaming apps are paying. The MAU growth has also come to a standstill as China’s online music market saturates; from 2017 to 2020, TME added only 50 million new users to its music streaming services. The question is whether the music titan can breathe new life into the adjacent audio sector.