Tencent Music plans to sell 3% shares in bundled record companies what is the plan?

for Tencent Music, financing can make it cash-rich on the one hand, but more importantly, establish equity ties with record companies to obtain streaming rights in a highly competitive market. Copyright is not only the "killer's mace" of Tencent Music, but also a "life-saving weapon".

original title: I heard that Tencent Music is going to "buy" the copyright owner with equity. You said that this little abacus

recently, a person familiar with the matter revealed that Tencent Music Entertainment Group Group is seeking to complete a new round of financing before IPO, valued at US $10 billion.

valuation of $10 billion is a lot, but after reading this message, I still have three questions.

strong > first, who does Tencent Music want to sell its equity to? is financing helpless or conforming to the trend? / strong >

Tencent Music plans to sell about 3% of its shares to strategic partners, including record labels, according to Bloomberg.

Tencent has spun off its music division to merge with China Music Group in an attempt to capture a larger share of China's domestic streaming music market.

on the surface, Tencent Music is already very strong, but in such a fierce competition in the online music market, who will spare more "meat" in their own hands?

so, for Tencent Music, financing can make it cash-rich on the one hand, but it is more important to establish equity ties with record companies to obtain streaming media rights in a highly competitive market. Copyright is not only the "killer's mace" of Tencent Music, but also a "life-saving weapon".

according to the valuation of Tencent Music, 3% of the shares are $300 million, or about 1.97 billion yuan. According to public materials, the purchase of copyright by a music platform is generally in the form of package. for example, a record company packages thousands or tens of thousands of works to the platform, which costs thousands or hundreds of millions of dollars a year, with almost no permanent license.

so after Tencent Music "bundles" the copyright with 1.97 billion yuan, it doesn't have to buy it on an annual basis, and it's a good deal.

Tencent music staff said they would not comment on the matter.

KuGou music staff said that they do not know about the last round of financing before Tencent Music sold a 3% stake in exchange for IPO. The details will depend on the official notice.

strong > second, what is the advantage of exchanging equity for copyright? / strong >

Tencent has a lot of copyrights, which everyone knows.

in 2015, the National copyright Administration required all major online music platforms to centrally clean up unauthorized songs before October 31. At that time, a person in charge of Tencent Music said in an interview that the pattern of online music is "one super, many strong", and the "first super" here actually refers to Tencent Music itself.

Public information shows that Tencent Music has reached copyright cooperation with record companies such as Universal Music Group, Warner Music Group and Sony Music, and has won the right to distribute the music of artists such as Beyonce and Taylor Swift. At the same time, Tencent Music also reached a copyright distribution agreement with Huayi Brothers Media and South Korea's YG Entertainment.

according to Tencent staff, most of the copyright in Tencent's hands is obtained in cooperation with record companies or through cash purchases.

some industry insiders believe that unlike strategic cooperation, Tencent Music can tie itself to the copyright owners through financing, making them stand on the same front with Tencent Music.

strong > third, does Tencent pull record companies to stand in line, which has a great impact on NetEYun music? / strong >

Tencent Music and NetEase Music are equal competitors. In the past month, Tencent Music has twice sued NetEase Music for "music copyright infringement." the details are as follows:

on August 11, NetEase Music was sued by Tencent Music for infringing Wu Yifan's paid digital album "6".

NetEase Yun Music was sued again by Tencent on Aug. 23 for unauthorizing the distribution of 200 music works such as Soda Green, Xie Na and Shang Wenjie.

NetEase Yun Music has announced that it is doing its utmost to negotiate the resale of copyright with Tencent Music, and that it has just completed a round of financing of 750 million yuan in April, with sufficient funds.

Ding Bo, vice president of NetEase Music, also said in an interview with Music Finance that the reason why some of the contents of the two sides failed to reach cooperation was "not price", and Tencent has not publicly indicated that it is not willing to license NetEYun Music.

the author believes that Tencent can avoid using cash by bundling with the copyright owner by transferring its shares, but the problem is that the copyright owner can choose to withdraw in the future, and this binding is not strong and long-term, and the relevant situation depends on the specific conditions.

whether the 3% stake in Tencent Music is attractive to copyright owners remains to be considered, so there are still many opportunities for NetEase Music, and the market for online music is also very large, leaving a lot of time for NetEYun Music.

Edit: xiongwei