Tencent Music, Warner Music Group Ink Massive, Multi-Year Licensing Agreement

Tencent Music IPO Launches at Lowest Expected Price Range
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Warner Music Group and Tencent Music have inked a “multi-year strategic licensing agreement” and established a jointly owned record label in China.

Warner Music Group (WMG) and Tencent Music, which operates the QQ Music, Kugou Music, and Kuwo Music streaming services as well as the WeSing karaoke app, unveiled their new licensing deal and co-owned record label this afternoon (early Tuesday morning in China), via a concise announcement message that was emailed to Digital Music News. The development coincided with the release of Tencent Music’s Q4 2020 earnings report.

The Big Three record label and China’s largest streaming service closed an “original agreement more than a decade ago,” the text indicates, and today’s broadened partnership will see Tencent Music continue to deliver WMG artists’ music to fans “across all its online music platforms in mainland China.”

While the release itself doesn’t specify exactly how many listeners these platforms boast, Tencent Music stated in its Q4 2020 earnings report that it had experienced a 40.4 percent year-over-year subscriber boost, for a total of 56 million paid users.

Mobile MAUs, across each of the above-mentioned streaming services and factoring for both ad-supported and paid accounts, totaled 622 million as of December 31st, 2020. Quarterly revenues, for their part, came in at $1.28 billion – a 14.3 percent bump from the same period in 2019.

On the jointly owned record-label front, the message notes only that the entities plan to leverage “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.” The label’s details, including its name, precise location, and artists, remain unclear.

Addressing his company’s new Tencent Music licensing deal in a statement, Simon Robson, Warner Music’s president of international, touted the significant growth potential associated with China’s music industry.

“Our collaboration with TME has already delivered tremendous results for local and international artists, and now we’re opening up even more opportunities together,” said Robson, who’s been with WMG for nearly 23 years.

“Alongside our increased investment in artist & repertoire (‘A&R’) and marketing in Greater China, this renewed and expanded partnership means we can help make our artists impossible to ignore in one of the world’s fastest-expanding music markets,” he finished.

Tencent Music, which claims to have drawn many millions of viewers to its “TME Live” livestream concerts, kicked off 2021 by dropping $415 million to acquire Lazy Audio, “a comprehensive audio platform providing entertainment in the forms of audiobooks, Chinese comedy, podcasts and other radio shows.”

Moreover, Tencent Music, which trades as TME on the NYSE, is reportedly considering rolling out a second, $5 billion IPO (originally reported as $3.5 billion), this time on Hong Kong’s stock market. Morgan Stanley last month increased its stake in Tencent Music to nearly 100 million shares, for a total investment of almost $3 billion, factoring based upon TME’s value at the time of this piece’s publishing.