Tencent banks on original music to become China’s Spotify
The internet giant’s music arm is launching a campaign to solicit grassroots original music composers and musicians onto its online platforms
The music arm of Chinese internet giant Tencent Holdings is betting big on original music composers and musicians to expand its content offerings to become the Spotify in China, a market historically hindered by piracy.
Tencent Music Entertainment Group (TME) vowed to “support the building of a new original music ecosystem regardless of the cost” in a campaign launched on Monday that is designed to help the company attract more grassroots music composers and musicians onto its platforms.
Like Spotify, the world’s largest music-streaming provider that is preparing for a listing this year, TME has been investing in striking deals with content owners and musicians to draw more listeners and subscribers.
In May, TME announced an expansion of its music-streaming business with a licensing agreement with Universal Music Group. The deal makes it the main distributor in China for Universal records and artists.
Called the Tencent Musicians Plan, TME said the new campaign aimed to help original music composers and musicians in China obtain the respect and monetary returns that they deserve.
“Our goal is to ensure that original music composers and musicians on our platforms would have earned a total income of 500 million yuan (US$74 million) in three years,” said Cussion Pang, chief executive officer of TME, without disclosing any investment numbers.
According to Pang, about 60 per cent of China’s original music composers and musicians earn a monthly income of less than 2,000 yuan, and about 80 per cent of their work has not been heard and popularised.
By joining the Tencent programme, composers and musicians will be provided with a one-stop training service from copy right protection to big data-enabled music promotion and distribution, according to TME.
TME’s expansion comes as Tencent Holdings’ Hong Kong-traded shares rose 1.8 per cent to a record HK$302.20 on Monday, generating a market value of HK$2.86 trillion (US$366 billion) for the Shenzhen-based company.
It is already China’s dominant digital music player after merging its music-streaming business with market leader China Music Corporation last year. It distributes music through its three online streaming services – QQ Music, KuGou and Kuwo, and has 60 per cent share of China’s online music market, according to market research firm iiMedia.
TME is reportedly mulling an IPO, but there has been no details from Tencent to date.
The International Federation of the Phonographic Industry describes China as “an undeveloped culture of paying for music and a history of piracy” but it said there was “hope for further growth in the years ahead as labels and services roll out initiatives to establish a paid model for music”.
With an online user base of more than 650 million, China’s music streaming market is projected to jump to US$460 million in 2020 from US$119 million in 2015, according to PwC.