A close-up image showing the Spotify Music app on an iPhone. Photo: EPA-EFE
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https://scmp.com/tech/china-tech/article/2123572/tencent-and-spotify-invest-each-other-cross-shareholding-deal Big Tech
Tencent and Spotify invest in each other in cross-shareholding deal
The Tencent booth in the fourth World Internet Conference in Wuzhen, Zhejiang province, China. Tencent and Spotify reached a deal for a cross-shareholding arrangement. Photo: Reuters
The world’s biggest music streaming service Spotify of Sweden and Chinese internet giant Tencent said on Friday they have struck a deal to take minority stakes in each other.
In a joint statement, they said they will acquire new shares representing minority equity stakes in each other for cash. Tencent Music Entertainment will invest in Spotify, while the Swedish music start-up will take a stake in Tencent’s music wing. Terms of the deal were not disclosed.
The companies said it would be “strengthening relationships between the two most popular music streaming platforms in the world.”
Tencent, which operates social media platforms in China, is also the country’s largest online music services company, claiming hundreds of millions of users.
“We are delighted to facilitate this strategic collaboration between the two largest digital music platforms in the world,” Tencent President Martin Lau said in the statement.
Spotify CEO Daniel Ek said it “will allow both companies to benefit from the global growth of music streaming.”
The Tencent deal comes amid talk of a hotly-awaited stock market flotation for Spotify expected in coming months, with analysts estimating the company to be worth at least US$10 billion.
Spotify says it has about 60 million paying premium subscribers, with another 80 million using the platform’s free streaming service.
Shenzhen-based Tencent is one of China’s most powerful internet companies, running the WeChat messaging app as well as online payment platforms and games. WeChat has revolutionised China’s tech industry and even daily life for millions of Chinese.
Because Chinese authorities have largely shut out western companies like Google, Twitter and Facebook, home grown internet companies like Tencent have been able to grow rapidly in size.
Spotify, meanwhile, has no users in China.
In April, Spotify had already signed a global licensing agreement with the Universal Music Group.
Tencent became more valuable than Facebook last month as investors sent the company soaring into the top five of the world’s biggest firms.