Tencent, Sony establish new label for electronic dance music in Asia
The new strategic partnership with Sony Music Entertainment is likely to burnish the credentials of Tencent’s music arm, which is expected to pursue its initial public offering this year
Tencent Holdings and Sony Music Entertainment have joined forces to launch a new label for electronic dance music in Asia ahead of the anticipated initial public offering of the Chinese internet company’s music subsidiary this year.
The new music label, Liquid State, will sign up electronic dance music talent across the region and collaborate with other artists from around the world.
“Our goal is to create an unmatched culture exchange between the East and the West through the power of electronic dance music. It is a music genre like no other,” said Cussion Pang, the chief executive of Tencent Music Entertainment Group.
The music arm of Hong Kong-listed Tencent is valued at about US$10 billion.
The announcement of the new label follows separate initiatives by online search firm Baidu, e-commerce provider Alibaba Group Holding and Tencent – the Chinese hi-tech triumvirate collectively known under the acronym BAT – to expand original digital content offerings in the world’s largest internet market.
The stakes are high for BAT and other players involved in the creation and distribution of music, film, video, games, news and other popular digital content in China.
The total entertainment and media market in China, which had about 750 million internet users at the end of June last year and is also the world’s biggest smartphone market, is forecast to be worth US$228.1 billion this year, up from an estimated US$209.5 billion last year, according to PwC.
Tencent, the world’s largest video games company by revenue and biggest social network operator in China, is also the country’s leading online music-streaming services provider.
The Shenzhen-based company operates China’s three most popular music-streaming platforms, QQ Music, Kugou Music and Kuwo Music. These three online channels have a combined 700 million monthly active users.
In a recent report, Jefferies equity analyst Karen Chan estimated that Tencent Music had a 77 per cent share of music-streaming revenue in China in 2016, followed by NetEase Cloud Music and Alibaba’s Xiami Music. New York-traded Alibaba owns the South China Morning Post.
With Liquid State, Tencent will be able to exclusively stream electronic dance tracks from the label’s roster of artists to its three music-streaming channels.
In addition, Tencent media platforms such as WeChat, QQ, Tencent Video and QZone will provide support for Liquid State and its artists.
The electronic dance music genre has enjoyed increased popularity on the mainland. Ultra Music Festival, the annual outdoor electronic music festival held in Miami, made a stop in Shanghai on its international tour last year.
Other electronic dance music festivals, such as Storm and the Strawberry Music Festival, have also seen rising attendance on the mainland. A total of 180,000 festivalgoers turned up for Storm last year, more than seven times larger than the attendance recorded at its first event in Shanghai in 2013.
Liquid State label has signed up Korean duo Junkilla and China’s DJ Lizzy as its first artists from Asia.
Popular Norwegian DJ Alan Walker – known for his 2015 hit “Faded” – has also been signed up to release a series of exclusive collaborations with the label this year.
Last year, Walker took the top spot on the QQ Music charts with a record number of more than six billion audio streams, according to Tencent.
Denis Handlin Ao, the president of Sony Music Entertainment in Asia, said on Wednesday that Liquid State was “created to support and enhance the discovery and development of artists”.
“This in turn, will provide music fans with new original content from one of the hottest genres in music,” Ao said.
The electronic dance music label marks the latest partnership between Tencent and Sony Music. In 2014, the two companies forged a strategic cooperation in which Tencent had exclusive online digital distribution rights for Sony Music’s master audio recordings on the mainland.
In December last year, Tencent also signed a deal to swap stakes with Sweden-based music streaming service Spotify, with both companies holding a minority stake in the other.