Unlike Spotify, with whom Tencent actually has a deal, TME is already turning a massive profit in China. The services extend well beyond just streaming:
“We have China’s most comprehensive library of music content in recorded and live, audio and video formats. We have the largest music content library with over 20 million tracks from over 200 domestic and international music labels, as of June 30, 2018. We also offer a broad range of video content, such as music videos and live and recorded concerts and music shows. In addition, hundreds of millions of users have shared their singing, short videos, live streaming of music performances, comments and music-related articles on our platform”
The estimated value of the company at filing is around $30B, similar to Spotify. Being a company that generates positive cash flow and net income however, the valuation is stronger. Plans for the funds raised in the IPO are as follows:
- “approximately 40% for investment to enhance our music content offerings to improve the variety, quality and quantity of content on our platform;
- approximately 30% for product and service development to expand and enhance our current product and service offerings, as well as to develop new products and services to further enhance user engagement;
- approximately 15% for selling and marketing, including marketing and promotions to strengthen our brand and grow our paying user base; and
- approximately 15% for potential strategic investments and acquisitions and general corporate purposes.”
The Spotify deal with Tencent was to allow Spotify to explore the Chinese, and for Tencent to get involved outside of China. If the filing turns out to be a good strategic move by TME, Spotify and Apple Music could find their streaming subscriptions getting cannibalized by a stronger and more comprehensive platform.
Constant disruption in the music industry has only made access to music and markets better for consumers and musicians alike. The addition of more players is welcome, and will hopefully bring a net benefit to all.