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On December 12, 2018, Tencent Music, composed of QQ Music, Kuwo Music, Kugou Music, and National K-Sing, launched China’s online music giant The attitude of "no tyranny" is landing on the New York Stock Exchange.
Tang Daosheng (Chairman of Tencent Music), Xie Guomin (Mayor Dong of Kuwo Music) and Xie Zhenyu (Founder of Kugou Music) struck the New York Times together as chairman and co-president respectively. Listed bells.
Three months later, Xie Guomin left the "Kuwo Music" that he held the throne with one hand.
Tencent invests US$20 million in “Kuwo Music”
According to Securities Times·e Company, on March 20, the “KuWo Music Box” development company-Yilan Online The shareholders of Network Technology (Beijing) Co., Ltd. have changed. The original shareholder Ocean Music Hong Kong Co., Ltd. withdrew, and the new shareholder Tencent Music Entertainment Hong Kong Co., Ltd.
Tencent Music has subscribed a capital of US$20 million and holds 100 shares of Yilan Online Network Technology (Beijing) Co., Ltd.
Xie Guomin, the founder of Ocean Music, also resigned from the legal representative, chairman and manager positions of Yilan Online, and was replaced by Yang Jing.
Kuwo Music immediately stated that Ocean Music Hong Kong Co., Ltd. and Tencent Music Entertainment Hong Kong Co., Ltd. are the same company. Ocean Music Hong Kong Co., Ltd. was renamed Tencent Music Entertainment Hong Kong Co., Ltd. when TME was established in 2016. The shareholders of Yilan have not changed the name. They just changed the name last week. KuWo Music also stated that its organizational structure has not changed.
Tencent launched the group "QQ Music, Kuwo Music, Kugou Music, National Karaoke"
In 2013, QQ Music and Apple's iTunes store were launched.
The latter successfully subverted the US online music market two years later and became the world's largest online music store. QQ Music did not become the king of China’s online music industry until 2018, to which Xie Guomin of Ocean Music played an important role.
Since then, the top three in the music APP market, QQ Music, Kuwo Music, and Kugou Music have merged. Tencent has also become the major shareholder of the new group through asset swap equity accounting for 62.42%. It was officially launched in 2017. Changed its name to Tencent Music.
In 2018, Tencent Music went public with a valuation of nearly US$21.3 billion, more than double its valuation a year ago.
The world’s most profitable online music giant
When Tencent Music first went public, there was a market value gap of US$200 million between it and Spotify, the world’s largest streaming media at the time.
In the blink of an eye, Tencent Music dominates global streaming media with a market value of 27.8 billion. The market value of Spotify, the big brother at that time, closed at 24.9 billion US dollars yesterday.
According to Tencent Music’s annual report released on March 20, for the whole of 2018, Tencent Music’s total revenue increased by 7.29% year-on-year to RMB 2.76 billion, and shareholders’ net profit increased by 11.85% year-on-year to US$607 million.
In the fourth quarter of 2018, Tencent Music’s total revenue increased by 5.05 to 785 million US dollars year-on-year, and shareholders’ net profit under non-IFRS increased by 3.73 to 133 million US dollars year-on-year.
Tencent Music’s main operating indicators continued to grow in the fourth quarter, with the number of paying users of online music services reaching 27 million, a year-on-year increase of 39.2. The number of paying users of social entertainment services reached 10.2 million, a year-on-year increase of 22.9%.
Although Spotify’s annual operating income in 2018 was US$6.013 billion, its operating profit was a loss of US$49.17 million, and its net profit was a loss of US$89.18 million.
"Music Social" builds an online music empire
Most of the Chinese concept stocks listed on the US stock market in 2018 suffered the fate of breaking their stocks on the first day, including not only a large number of educational institutions that were favored by the market, but also There are also video websites such as Bilibili and iQiyi.
Tencent Music is no exception. After hitting a new low of $11.81 on the fifth trading day after listing, Tencent Music started a wave of bull market operations. In the past 60 trading days, it once rose as high as 54.7.
What supports Tencent Music’s continued rise?
Judging from the scale of monthly active users, Tencent Music can be said to have "dominated" the domestic online music market. Kugou Music, QQ Music and Kuwo Music rank among the top three online music users in China in terms of monthly active users. NetEase Cloud Music ranks fourth. Alibaba’s Xiami Music, Baidu’s Baidu Music, etc. are far behind Tencent Music.
At present, Tencent Music’s average monthly active users exceed 700 million, and it has nearly 80% of the users in the domestic online music market and 90% of the domestic music copyrights.
Even though Tencent Music has many users, it is difficult to monetize it. In 2018, mobile online music only brought 5.54 billion yuan in revenue to Tencent Music, accounting for 29%.
So, where does the other income of over 70 come from? This depends on Tencent’s “specialty” – social networking.
The social entertainment segment mainly includes the live broadcast and community business of National Karaoke, Kugou Live, Kuwo Juxing, and the main source of income is virtual gifts and value-added memberships from National Karaoke.
The annual report shows that social entertainment services and other revenue were 13.45 billion yuan, a year-on-year increase of 72%, accounting for 71% of the total revenue, and the proportion is expanding. The growth in revenue was mainly due to the revenue growth from the company's online karaoke and live broadcast business.
As early as 2016, entertainment and social revenue accounted for 50.8% of overall revenue. Considering K-Sing’s absolute leading position in the industry, live streaming monetization will remain an important source of revenue for Tencent Music in the future.
Xie Zhenyu&; Behind this, two people are inseparable - Xie Zhenyu, the founder of Kugou Music, and Xie Guomin, the founder of Ocean Music. They are now the co-presidents and directors of Tencent Music.
Public information shows that in 2001, Xie Zhenyu founded Search Music Network, which was China’s first digital music search engine.
After surviving the Internet winter, he founded Kugou Music in 2004.
Almost at the same time (August 2005), former Baidu chief architect Lei Ming and Huai Qi, who returned from Stanford MBA, jointly founded Beijing Kuwo Technology Co., Ltd.
In the following years, Kugou and Kuwo almost competed on the same track, and many users were “stupidly confused” about the two companies. Until 2012, a music copyright company emerged.
In June 2012, Xie Guomin, former vice president of Sina and head of Sina Music, founded Ocean Music. According to media reports, Xie Guomin has a lawyer background and played an important role in Sina's listing in the United States using a VIE structure.
(Xie Guomin, founder of Ocean Music)
Previously, Internet music piracy was rampant, and record companies were very sad. Ocean Music seized on the pain points of the market and took advantage of record companies’ low licensing fees and lack of money to sign as many long-term exclusive copyrights as possible at a relatively low price, thus having a large enough share of the music market copyright.
In December 2013, Ocean Music acquired Kuwo Music. In April 2014, Ocean Music and Kugou Music completed a share exchange merger to form a new music group. The look of a music mogul is beginning to emerge.
Subsequently, in 2014 and 2015, a music copyright war broke out, in which Tencent QQ Music and Ocean Music were involved.
Unexpectedly, in July 2016, Ocean Music and Tencent announced that they would merge the QQ Music business with Ocean Music and become a new music group through asset swaps for equity. CMC co-CEOs Xie Zhenyu and Xie Guomin will serve as co-presidents of New Music Group, and Tencent Vice President Peng Jiaxin will serve as CEO of New Music Group. Although after the merger, QQ Music, Kugou, Kuwo and other products and brands will maintain independent development, they will all be one company in the future. In December of that year, the group officially changed its name to "Tencent Music Entertainment Group".
According to Tencent Music's "Prospectus", Xie Zhenyu currently holds 4.2 shares and Xie Guomin holds 4.1 shares.
If calculated based on the current market value of Tencent Music, Xie Zhenyu and Xie Guomin are both worth more than 10 US dollars.
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