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News December 11, 2017

Spotify and Tencent Music’s equity swap confirmed

Spotify and Tencent Music’s equity swap confirmed

Spotify and Tencent Music Entertainment have confirmed reports that they are are entering into a stock-swap arrangement.

Confirmed via Spotify’s blog on Friday night (Dec 8), Sweden-based Spotify and China’s Tencent, one of that market’s leading music subscription platforms, are to swap 10% of each other’s holdings.

Daniel Ek, CEO and Founder, Spotify, said:

“Spotify and Tencent Music Entertainment see significant opportunities in the global music streaming market for all our users, artists, music and business partners. This transaction will allow both companies to benefit from the global growth of music streaming.”

The deal will see Spotify gain a foothold in the nascent China market as it preps to go public in early 2018. Spotify may be the market leader with double the amount of paying subscribers (60m) than nearest competitor Apple Music (30m), but it’s still chasing the tech giant. Apple Music launched in China in September 2015 with an offering priced of about US$1.50 per month.

Meanwhile, the Chinese government has put in place restrictions on its nation’s companies investing overseas in an effort to stem the outflow of capital – an equity swap is the legitimate loophole Tencent needs. Through this deal with Spotify, Tencent gets exposure with the United States, the world’s biggest music market.

Cussion Pang, CEO of TME, said:

“We are excited to embark on this partnership with the largest music streaming platform in the world. TME and Spotify will work together to explore collaboration opportunities, with a common objective to foster a vibrant music ecosystem that benefits users, artists and content owners.”

Tencent boasts China’s biggest social network and gaming firm and operates multiple music streaming services in the world’s most populous market, including QQ Music, KuGou and Kuwo. It dominates the music market with 700 million combined monthly active users.

Martin Lau, President at Tencent, said:

“We are delighted to facilitate this strategic collaboration between the two largest digital music platforms in the world. Both of us share the same commitment to bringing music and superior entertainment experiences to music lovers, and to expanding the global digital music market for artists and content partners.”

Tencent recently became the first Asian firm to enter the club of companies worth more than US$500bn and is understood to be planning its own $10 billion flotation of Tencent Music.

This article originally appeared on The Industry Observer, which is now part of The Music Network.

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