Author: Li Zhujiang
Source: GPLP
The expansion of Tencent Music (TME. NYSE) in the field of copyright, it’s also like “local tyrants”: with money !
On March 31, Tencent Music announced that its consortium led by Tencent Holdings had completed the acquisition of 10% of Universal Music Group.
Under the agreement, prior to January 15, 2021, the consortium may also choose to acquire an additional 10% stake in Universal Music Group at the same corporate valuation as in the above transaction.
At the same time, Tencent music and Universal Music Group also reached an agreement to grant Tencent music a subscription equity, which can purchase a minority stake in the greater China business of Universal Music Group within two years after the completion of the above transaction.
It is reported that the transaction is valued at 30 billion euros for Universal Music Group. In other words, Tencent Music’s purchase of 10% of the shares amounted to about 3billion euros.
It can be seen from this that Tencent Music has never stopped competing for the copyright, instead, it has gone to a more determined direction and directly become a shareholder. Signing a contract with a record company alone, the high copyright fee is also a large expenditure every year, and the advantage of equity is more obvious.
In fact, as early as May 2017, Tencent Music and Universal Music have reached a cooperation. Tencent Music has obtained the digital copyright distribution right of Universal Music in mainland China. But the cost behind is not small. According to the public information, Tencent Music pays nearly 620 million yuan of copyright fee for the music library of Universal Music.
In addition to the copyright fee, once other music platforms intervene in the renewal, it ispossible to push the fee to a higher point.
It is understood that in the copyright competition of Global Music, the licensing fee has gone up all the way, from the initial $34 million to the most intense $350 million in cashplus $100 million in equity.
It is worth noting that the exclusive copyright agreement between Tencent Music and the three major record companies is about to expire in 2020. On the same day Tencent Music announced its acquisition, Netease Cloud Music announced a strategic cooperation with Rock Records.
So it can be said that Tencent Music has not given up the importance of copyright at all, but has more deeply bound the interests of both parties.
But can the deep bundling with record companies alleviate the input&output disproportionate pain of Tencent’s online music ?
As we all know, in the field of music, Tencent Music has gained a huge copyright advantage with a lot of money. But from the perspective of investment yield, Tencent Music’s heavy investment in copyright consumption has no expected return.
According to Tencent Music’s 2019 financial report, social entertainment business contributes more than 70% of Tencent Music’s revenue, while online music business accounts for less than 30%. However, the total cost in 2019 is 16.76 billion yuan, an increase of 43.2% year-on-year. Tencent Music said it was mainly due to the increase of content expenses and revenue sharing expenses.
The copyright dispute that seemed to stop before is only the temporary stability caused by Tencent Music’s copyright advantage. Now, another player, Netease Cloud Music, comes in. Therefore, the fight for copyright will not stop, it will only intensify.
It is understood that on March 31, 2020, the exclusive copyright agreement between Tencent Music and Jay Chou, a heavyweight player in the Chinese market, is about to expire. As of the time before the release, the Jay Chou Music Library owned by Tencent Music is still playing normally.
Up to now, in the field of copyright investment in “bottomless hole”, no player dare to quit, but can only continue to “burn down”. As a musician said, now online music has gradually separated from “online”, but has evolved into a competition about capital and resources.
Is the copyright cycle of online music really unsolvable?
