It is tempting to envision Chinese media firms as the local equivalent of a familiar Western brand. That mindset imagines Weibo as the Chinese Twitter, iQIYI as the Chinese Netflix, and WeChat as a Middle Kingdom version of WhatsApp.
As part of more than $6 billion it has spent on music investments in recent years, Tencent and TME paid $3.3 billion for a 10% stake in Universal Music in January. And this month TME spent $200 million for a 1.6% slice of Warner Music Group right after WMG’s IPO; adding to the situation’s complexity, Sony and Warner together own 4% of Tencent.
TME has three separate platforms, QQ Music, Kugou and Kuwu, which give it a combined 42.7 million paying subscribers, making it the largest music streamer in China. Impressive as that might sound, only 10% of TME’s content is behind a paywall, and music streaming accounts for less than 30% of its business.
The pressing need to spend $3.5 billion buying shares in UMG and WMG seems even more remote when it becomes clear that local acts are more important than Western music artists. “There’s a lot of focus on the three majors, but the biggest five labels account for only less than 30% of our streaming volume on our platform,” says Pang.