So following all the recent chit chat speculating that Spotify and Tencent Music might soon be exchanging some equity, on Friday it was confirmed that Spotify and Tencent Music would soon be exchanging some equity. And just in time for Christmas! It’s exactly what Jesus would have wanted.
Chinese internet firm Tencent is one of the companies busy trying to dominate the rapidly expanding streaming music market in China, via its standalone music subsidiary and services like QQ Music. Spotify, of course, is the dominate paid-for streaming service on a worldwide basis, but is yet to enter the tricky but potentially lucrative (eventually) Chinese market.
On Tencent’s side, the deal involves both the parent company and its music subsidiary, the latter of which is expected to be separately floated on a stock exchange next year. In official speak, “Tencent Music Entertainment and Spotify will acquire new shares representing minority equity stakes in each other for cash”, plus “Tencent will invest in Spotify through secondary purchases”. The latter part of the deal should mean a cash boost for Spotify.
The outcome of the arrangement is that: “Spotify will hold a minority stake in TME, and both Tencent and TME will hold minority stakes in Spotify”.
Confirming the tie up between the two companies, Spotify boss Daniel Ek said on Friday: “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”.
Meanwhile over at Tencent, the CEO of TME, Cussion Pang, added: “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”.
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