Tencent Now Owns Part of Two of the Three Major Record Companies - Rolling Stone
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China’s Tencent Now Owns Part of Two of the Three Major Record Companies

The Chinese music-streaming giant just purchased 4 million shares in a newly public WMG, which is home to the likes of Tom Petty, Led Zeppelin and Cardi B

LizzoWarner Music's Pre-Grammys Party, Arrivals, Hollywood Athletic Club, Los Angeles, USA - 23 Jan 2020

Lizzo, one of Warner Music's most popular artists.

Rob Latour/Shutterstock

A little more than a week after Warner Music Group’s IPO led to a $15.3 billion valuation, Chinese entertainment behemoth Tencent — the country’s leader in music streaming — has purchased 5.2% of WMG’s Class A shares, equating to about 0.8% total of the U.S.-based recorded music company, for $100 million.

While this amount pales in comparison to the Tencent-led $3.3 billion consortium purchase of 10% of Universal Music Group  at the end of last year, it further shows the increasing ties between the Asian market and the U.S. one, as well as the steady globalization of the music industry. Tencent also already owns 9.1% of music-streaming market leader Spotify.

Tencent has not publicly announced its ambitions with Warner and Universal, two of the “Big Three” leading the global record industry. (The third id Sony Music Group.) But it already made its interest in the global music market resoundingly clear back in 2014 — when it broke ground through a unique sub-licensing deal with WMG. That allowed the company to distribute the label group’s music to the vast majority of Chinese platforms. With a stake in WMG and UMG both, Tencent has the potential to build new products and make money on not only Warner- or Universal-signed artists who are listened to in China, but also on listeners who, say, stream Led Zeppelin from Los Angeles — or future ventures that either of these label companies pursue in the U.S. and in other territories.

It’s worth noting that the conglomerate, which has its hands in a variety of industries, has also been investing significant money in video games, which have become increasingly important to the music industry’s growth. For one, Tencent owns a 40% stake in Epic Games, the makers of Fortnite. But it also owns Riot Games — which has the utterly massive League of Legends —  in its entirety. Now more than ever before, members of the American music business know they need allies in both the Asian market — just look at the stratospheric rise of K-Pop — and the video game industry, and it appears Tencent is a few steps (or miles) ahead.

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