Tencent buys $200m stakes in Warner Music Group

tencent

Last week, the Chinese technology giant Tencent made two significant operations after Warner Music Group’s IPO on June 3rd. First, Tencent Music Entertainment, the music subsidiary of parent company Tencent Holdings, acquired 4m Class A common stock shares in WMG, representing $100m worth of stock. On the same day, another of Tencent Hoding’s subsidiary, Huang River Investment Limited, bought an additional 4m of the same shares, summing a total of $200m worth of stock, represented in 8m shares. Tencent Holdings now own in total 10.4% of WMG’s outstanding Class A shares, and 1.6% of the entirety of WMG according to the SEC filings.

Music-tech writer and researcher Cherie Hu shared the following diagram on her Twitter account this Wednesday, illustration the current state of ownership between the three majors and Spotify, while also pointing out that the current majority stake that WMG’s parent company Access Industries has in France based streaming service Deezer is not included there. 

cherie hu diagram

Such acquisition was heavily opposed by European lobbying body IMPALA, whose Executive Chair, Helen Smith, referred to back in November 2019:

“Even at a low level of shareholding, we believe the risk of harm for consumers and competitors from such a transaction would be a concern because of the impact in both the digital market and the music sector, with independents being squeezed further and artists also losing out.”

Between majors and tech giants

As we have analyzed in previous posts, streaming will be the “anchor” of the post-pandemic recorded music business. The inner negotiations of major labels and tech giants widely affect the level of accountability and transparency for artists –Tom Gray, starter of the #BrokenRecord campaign recently dedicated a long Twitter thread on this.

On top of this, the European Commission launched two formal antitrust investigations of Apple, one of which was sparked by a 2019 Spotify complaint accusing Apple of anticompetitive behavior regarding the management of the App Store and in-app purchases. 

Although we can not expect a short-term resolution of these investigations, nor can we expect to see less of these stock acquisitions and co-owning synergies between the dominating corporations of the music industry, we are certainly hopeful that the increasing development of technology for the independent music sector –in the form of local streaming services, collective associations, artist tools and operational solutions aimed at SMEs– will continue to drive the sustainability of the independent music industry. 

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