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Tencent rival NetEase secures new funding for music service

By | Published on Wednesday 14 November 2018

NetEase Cloud Music

As Tencent – operator of the biggest streaming service in China – prepares to IPO its music division, a key rival in the Chinese streaming music market has completed a new funding round of $600 million.

Although China is still only the tenth biggest recorded music market overall, it has seen considerable growth in recent years thanks to the rapid rise of the streaming sector, making it a priority emerging market for the music industry worldwide.

Local rather than global streaming music services dominate there, with Tencent’s QQ Music by far the biggest. The closest rival is NetEase Cloud Music, which has just secured another $600 million of cash from a number of investors. With the money, it aims to take on Tencent and its QQ brand.

Among the investors is another Chinese web giant Baidu, which was for a time enemy number one of the global music industry for facilitating access to a mountain of unlicensed MP3 downloads via its search engine.

However, it then did a deal with the record industry and sought to take a lead in the then fledgling legitimate digital music market in China. However, it quickly lost ground to Tencent, NetEase and that other Chinese web giant Alibaba. This makes its recent alliance with NetEase to take on Tencent all the more interesting.

Some are now chattering about whether NetEase’s cash boost will affect Tencent’s plan to IPO its music division on the New York Stock Exchange.

Although Tencent has already filed some paperwork for that IPO, the Wall Street Journal reported that the company had slowed down its march to the market after share prices across the tech sector took a tumble. Increased competition on its home turf could also impact investor interest in a standalone Tencent Music.

Tencent nevertheless remains the dominant player in digital music in China – for now at least – and as that market continues to grow, that makes it a dominant player globally as well.