Official: Spotify and Chinese music giant Tencent acquire minority stakes in each other

Sweden’s Spotify and China’s Tencent Music Entertainment Group (TME) are creating a larger global footprint for themselves as each are expected to announce IPOs in early 2018.

Late on Friday night, Australian time, they jointly confirmed week-long speculation they were buying minority (10%) stakes in each other.

TME is the music arm of tech empire Tenpercent Holdings – the fifth most valuable company in the world with a market value of $500 billion.

Its divisions include a video streaming service, a social media network called Weixin/WeChat with 938 million monthly active users, multi-super apps, gaming, artificial intelligence & machine learning, information, a blogging platform, email, internet browsers and personalization services.

TME is the dominant player in the Chinese market with music service providers QQ Music, KuGou and Kuwo.

Details of the Spotify/Tencent deals were maddeningly thin on the ground from both sides at the announcement.

“Spotify and Tencent Music Entertainment see significant opportunities in the global music streaming market for all our users, artists, music and business partners,’ Spotify founder and CEO Daniel Ek said.

“This transaction will allow both companies to benefit from the global growth of music streaming.”

An equally brief statement came from TME CEO Cussion Pang: "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."

The team-up is designed to attract more investors to both, and strengthen their hands in licensing negotiations.

In September, Spotify was estimated to be worth $16 billion.