Deep within the Form F-1 that Shenzhen-based Tencent Music Entertainment Group prepared a prospectus for the SEC back in 2018, there is an interesting section titled “Fragmented music content providers and popularity of long-tail content.”
Know that TME, which is the leading music streaming service in China, operates music apps including QQ Music Kugou Music, Kuwo Music, and WeSing. The company’s platform includes online music, online audio, online karaoke, music-centric live streaming and online concert services. Although it is a fraction of the size of Spotify, given that there are about 1-billion internet users in China (in the U.S. for example, the number is along the lines of 312-million, less than half of the number of users in India, at 834-million), there is something to say for the upside opportunities of TME, which reported last month that it has 76.2-million paying users, a 36% year-over-year increase, which is some serious traction.
The fragmented music section includes:
• “China has a more fragmented music content creation and copyright ownership landscape as compared to developed economies. In contrast to the U.S. market where the top music labels have strong market positions, China provides a more conducive environment for online music platforms. According to iResearch, in terms of the volume of tracks streamed, the top five labels in China had a combined market share of less than 30% in 2017, while the top five labels globally had a combined market share of approximately 85%.”
• “China also has a fast growing market for long-tail, niche music content, including those that belong to niche genres, driven by an increasing demand for diversified and personalized online entertainment experiences.”
• “The younger generation in China, represented by Generation Z (born between 1990 and 2009), is also a key driving force of the market for long-tail entertainment content. They are generally technology savvy, creative, expressive, and willing to pay for quality content. They are also actively involved in content creation through interactive online platforms, driving both the supply and demand for long-tail music content.”
While there are undoubtedly changes between 2018 and 2022 and so this focus on niche music may be somewhat attenuated, in its Form 6-K filing with the SEC for March 2022 there is the following:
“As of the end of the fourth quarter, the number of indie musicians on our Tencent Musician Platform reached 300,000.”
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