According to experts Tencent Music has a better business than Spotify

29/09/2018

 

Tencent Music also earns from services such as live broadcasting of karaoke

 

The Swedish Spotify is currently the most famous streaming music service in the world, but, with its current services, it still cannot earn much. On the other hand, however, Tencent Music, which owns the most popular music apps in China, offers more in terms of socially interactive services that are helping the Chinese company get more money.

According to an investor document circulated in August that was seen by Reuters, Tencent Music made almost $400 million in earnings before interest and taxes in 2017. According to the document, those profits are expected to nearly double to $764 million this year while revenue is seen climbing 72 per cent to $3.1 billion.

 

Tencent Music Entertainment Group is a company that develops music streaming services for the Chinese market

 

If Tencent Music earns, Spotify, on the other hand, lost 90 million euros ($ 105 million) in the second quarter of this year with a turnover of 1.3 billion euros. The difference, it seems the business model Tencent Music that is not mainly based on monthly subscription payments.

Elinor Leung, managing director of Asia telecom and internet research at CLSA, said: “China music apps are more advanced in their integration of music streaming with live broadcasting, karaoke as well as social community. Social interaction is the main difference between Chinese music apps and Western music apps”

 

Tencent Music also benefits from differences in music copyright payment in China and the West

 

“Some popular musicians in Europe or the US may require royalty payment per play count, while the current practice in China is for companies to sign three-year contracts regardless of play count, so the economy of scale helps the platform’s profit,” continued Elinor.

Tencent Holdings and Spotify announced a share swap in December that gave the Chinese company a 7.5 percent stake in Spotify including shares held by Tencent Music.

 

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