Spotify remains laser-focused on executing an IPO as soon as possible. But in the meantime, there’s another major streaming service set to go public in New York.
Tencent-backed China Music Corp., owner of Chinese online music streaming services, Kugou Music and Kuwo Music, is said to be headed for an IPO later this year.
The flotation has a potential value of between $300 and $600 million, according to WSJ sources.
Kugou is one of the top music streaming services in China – where Apple Music launched last year but Spotify has yet to arrive.
China Music Corp. is backed by Chinese internet giant Tencent Holdings Limited. which also has its own music streaming business, QQ Music.
In January, Kugou and Kuwo announced that they have reached a mutual licensing agreement with Tencent’s QQ Music to cover music copyrights of over one million songs from companies such as Warner Music, Sony Music, JVR Music and Linfair Records.
Prior to this, the two companies had signed deals with 100 record companies such as Ocean Butterflies, China Record Corporation, Taihe Rye Musia, EMI, Forward Music, and Seed Music.
China Music Corp is attempting to secure its place at the top end of China’s online music scene, which, previously dogged by piracy, is deemed to be a growing market with lots of potential thanks to the rise in smartphone usage.
China’s recorded music industry grew by 63.8% in 2015, according to IFPI, making it the second biggest contributor to global growth after Japan.
China was the 14th biggest recorded market in the world in the year, generating $169.7m for the music biz.
In 2014, Tencent signed a wide-ranging agreement with Warner Music Group, which included the first-ever master distribution partnership between a major record company and a leading ISP in Mainland China.
It was followed by a similar deal with indie Believe Digital in 2015.
However, just three days ahead of its deadline, it pulled out due to tough “market conditions.”
Spotify is thought to be the next to float and is estimated to be worth about $8.5 billion.
The firm promised investors TPG and Dragoneer that they would be able to convert their debt at a 20% discount following a flotation.
It also pledged to pay 5% interest on the debt – a figure which will rise 1% every six months until it goes public, or until it maxes out at 10%.
When Pandora went public in June 2011 it raised $234.9m.
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