Vietnam’s VNG Corp, owner of music streaming service Zing MP3, files for IPO in the US

Vietnamese internet startup VNG Corp, the parent company of music streaming platform Zing MP3, has filed for initial public offering in the US.

As noted by Reuters, the move positions VNG, Vietnam’s first unicorn, to become the first technology firm from the country to be publicly listed in the US.

Reuters also reports that VNG first entered into a preliminary agreement in 2017 with the NASDAQ to explore an IPO. Citing sources, Reuters reports that VNG ‘aims to raise $150 million’ in the listing.

Founded in 2004, VNG developed Zing MP3 in 2007. In the second quarter of 2023, the app had 28.7 million monthly active users and it included songs from “Sony and Universal’s music libraries”, according to VNG’s registration statement filed with the US Securities and Exchange Commission.

“Zing MP3 delivers a differentiated and premium user experience by leveraging our vast, licensed music library,” VNG said.

Market research firm Statista predicts revenue from music streaming in the Vietnam market to increase by USD $9.6 million between 2023 and 2027, reaching $46.6 million by 2027.

In a bid to provide users with an “uninterrupted” online music entertainment experience, VNG in its IPO filing said it limited the amount and duration of advertisements on the platform. 

“While we believe this approach will enable us to expand our current user base and strengthen our monetization potential in the long-term, advertisers may view it as being overly accommodating to users and decrease their willingness to advertise on Zing MP3,” VNG acknowledged.

VNG said significant portions of its music offerings on the Zing MP3 platform are licensed from music content partners, including music publishers and labels, such as Sony and Universal, as well as direct licensing from Vietnamese artists.

However, the company acknowledged that: “We may not have obtained all requisite copyright licenses with respect to a portion of the content on our Zing MP3 platform.”

It added: “To secure the rights to provide music content on the internet or for our users to download or stream music from our platform, or to provide other related online services such as podcasts, we must obtain licenses from the appropriate copyright owners, including for music publishing and musical recording rights.”

VNG was forthcoming about potential risks tied to copyright infringement allegations, acknowledging that it might lack comprehensive licenses for the copyrights underpinning certain music content available on Zing MP3.

“Therefore we have been, and may continue to be, subject to assertions by third parties of infringement or other violations by us of their copyright in connection with such content, particularly with respect to older music,” the company warned.

Addressing this further, the company stated in the filing: “We are subject to risks related to litigation, including intellectual property claims, consumer protection actions and regulatory disputes, and have been sued in the United States District Court for the Central District of California for alleged copyright infringement of musical recordings.”

It added: “We are subject to legal proceedings in the District Court for the Central District of California brought by Lang Van, Inc., a producer and distributor of Vietnamese music and entertainment, alleging copyright infringement of its musical recordings through our Zing MP3 application. Although the case was dismissed by the lower court for lack of jurisdiction, a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed the lower court’s dismissal in July 2022 for lack of jurisdiction and remanded for further proceedings.

“We were unsuccessful in petitioning the United States Court of Appeals for the Ninth Circuit for panel rehearing or rehearing en banc in connection with the exercise of jurisdiction. We were also unsuccessful in petitioning the United States Supreme Court to review the United States Court of Appeals for the Ninth Circuit’s decision, and are preparing to continue the legal proceedings in the District Court for the Central District of California. We continue to dispute the allegations of wrongdoing and intend to continue vigorously defending ourselves.”

Meanwhile, apart from Zing MP3, VNG also operates a mobile game publishing subsidiary, its Zalo messaging application with 75 million monthly active users, and ZaloPay, a mobile payment application.

Citigroup Global Markets, Morgan Stanley, UBS Securities and BofA Securities will serve as underwriters of the IPO. The company has yet to determine how much it plans to raise from the deal.

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