Tencent’s acquisition of Ocean Music has made it the market leader. Do you still have any fun with Netease Cloud Music？

On July 14th, according to The Wall Street Journal, Tencent has agreed to acquire Ocean Music. Tencent will acquire the controlling stake in Ocean Music by cash and asset injection, and the specific amount has not been announced. QQ music is mainly injected by means of asset injection, and Ocean Music will acquire the assets of QQ music. The deal values Ocean at about $2.7 billion, and Tencent Holdings will increase its stake in Ocean Music from 16% to about 60%.

The interface news asked Tencent and Ocean Music respectively, and neither side responded.

In the public view, Ocean Music Group is a slightly unfamiliar company. This music group was founded in April 2014. It owns music assets such as Cool Dog Music, Cool Me Music and Rainbow Music, as well as digital music copyright service companies such as Ocean Music and Source Music.

In March 2015, Xie Guomin, the founder of Ocean Music and former vice president of Sina, conducted the merger of Kuwo Music and Kugou Music, and with the accumulated user base of "Two Kus", it became the first echelon of online music in one fell swoop.

According to the data of Speedway Research, an online music market research institution, in the first quarter of 2016, before Tencent became a shareholder, Cool Dog Music and Cool Me Music accounted for more than 30% of the market share, while QQ Music accounted for 18.91%. Now, after Tencent buys Ocean, Tencent will occupy half of this market and become the leading enterprise in the online music market in China.

According to the Wall Street Journal, after the transaction is completed, Tencent’s music business will be valued at 6 billion US dollars, and the business will be operated as a subsidiary of Tencent Holdings.

According to market research firm iiMedia Research, in the first quarter of 2016, China’s mobile music service market had 449 million users, exceeding the population of the United States, which also made China the largest mobile music service market in the world.

In May 2016, it was reported that Ocean Music had been trying to go public in the United States, raising between 300 million and 600 million dollars, which was operated by Goldman Sachs Group and Morgan Stanley. However, because the US stock market is not optimistic about online music, the IPO of Ocean Music was once rumored to be stranded, and the global capital market is wary of music technology companies that are prone to losses.

Take Spotify as an example, as the representative of the global music streaming media platform, Spotify, which has been developing for nearly 10 years, is still on the financing road. Spotify has raised funds from 26 investment institutions. In March this year, Spotify just completed the ninth financing of $1 billion convertible bonds, and made several strict guarantees related to IPO to investors.

From the perspective of the global Internet music industry, only Pandora has successfully listed, and its share price has dropped from $70 at the peak to $13 today. When it went public in 2011, it raised $234 million. Last year, the IPO of the French music company Deezer was also postponed.

Analysts said that after Tencent’s shareholding, the merged company may be IPO； in the future; Compared with the original ocean music, the possibility of success will be higher; However, how to make money from streaming music will be the key factor to convince the capital side.

According to international federation of the phonographic industry (IFPI) data, China’s record music industry grew by 63.8% in 2015, making it the second largest contributor to growth after Japan. Last year, the output value of China’s record industry reached US$ 169 million, ranking 14th in the world. It can be said that the overall progress of the domestic music market has also provided imaginative growth space for China Internet music companies.

The competition layout of the giants in the music field has also intensified. On July 9, 2015, the National Copyright Administration issued the Notice on Ordering Online Music Service Providers to Stop Unauthorized Dissemination of Music (known as the "most restrictive order in history"), requiring online music service providers to stop unauthorized dissemination of music works, and ordering all music service providers to offline all unauthorized music works before July 31. The "most restrictive order" not only ended the "free era" of online music, but also made China’s online music industry gradually move towards the track of legalization, systematization and diversification, and the investment scale of major platforms in copyright was also increasing.

Ali Mutual Entertainment has shrimp and Tiantian Music, and Netease Cloud Music, a subsidiary of Netease, has also gained many fans. In Q1 2016, after Ali Music ranked QQ Music with 12.08% market share, Netease Cloud Music accounted for 3%.

The competition for copyright is also continuing, and obtaining the "sole broadcasting right" is an important way to circle the powder. According to the report "Insight into Online Music Market in China in 2015", among many music platforms, QQ music has taken the lead in breaking through ten million orders of magnitude in copyright, with obvious copyright advantages. What is certain is that after the completion of the shareholding, the advantages of Tencent Music will be further expanded.

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