Most Popular Streaming threatens the iTunes model

In recent weeks, a new name titillated the markets: Tencent. According to the Wall Street Journal,
the IPO of the music subsidiary of the Chinese conglomerate should indeed occur in the coming
months. According to the US daily, several banks, including Goldman Sachs, Morgan Bank and Bank
of America Merrill Lynch were recently mandated to study the necessary documents and prepare for
this event.

However, one unknown remains on this file: the exact location of the IPO. Wall Street and the Hong Kong Stock Exchange would effectively compete for Tencent Music Entertainment (TME). At first glance, this choice of the place of listing will actually make sense, because it will reveal if the Chinese group is ready to leave its national market, where it already has some 700 million users (on its music platforms QQ Music and KuGou) and tackle the Silicon Valley giants. The recent exchange of shares
with Spotify allows in any case to think that the Chinese conglomerate wants to continue its development outside Asia.

Most Popular Streaming threatens the iTunes model

But before anything else, it is the valuation of this division that ignites the minds of analysts. In a few
months, that of TME has doubled, from $ 12.5 billion at the end of the year to 25 billion currently. If
everything goes as analysts are currently considering, this division of the Chinese conglomerate could
result in one of the most important IPOs in the history of new technologies.

Towards the end of the iTunes template

A few months after Spotify, another major player in streaming music is preparing to open its capital.
This news puts into perspective the general craze for this new way of consuming music. All analyzes
abound in the same direction: smartphone owners no longer want to see their memory saturated
with music. In just a few years, streaming has logically taken precedence over downloading, thus
condemning a certain death iTunes, this model developed by Apple in 2001, itself at the origin of the
decline of the CD.

streaming threatens the iTunes

If the Cupertino giant continues to deny for the moment any inclination to completely close its
download platform, his fate should be similar to that of the iPod, a gadget now largely abandoned by
the brand to the apple. In a recent BBC interview, Jimmy Lovine, director of Apple Music (the
American group’s streaming subsidiary), talked about the likelihood that online music could put an
end to the “iTunes adventure” given the steady decline of his income.

Competition explodes

Inspired by the success of Spotify, the competition is growing day by day. Amazon, Google, Apple or
the French Deezer and Tencent … the conquest of this market with huge potential is running. Every
day, there are indeed several hundred, or thousands of new members who adhere to one or the
other platform. They are even willing to pay for such services. Out of a total of 140 million, 75 million
Spotify users have finally switched to the paid subscription system.

Apple Music, late arrival on the market, already has 38 million and is even preparing to exceed its
Swedish competitor in the US market alone. This passage to the payor reflects the main issue for the
music division of Tencent, since only 10% of its 700 million users have agreed to pay a few yuan each

Upset copyright

In addition to disrupting the business model of companies active in the music sector, streaming also
affects writers and their publishers. “The internet has dropped the price of recorded music and, as a
result, the revenues of the authors and the labels that produce them”, confirmed recently in our
pages Nicolas Pont, head of the legal department at the Cooperative composers, authors and
publishers of music in Switzerland and Liechtenstein (Suisa).
Aware that there will be no turning back and that some of the costs have finally been brought
forward in the field of live music, Suisa nevertheless calls for an improvement in the transfer of value
between the powerful music industry. internet (thanks to advertising) and the authors of the works
listened to.

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