HONG KONG (Reuters) – Tencent Music Entertainment Group, the music arm of Tencent Holdings, on Wednesday announced with Sony Music Entertainment that they are forming a new music label, marking Tencent’s first move into having its own music label.
The new label, called Liquid State, will be dedicated to promoting electronic and dance music by showcasing Asian and international DJs in a genre that Tencent Music chief executive Cussion Pang said was getting increasingly popular in Asia.
Tencent, China’s largest gaming and social media company, competes against Alibaba Group and NetEase Inc. for China’s growing digital music market, where more and more young people are willing to pay for content.
Revenue from live broadcast, video streaming and music streaming contributed to a 18 percent rise in Tencent’s third-quarter social networks’ revenues to 15.28 billion yuan.
According to consultancy iResearch, digital music subscription income in China is expected to more than double from 2 billion yuan ($318 million) in 2016 to 4.7 billion yuan in 2018.
Tencent Music, which is expected to be spun off from its parent for an initial public offering this year, says it has 700 million monthly active users across its apps including QQ Music, Kugou Music and Kuwo Music.
The companies declined to comment on the amount of investment in Liquid State.
Tencent and Swedish music streaming company Spotify last month announced a stake swap agreement to gain a minority stake in each other in order to increase exposure in each other’s core markets.
($1 = 6.2835 Chinese yuan renminbi)
Reporting by Sijia Jiang; Editing by Alison Williams