Tencent-affiliated China Music Corp. (CMC), the company behind online music services Kugou and Kuwo, is planning a U.S. listing, possibly before the end of the year.
According to sources who spoke to the Wall Street Journal, the company has hired Goldman Sachs Group and Morgan Stanley for the IPO which could range between $300-600 million USD.
In January this year Kugou and Kuwo inked a syndication deal with with QQ Music, the leading music streaming service from Tencent. Under the deal the two CMC companies gained the rights to over one billion songs exclusively distributed by QQ Music within China.
Competition between China’s largest musics streaming services has intensified in the last year. Nudged on by government regulations, the industry’s major players have cracked down on piracy on their own platforms, leading to a spate of legal battles between top players. In late 2014 Tencent sued rival Netease over alleged infringements, leading Netease to immediately countersue for similar reasons. Last year Kugou was sued by both Alibaba and Netease, before dutifully countersuing both companies.
Kugou and Kuwo hold one of the largest stakes in the Chinese online streaming industry, due mostly to their impressive presence in the country’s underserved third and fourth-tier cities.
The Chinese market has historically struggled to monetize online music. An increase in proprietary restrictions and a growing number of consumers with disposable income could transform the industry however, and leading services are racing to stake their claim in the industry early.
Alibaba consolidated a collection of their own music investments last year under Alibaba Music Group, including music streaming services Xiami and Tiantian. In December last year Baidu announced the merger of Baidu Music with traditional music company Taihe Entertainment Group.