TikTok Parent Prepares Streaming Service After Tencent Music Penalty

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Earlier this month, Tencent Music (NYSE: TME) canceled its exclusive music deals to comply with a Chinese government “antitrust” penalty. Now TikTok’s parent company ByteDance is reportedly gearing up to launch a competing music streaming platform.

Beijing-based ByteDance reportedly intends to launch the music streaming app – tentatively called Feilo and internally called Luna – in China later this year, according to Google’s translation of a report in mandarin of 36Kr (NASDAQ: KRKR).

The concise report also notes that ByteDance’s streaming service will use a proven algorithm from the start in an effort to reach consumers, while the initially mentioned “Tencent’s exclusive copyright invalidation may bring new opportunities.” as ByteDance seeks to “grow its national music business.”

Despite the reach of TikTok (known as Douyin in China) and the government order that ended most of Tencent Music’s exclusive deals, it is not clear whether ByteDance’s music streaming service will be able to develop a significant market presence from the start.

Tencent Music – which operates the streaming services QQ Music, Kugou Music and Kuwo Music – had 66 million paying users in the second quarter of 2021, as well as 623 million monthly active mobile online music (MAU) users. Additionally, the order to forgo exclusive music contracts left certain agreements with independent artists and labels in place, including an “30-day exclusive release period for new songs.”

Especially as the Chinese music market continues to grow, it is possible that the temporary availability of some new tracks only on Tencent Music services will remain a major selling point for fans. It’s also worth noting that NetEase’s (NASDAQ: NTES) streaming service, based in Hangzhou, Cloud Village, put aside plans for a billion dollar IPO in Hong Kong last month, at amid the Chinese government’s crackdown on tech companies. ByteDance, on the other hand, is reportedly considering moving ahead with its IPO plans next year.

On the sanctions front, Alibaba was fined $ 2.8 billion in “antitrust” in April, while internet and AI-focused Baidu (NASDAQ: BIDU) was fined relatively minor of around $ 77,000 in March “for making acquisitions without notifying the authorities.”

A joint venture formerly backed by ByteDance – and not the company itself – was also forced to pay $ 77,000 for the alleged violation. Amid this blatant lack of external control for ByteDance proper, a “Chinese government fund” a month ago bought “a small stake in a national operating unit of ByteDance,” according to Nikkei Asia, in addition to taking a position on the board of directors of the operational unit.

TikTok – which has reportedly surpassed YouTube in terms of average viewing time per user in the US and UK – continues to face high-profile security and privacy criticism. U.S. lawmakers have launched an investigation into the app’s extensive biometric data collections, for example, while the Irish Data Protection Commission recently unveiled a separate investigation into the app’s data transfer policies.


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