Shares in Chinese music streaming leader Tencent Music Entertainment rose 21.6% Monday morning (Jan. 19) on news it will acquire Lazy Audio, a Chinese-owned service with spoken word content such as audiobooks and podcasts, for RMB 2.7 billion ($417 million). The transaction is expected to close in the first half of 2021.
At Monday’s high point of $27.00, Tencent Music’s market capitalization was $45.4 billion. That’s well behind Spotify’s $61 billion but still among the most valuable publicly traded media tech companies in the world. The stock ended Tuesday at $26.86, another high closing price in a 88.4% upswing since Oct. 13. Tencent owns China’s most popular music streaming apps — QQ Music, Kogou Music and Kuwu Music — and the karaoke app WeSing. It was spun off from Chinese tech giant Tencent Corp. in December 2018, raising $1.1 billion in an IPO on the New York Stock Exchange.
Over the past year and a half Spotify has led the streaming industry’s investment in podcasts and other audio content, using the formats to grow beyond music and become a broader audio service. Lazy Audio, available at lrts.me, offers a selection of fiction and non-fiction audiobooks, podcasts and news shows. Tencent Music had already upped its audiobook offerings by reaching a partnership with China Literature in March 2020 to add its long-form audio catalog. (China Literature is a shareholder in Lazy Audio along with the company’s management team and other financial investors.) Now, Lazy Audio will allow Tencent Music to “cater to the increasingly nuanced needs of our customers,” Tencent Music CEO Cussion Pang said in a statement.
Streaming companies are spending big money to chase growth and market share. Lazy Audio’s $417 million price tag alone exceeds the $400 million to $500 million that Spotify earmarked for acquisitions of content producers and podcasting platforms in 2019. Since 2020, Spotify has acquired podcaster production houses Gimlet, The Ringer and Parcast, and bought Anchor, a podcast creation tool for smartphones, and Megaphone, a podcast advertising platform. Not to be outdone, in December Amazon purchased Wondery, producer of such podcasts as Death of a Starlet, Over My Dead Body and Business Wars. Apple Music, Pandora and iHeartRadio are also betting that podcasts are a basic requirement for a music streaming service in the 2020s.