This is not the first time that the three major music labels have used music copyrights as capital for being a gangster.
Spotify, the world's largest music streaming platform, is called "Shengtian" or "Shengpotian" in Chinese.
This Swedish company has always been sucked by the three major music labels.
Although it has 70 million paying users, Shengpotian's financial situation is very poor, with losses of more than US$1 billion in the past two years.
Why is this happening?
Because Shengpotian spends almost 85% of its income on music copyrights, even if its annual revenue is as high as 5 billion US dollars, it is still losing money.
In addition, Shengpotian also gave up part of its equity to the three major record companies.
Internally, we have to accept the exploitation of these greedy people; externally, we have to compete with competitors like Apple Musical.
Life was quite difficult.
However, Zhang Yida will not sympathize with this company, because Soundpotian completed the share exchange with Penguin Music this month.
Soundpot was valued at US$16 billion and Penguin Music Group was valued at US$10 billion. The two parties exchanged several points of equity.
Penguin Music holds a 2.5% stake in Sound Potian, which holds a 9.1% stake in Penguin Music.
In addition, Li Jiacheng is also the earliest investor in Shengpotian, and its subsidiary Victoria Harbor Investment is the fifth largest shareholder of Shengpotian.
Zhang Yida was silent for a moment and asked a very important question: "What about the music copyright in mainland China?"
This issue is very critical. All the copyrights of the three major record companies in mainland China have been authorized to Penguin, and even the distribution rights have been given to the latter.
Competitors such as NetEase Cloud Music, Taihe Music, and Ali Music have to go to Penguin to get goods. These operations can only be said to be too outrageous.
In May, Universal Music opened its copyright bidding, and NetEase, Ali, and Qiandu's Taihe Music all joined the competition.
The licensing fee has been rising all the way, from the initial US$300 to 40 million to the most intense US$350 million in cash plus US$100 million in equity.
What makes Penguin stand out is not its price.
Instead, it united a European family consortium and the parent company of Universal Music, and France's Vivendi made a strategic investment invitation, so it became the winner in this competition.
When it comes to money, Ahri is not afraid of Penguin at all. But Penguin makes too many moves outside the game, so he has no choice but to admit defeat.
Zhonghe Group was not strong enough at that time and did not have its own music platform. Even if it joined in the competition, it would inevitably end in failure.
It’s still easy for these companies that make money from copyrights and patents. They make money while lying down, and the prices raised by customers are higher and higher. Zhang Yida sighed in his heart.
However, the momentum that the three major records have achieved today did not happen overnight.
Columbia Records, the predecessor of Sony Records, was founded in 1890, Universal Records was founded in 1912, and Warner Records was founded in 1930.
It took about a hundred years of accumulation to accumulate so many singers and music copyrights.
In the meantime, countless companies have changed owners, corporate crises, etc. have occurred.
Since the rise of the Internet, due to the expansion of online distribution and rampant piracy, the record industry has begun to have a difficult time. It can be called Wang Xiaoer's New Year, and every year is worse than the last.
It wasn't until music streaming began to take off that record companies' lives gradually improved.
Today, the revenue earned by the three major record labels through music streaming is almost twice that of physical records.
And EMI fell just before dawn.
In the 1920s, EMI entered China and signed contracts with former superstars such as Zhou Xuan, Hu Die, Nie Er, and Xian Xinghai.
It is also a record company with a long history, but due to the decline of the traditional record industry, it sold its copyright department to Sony and its record department to Universal in 2011.
Universal Music CEO Grange's face remained normal, he waved his hand and said: "We authorized the music copyright in mainland China to Penguin Music Group in May this year, and it will not expire until May 2020.
Therefore, you can only discuss this with Penguin Music Group."
Cooper, CEO of Warner Music, also said: "Warner Music gave the copyright to Penguin in mainland China as early as 2014. After it expired this year, the two parties also renewed the contract, which expired three years later."
Hirai Kazuo also nodded, "Sony signed a contract with Penguin last year, and it will not expire until 2019."
Zhang Yida let out a long sigh, this is going to be a hammer, the domestic music market will not be able to play in three years.
Seeing Zhang Yida's disappointment, Hirai Kazuo said with a smile: "Although there will be no copyright in mainland China in the short term, we still have global copyright outside of mainland China.
Mr. Zhang, the copyrights we signed with SoundPotian, Apple Music, and Amazon Music are not exclusive.
If you add Musical.ly, there will be absolutely no problem.”
"Okay, then let's talk about global copyrights except mainland China."
Zhang Yida had no choice but to do the next best thing and solve the copyright issue of Musical.ly first.
"The US$500 million quotation is too high and does not include the mainland copyright. It is not worth the price."
Cooper smiled and said: "Didn't we say that Plan B is just to become a shareholder.
We all know the valuation of the primary Internet market, and we can invest in shares based on the pre-money valuation of US$63.3 billion.
For Zhonghe Group, firstly, it can solve the copyright problem, and secondly, it can push up the valuation."
"Yes, this is a win-win solution!" Kazuo Hirai also interjected.
Zhang Yida shook his head, "It's impossible, unless the three major record companies extend the copyright authorization period to 10 years."
"10 years?"
Grange laughed angrily, "Three years is too long for us, let alone ten years."
"Mr. Zhang, Zuckerberg has talked to us several times. If Zhonghe Group is not willing to cooperate, there are many people who are willing to cooperate with us."
Cooper’s words point directly to the challenges that Zhonghe Group is about to face, because Facebook and other companies are all sharpening their focus on short videos.
"I think our conditions are already very relaxed. I don't understand what are you hesitating about, Mr. Zhang?"
Zhang Yida glanced at Kazuo Hirai and replied: "The current valuation of Zhonghe Group is without any water, but the sky-high price of US$500 million offered by the three major records is far from the actual value.
I also have a plan that you three can listen to."
The three of them wanted to refute Zhang Yida's words, but when they heard that there was a new plan, they didn't rush to speak. They planned to listen first and then talk.
Zhang Yida gestured with five fingers and said, "Five years, I want the copyright for five years, and the other three major record companies will each invest US$250 million in Zhonghe Group.
At the same time, music copyright authorization must also include streaming media platforms.”
"Zhonghe Group is going to launch its own music streaming media?" Hirai Kazuo has a keen sense of smell and immediately heard something different.
Cooper directly objected loudly: "This is impossible, absolutely impossible. Streaming media has always paid us copyright fees, and there has never been a precedent for us to pay."
Zhang Yida spread his hands and said, "Aren't precedents created by humans?"
"I want to hear Mr. Zhang's streaming plan."
Grange did not object, but asked about streaming media.
He was quite curious about Zhang Yida and thought he might as well listen to the plans of this young tycoon with a net worth of US$70 billion first.
Maybe there will be some surprise?
Zhang Yida nodded slightly in greeting to him, feeling that this foreigner was not simple.
Kazuo Hirai and Cooper also fell silent for the time being, pretending to be listening attentively.
"Zhonghe Group will launch a new music streaming product outside mainland China called Resso.
In addition to providing the same music payment service and lyrics function as Spotify and Apple Music, it will also add social gameplay to encourage users to share lyrics with each other, focusing on music social networking.
Musical.ly will also integrate functions with Resso.
When users browse Musical.ly's short videos and find the background music pleasant, they can jump to Resso to play the songs online or download them offline.
How effective Musical.ly is in promoting music, the three major records are also shareholders of Shengpotian, so we should have an intuitive feeling."
The CEOs of the three major records were all silent. They thought carefully that Musical.ly could indeed be used as a traffic portal, and then distribute the traffic to music, long videos, and even games.
They have also heard how Zhonghe Group's products are operated in mainland China, so they can just follow the example.
"Shengpotian already has 70 million paying users, and Apple Music also has 36 million paying users. Is this product called Resso sure to beat them?" Kazuo Ida asked.
"certainly!"
Zhang Yida explained confidently: "In the field of short videos, looking around the world, who is still our opponent?"
"It's an exaggeration. Before Facebook, YouTube, and Sarab launched their own short video products, Musical.ly was only one step ahead and had a first-mover advantage."
Zhang Yida looked at Cooper who was refuting him and said: "Being ahead is also leading. Think about the story of Facebook and Sarab.
Facebook has launched so many products of the same type, but has it surpassed Salad?
Sarabu is still very much alive and well, with a market value of more than 20 billion U.S. dollars."
Cooper still wanted to argue, but was stopped by Grange, who said: "OK, let's not discuss this first."
He turned to look at Zhang Yida, a pair of cloudy blue eyes flashed with shrewdness, "Mr. Zhang, we have no doubt about the strength of Zhonghe Group.
But to convince the three of us, we have to come up with something more powerful."
Zhang Yida secretly cursed the old fox in his heart and said with a smile on his face: "Resso has become a holding subsidiary of Zhonghe Group. We only need 55% of the shares, and the other 45% will be divided among the three major record companies.
Resso will be independently listed in the future, and the three major record labels, as shareholders, will also enjoy generous returns."
Grange chuckled and shook his head, "Mr. Zhang, we have heard enough entrepreneurial stories in Silicon Valley.
Resso doesn't even have a product now, so it's too far to talk about going on the market.
Don’t forget, there are three big mountains standing in front of you, Shengpotian, Apple, and Amazon, and each of them is not a friendly one."
"Then you don't have to worry, I will certainly have a way to deal with them."
Cooper sneered, "Young man, you must be responsible when you talk big."
"An Internet entrepreneur who has reached US$70 billion in assets and owned more than a dozen unicorn companies in four years is convincing enough."
Grange laughed and said, "Mr. Zhang, you are really not as reserved as ordinary Chinese people."
"If you have strength and confidence, why should you hide it?"
Grange pondered for a while and then asked: "What is the relationship between this Resso and Zhonghe Music?"
"It depends on the choices of the three major labels and Penguin after their cooperation expires."
Grange nodded, "Okay, I understand."
"Let me ask again, how many monthly active users does Zhonghe Group have in the short video field around the world?"
"900 million!"
Grange seemed to have discovered a new world and asked: "Is this true?"
"The data is all available and I will not cheat on it!
Among them, there are more than 500 million in mainland China and more than 300 million monthly active users overseas."
Grange, Kazuo Ida, and Cooper looked at each other and saw the shock in each other's eyes.
This should be the first company to reach hundreds of millions of active users in both the East and the West, which is a miracle!
And the number of active users has approached the billion mark, breaking through and marking the birth of a world-class technology company.
The three of them digested it for a while, and finally said they needed to think about it before making a reply.