Tencent has managed to cash in on Chinese music-lovers' adoption of mobile technology and their willingness to buy music through streaming platforms.

Vivendi, a Paris-based mass media conglomerate controlled by French billionaire Vincent Bollore, announced that negotiations with Tencent were based on a corporate valuation of UMG of 33.6 billion dollars. The Chinese digital giant's potential 10 percent stake would ring in at 3.36 billion dollars.

Tencent did its homework first, entering into a licensing deal for UMG's content in 2017 to see how well it played in China.

"Vivendi is eager to explore enhanced cooperation which could help UMG capture growth opportunities offered by the digitization and the opening of new markets," Vivendi said in a statement, adding that the company hoped the Vivendi-Tencent relationship would help promote its artists in China.

"This deal enables Tencent to make money not just on the Western artists that they license on their platform in China, but on artists that are selling anywhere in the world. It's a smart kind of double-dipping," Cane said.

"Also, it gets them a seat at the big boy's table and a way to learn what sells globally," he added. "China is huge, and they're definitely invited to the party, but creatively, they're not in the DJ booth yet calling the playlist."

If all goes well, the deal also gives Tencent an option to buy an additional 10 percent of UMG within the next 12 months under the same terms -- a move that could pay off for both parties.

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