Universal Music Group (UMG) introduced Monday that it has signed multi-year direct licensing agreements in China with each Tencent Music Leisure (TME) and its competitor NetEase Cloud Music, breaking the previous precedent of signing solely with the previous.
The transfer indicators a shake-up within the main labels’ strategy to the Chinese language market. Till now, UMG, Warner Music and Sony Music Leisure had every signed a single, unique licensing deal in China with TME, which then sub-licensed its catalogs out to its rivals, together with NetEase.
The apply provoked an antitrust investigation of Tencent by Chinese language authorities final yr. These kind of offers left rival Chinese language corporations sub-licensing music from TME usually paying as a lot as double or triple what they might if that they had licensed from the main labels instantly, in response to Bloomberg.
The brand new NetEase deal “marks an excellent step ahead for China’s music trade as a complete,” mentioned NetEase CEO William Ding. “We’re assured that the partnership will convey wider alternative not just for music lovers and artists, but in addition for the trade.”
The agency will now instantly distribute UMG’s full roster of music, “rising the scope of premium choices and experiences” accessible to its subscribers, it mentioned.
In the meantime, the extension of UMG’s settlement with Tencent will see TME proceed to distribute UMG’s content material on its platforms, which embody QQ Music, Kugou Music and Kuwo Music, in addition to its extra money-making on-line karaoke and stay streaming companies.
Adam Granite, UMG’s London-based market growth EVP, mentioned he was “happy to increase and evolve” the corporate’s current Tencent deal.
The 2 corporations additionally introduced a brand new, nonetheless unnamed three way partnership music label that can concentrate on cultivating Chinese language artists for native audiences.
TC Pan, TME’s group vp of content material cooperation, mentioned the 2 firms hoped to create “a world pioneering music label” that appeals to a youthful demographic.
Tencent now has non-controlling stakes in a lot of the main Western labels. In March, a consortium led by TME accomplished the acquisition of a 10% stake in UMG value about $33.6 billion. It nonetheless has the choice to buy one other 10% in 2021. In June, Tencent additionally acquired a $200 million stake in Warner Music Group.
On Monday, TME beat analyst estimates for quarterly income, because of a broader content material library that has introduced in a surge of paid subscriptions. Income rose 17.5% year-on-year to $981 million, beating estimates of $984 million, in response to Reuters.
TME mentioned its variety of customers paying for music rose 52% to 47.1 million in Q2, whereas its on-line music subscription revenues grew 65% year-on-year to $186 million.