Tencent Snaps up Exclusive Music Distribution Rights From Universal, Last of Big Three Record Labels

Yicai

2017-05-19

(Yicai Global) May 19 -- The world’s largest record company, Universal Music Group (UMG), recently inked a cooperation deal with Tencent Music Entertainment Group (TME), an arm of China’s leading provider of internet value added services, Tencent Holdings Ltd. [HKG:0700], to license the latter to distribute its music online within the Chinese mainland. UMG is the last one of the “Big Three” record labels to partner up with the Chinese internet giant.

The other two, Warner Music Group and Sony Music, have already signed agreements with Tencent. As such, the Chinese firm now enjoys a virtual monopoly on the mainstream Western music market in China.

Per the latest agreement, Tencent’s music streaming and download platforms, QQ Music, KuGou and Kuwo, will distribute music from UMG's roster of record labels, as well as operating, marketing and developing UMG’s global artist and star resources. Both sides will collaborate on artist development, business model innovation and reinforcing copyright protection. Tencent Music Entertainment Group will also support UMG artists in music promotion activities.

“TME will also be UMG’s master distribution and licensing partner to exclusively sub-license UMG’s content to third-party music service providers in China,” said a joint statement by both companies. “Furthermore, to accelerate the development of Chinese recording artists and advance a vibrant local repertoire, UMG and TME will work together to design, build and develop Abbey Road Studios China, a state-of-the-art recording and mastering facility inspired by UMG’s iconic recording studio in London,” the statement added.

Tencent’s music service platforms currently have approximately 600 million monthly active users, but only less than three percent of them are paying subscribers, according to information provided by TME.

Follow Yicai Global on Facebook @yicaiglobal and Twitter @yicaichina.