Tencent and NetEase to share exclusive music licenses

13/02/2018

Streaming music platforms Tencent Music and NetEase Music inked a deal to share 99% of their exclusively held music licenses, creating one of the largest music libraries in China. The statement was made by China’s National Copyright Administration.

Licensing fees have raised considerably as of late after authorities cracked down on illegal music sharing in 2015. A national campaign to regulate the media industry has spawned a war between companies fighting for exclusive rights to songs.

Tencent Holdings Ltd. social media app WeChat played host to a statement by the National Copyright Administration last Friday that said the two companies would form a long-term music licensing agreement, and also make the music library available for lease by other companies in the streaming media ecosystem.

The rewards of the deal for NetEase, the smaller company of the two, seem apparent. The online gaming platform will gain access to media from at least six different labels previously controlled by Tencent.

But A NetEase insider told Caixin that the deal is not all roses for the company. “After the license swap, the experience for existing NetEase users has the potential to improve, but the handful of exclusive licenses NetEase already held will now also be available to Tencent after the swap, meaning NetEase will have lower bargaining power during future negotiations with record companies.” Neither company disclosed the dollar amount of the deal.

Despite trade-offs typical of any major deal, the agreement marks the end of an ongoing feud between Tencent and NetEase who sued each other twice for copyright infringement in the past three years. Tencent also sued KuGou in 2015 after the Beijing media crackdown, which is held by Alibaba Group Holding Ltd.

It’s rumored that Tencent Music is planning an IPO later this year. The platform boasts 600 million users, a figure that dwarfs international competitor Spotify, which clocked in at 140 million users at the end of 2017.

 

 

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