NetEase Inc (網易) struck a deal to license songs from Universal Music Group for the first time, a move that would further Beijing’s effort to dismantle Tencent Holdings Ltd’s (騰訊) commanding lead in Chinese music streaming.
The world’s biggest music company said that it has agreed to license tunes to both Tencent Music Entertainment Group (騰訊音樂娛樂) and closest rival NetEase, ending an exclusive arrangement with China’s dominant musicstreaming platform.
The move gives NetEase new ammunition in a fight against Tencent.
Photo: Reuters
The Chinese antitrust authorities had investigated Tencent’s dealings with the world’s three biggest record labels, but the probe was suspended this year, people familiar with the matter said in February.
The pact with NetEase lets subscribers get Vivendi SA-controlled Universal Music’s full roster and the two would work on ways to let customers interact with artists.
Tencent Music’s separate deal with Universal Music extends a current licensing agreement by multiple years and the duo would establish a joint music label in China, a separate statement said, without disclosing financial terms.
Universal Music, Sony Music Entertainment and Warner Music Group Corp have sold exclusive rights to a major part of their music catalogs to Tencent Music, which is backed by Sony and Warner. Tencent Music then sublicenses that content to smaller platforms such as those operated by NetEase, Alibaba Group Holding Ltd (阿里巴巴) and Xiaomi Corp (小米).
Competing platforms like NetEase have to “pay two to three times the reasonable cost” for content under such arrangements, NetEase chief executive officer William Ding (丁磊) told an earnings conference call in February.
Tencent Music’s revenue grew 17.5 percent in the second quarter to 6.93 billion yuan (US$996.75 million), beating analysts’ estimates.
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