Universal Music Group has signed a licensing deal with China’s internet giant Tencent Music Entertainment Group in an attempt to expand the Chinese music market.
Under the “multi-year” agreement, Tencent will distribute music from UMG’s roster on its streaming platforms QQ Music, KuGou and Kuwo. 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. According to Universal’s statement, both parties will “work together to find new ways to develop artists, to innovate business models and to reinforce a robust copyright protection environment. In addition, TME will support UMG artists to promote their music, leveraging Tencent online properties and other media channels”.
Tencent is one of China’s biggest music platforms and says it offers over 17 million songs to 600 million monthly active users. Crucially, in China’s still piracy-plagued market, it is a strong supporter of fully-licensed music.
Last month’s IFPI global music report highlighted the enormous potential of developing markets such as China and India to boost the streaming business, despite previously contributing very little as physical markets.
UMG and Tencent will also 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”.
Sir Lucian Grainge, chairman/CEO of Universal Music Group said: “We’re looking forward to working with Tencent as we develop local Chinese artists and repertoire, as well as global stars, in this dynamic and expanding music market. With more than 80 years of history in China, UMG has been engaged in the unique evolution of the country’s music business and I’m looking forward to working with Tencent to bring exciting new artists and services to music fans across China. Given recent developments in technology and the commercial environment there, now is the right time for an innovative strategic partnership with a leading Chinese company like Tencent that can meaningfully accelerate the development of the country’s entire music ecosystem and, in turn, inspire growth in creative and commercial opportunities for all artists.”
Martin Lau, president of Tencent, said: “We are honoured to be UMG’s master distribution and licensing partner in China. With extensive user reach and deep industry knowledge, TME is the partner of choice for the music industry to engage with music lovers. Our partnership with the world’s leading music labels will further demonstrate our commitment to cultivating a vibrant ecosystem that benefits music lovers, artists and songwriters.”
Michael Nash, EVP of digital strategy at UMG, added: “The digital opportunity in China’s music market is truly extraordinary, with over half a billion people enabled with smart phones. Our expansive new partnership with Tencent will enable UMG to fully address this opportunity, especially with the growing success of QQ Music, KuGou and Kuwo. Chinese consumers are clearly embracing licensed services, fueling an expansion of China’s music economy, increasing the importance of this market internationally and accelerating the development of Chinese artists for the enrichment of China’s culture and the enjoyment of audiences globally.”
Cussion Pang, CEO of TME, said: “Leveraging UMG’s resources and our distribution capabilities, we can provide a rich and personalized experience to hundreds of millions of music lovers in China. This strategic agreement will further strengthen our efforts in copyright protection and shift the industry towards the paid subscription model. In addition, with the establishment of Abbey Road Studios China, we will work together with UMG to help local artists produce top-quality recordings for distribution in China and across the world.”
Lang Lang, the globally celebrated piano virtuoso signed to UMG’s Deutsche Grammophon also gave a statement, saying: “I’m thrilled that UMG and Tencent are working together to create more ways for Chinese audiences to access music. There are so many incredibly talented musicians and songwriters working in China today and this new partnership will provide greater exposure for Chinese musical culture and heritage here and around the world. In particular, I am excited about the creation of Abbey Road Studios China, a true investment in the next generation of great Chinese artists."