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May 17, 2017

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Distributing deal is music to Tencent and UMG

Source: Agencies | 00:01 UTC+8 May 17, 2017 | Print Edition

TENCENT Holdings Ltd, China’s biggest gaming and social media firm, has reached a deal with US music firm Universal Music Group to distribute licensed content in China.

Tencent Music Entertainment Group, the Chinese firm’s music subsidiary, will also own exclusive rights to sub-license UMG’s content to other content providers in China, the two firms said in a statement yesterday.

“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,” said Michael Nash, UMG executive vice president of digital strategy.

Last year, Tencent and leading Chinese music-streaming company China Music Corp struck a deal to combine their music businesses under a new venture valued at US$6 billion.

In 2015, Germany’s BMG music rights company reached an agreement with Tencent rival Alibaba Group Holding Ltd to license 2.5 million copyrights in the Chinese market.

But despite the wide proliferation of streaming sites, China’s music industry is still in its infancy unlike Japan and South Korea, and subscription services are still less developed.

In 2015, the country said it was targeting a music industry output of US$47 billion by 2020. According to research firm IFIR, China’s music industry was worth US$170 million in 2015.

Tencent’s music unit, which has more than 600 million monthly active users and 15 million paying subscribers, oversees music services QQ Music, KuGou and Kuwo.

It will also work with UMG to build a recording studio “inspired” by the famous UMG Abbey Road studio in London, it said.

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