One of the quirks of the Chinese digital music market, from a western perspective, is the exclusive licensing deals that tech-giant Tencent has struck with major labels.
Its deals with global label groups like Universal Music and Sony Music mean that the dominant player in the Chinese music-streaming market gets to sub-license those catalogues to rivals.
For example, Tencent has just struck a new agreement with Alibaba, according to the Financial Times.
“The deal, announced Tuesday morning by Tencent, gives Alibaba the right to stream music from some of Tencent’s exclusive deals with international music labels such as Sony and Universal Music, in exchange for reciprocal rights to Alibaba’s catalogue of Chinese and Japanese classics,” it reported.
This is a significant deal for both sides. Alibaba gets access to some of the western catalogue that it would otherwise have missed out on. Meanwhile, Tencent bolsters its own catalogue of local music.
At the Midem conference in June, Tencent Music Entertainment Group boss Andy Ng said that only 4% of its catalogue was Chinese music. “However, over 80% of our users are only listening to this 4% of Chinese catalogue!” he added.
With Tencent keen to grow its number of paying subscribers from 15 million now to 25 million by 2019, a bigger catalogue of Chinese music should be a helpful addition.
The deal with Alibaba also comes ahead of an anticipated IPO for Tencent’s music division. Earlier this month, Bloomberg claimed that the company is targeting a $10bn valuation for the group, including plans to sell some of its shares to labels.