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Tencent Music Entertainment terminates all exclusive copyright agreements in antitrust fallout

Written by Jiaxing Li Published on     2 mins read

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Major record labels are eyeing license agreements with platforms like Kauishou and NetEase’s music arm.

Tencent Music Entertainment Group (TME) has scrapped all of its exclusive music licensing agreements after Chinese regulators issued demands to bring these deals to an end, the company said on Tuesday.

Tencent posted an announcement on one of its official WeChat accounts, saying that it has notified all upstream copyright holders that their contracts will no longer be valid after August 23. These record labels can now license their music to other streaming platforms like Kuaishou and NetEase, and TME will pursue nonexclusive collaborations.

Last month, the State Administration for Market Regulation, or SAMR, ordered TME to terminate all deals within 30 days that locked copyrighted music in exclusive agreements with the company. The SAMR then imposed a fine of RMB 500,000 (USD 77,360), the maximum amount for this type of anticompetitive behavior. The market watchdog said Tencent and its music arm own over 80% of music library resources in China, giving the company power to block new entrants and create an unfair business environment.

TME was established in 2016 after Tencent merged with China Music Corp to form a new digital music business. The SAMR said Tencent has a tendency of creating monopolies by merging its business units with competitors to occupy a large market share.

Tencent’s announcement was the top trending topic on Weibo and generated 550 million views as of Wednesday. Some users commented that Tencent should also make its exclusive video content available to other platforms.

The company has been one of many targets in Beijing’s intensifying crackdown on tech giants. Its business lines like video games, private tutoring, and cloud computing are all being reshaped by new regulations.

Nonetheless, top technopreneurs in China are offering their gratitude to the government as their business landscape changes. The CEO of NetEase, a major competitor of Tencent and TME, said on Tuesday that his company is “very thankful to the regulators” and looking forward to more antitrust regulations that will curb abnormalities in the market. “This is a very positive signal for the industry,” NetEase CEO William Ding said, adding that the regulations were long-awaited by users and enterprises.

Some investors believe that the antitrust case against Tencent could revive the IPO process of NetEase’s music arm, Cloud Village, in Hong Kong. Earlier this month, Cloud Village’s IPO application was suspended for undisclosed reasons.

Also on Tuesday, China’s second largest short video platform, Kuaishou, struck a licensing deal with Warner Music Group, giving the company rights to stream Warner’s music on its overseas platforms, Kwai and Snack Video.

Kuaishou has been ramping up its overseas operations to compete with TikTok. Chinese media outlet LatePost reported that the company has earmarked USD 1 billion for user acquisition beyond China.

Read this: Young Chinese gamers are now limited to 3 hours of weekly playtime

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