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News March 16, 2018

Merlin strikes groundbreaking deals with Chinese DSPs to bring indie music to 500 million consumers

Lars Brandle
Merlin strikes groundbreaking deals with Chinese DSPs to bring indie music to 500 million consumers

Merlin is taking the high road to China through a string of new licensing arrangements which could push independent music to a potential new audience of half a billion people.

In a groundbreaking set of deals, the independents’ digital rights agency has hooked-up with NetEase Cloud Music (NetEase), Xiami (Alibaba), and Tencent’s QQ Music, Kugou and Kuwo, the five leading digital music services which collectively represent about 90% of all digital music users in the world’s most populous market.

Merlin will now be “uniquely positioned to benefit from China’s growth in terms of relationships and infrastructure/foundations” says a rep for the organization, adding the indie community “will arguably take on a de facto leadership role in the China market.”

The non-exclusive partnerships, announced overnight, are uniquely structured and are incentivised to “build new infrastructures to promote future growth and provide accurate usage reporting, alongside substantial marketing opportunities for participating Merlin members.” And they represent Merlin’s first deals with Chinese DSPs.

In recent years, the major music companies all signed exclusive licensing agreements Tencent, a streaming titan that claims roughly twice as many paying customers as Spotify, with Tencent now obliged to license this content onto competitors.

The newly-unveiled pacts “change the licensing narrative, creating a new path for independent music businesses looking to enter the Chinese market,” explains a statement from Merlin.

“This is an exciting new chapter for Merlin,” says Charles Caldas, the Australian born-and-raised CEO of Merlin. “For the first time, repertoire from the world’s leading independent record labels will be legitimately available across China’s five most prominent music services. I am delighted that NetEase Cloud Music, Ali Music Group and Tencent Music Entertainment share Merlin’s confidence and aspirations to develop a new market narrative, and to lay the foundations and infrastructures of a more open, transparent and equitable future. Above all, Merlin members are now uniquely positioned to benefit from a set of truly transformative partnerships that will accelerate growth in one of the world’s most exciting and fast-evolving markets.”

Moving forward, music industry services company Outdustry will implement and manage the deals on behalf of Merlin from their Beijing and Shanghai premises.

The independent music community has been chipping away at China for years, though piracy and restrictive practices so often created barriers for doing business. Way back in 2006, AIM, the U.K.’s independent music companies’ trade association struck what was then heralded as a breakthrough with Chinese Web portal SINA to stream music promos and clips from its platform. Now, with the streaming sector striding ahead, the future for legitimate music consumption in China looks rosy.

Merlin’s membership spans more than 20,000 indie labels and distributors from 53 countries. The organization’s members boasts more than 12% of the digital recorded music market and last year Merlin announced it had distributed its billionth dollar (AUS$1.25 billion).

In other news, Merlin used the platform of SXSW to announce its Latin America earnings are booming. According to the network, 2017 Latin American earnings increased five-fold in three years, and, at current rates of growth, Merlin forecasts more than $60 million in revenues in 2018 across its audio streaming service partners in Latin America, with U.S.-based members representing around 50% of those earnings.

This article originally appeared on The Industry Observer, which is now part of The Music Network.


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