Universal expands in China with major licensing deal and Abbey Road Studios
Universal Music Group (UMG) has made a huge move into the lucrative Chinese market with a licensing partnership with leading Chinese digital music platform Tencent Music Entertainment Group (TME).
Founded in Shenzhen in 1998, TME provides 17 million songs to 600 million monthly active users and 15 million paying subscribers in China.
While the Chinese music market is still hampered by a huge level of piracy, TME has been a strong supporter of licenced music.
TME already has similar deals in place with Sony and Warner, which means it now has repertoire from all three major labels in the domestic Chinese market.
Universal previously licensed services directly in China.
The UMG/TME deal, according to both parties, will grow the Chinese music market, and provide a great amount of multi-platform distribution and marketing opportunities across China.
It will also see the two develop Abbey Road Studios China to create a world class recording studio inspired by – and linked to – the iconic landmark in London, and accelerate the development of China-based talent.
This could well be a game-changer in the building up and the global marketing of new Chinese music acts.
The multi-year agreement sees Universal artists distributed on TME’s streaming platforms QQ Music, KuGou and Kuwo.
TME will be UMG’s master distribution and licensing partner to exclusively sub-license UMG’s content to third-party music service providers in China.
Both will “work together to find new ways to develop artists, to innovate business models and to reinforce a robust copyright protection environment.”
China is the 12th biggest music market in the world. Last year its recorded music sector generated US$202.2 million, up 20.3% on 2015.
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What is exciting the Western labels is that an astounding 96% of sales were digital.
Michael Nash, Executive Vice President of Digital Strategy at UMG, commented, “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, fuelling 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.”
TME CEO Cussion Pang says that the wide range of UMG acts would appeal to “hundreds of millions of music lovers in China”.
This would, in turn, “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.”
There have been rumours that TME wanted to buy a small stake in UMG. But no public announcement was made of an equity exchange when news of the deal was announced overnight.
Sir Lucian Grainge, Chairman and CEO of UMG noted, “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.”
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