Tencent Music Entertainment Group (TME) has terminated all of its exclusive music licensing agreements after Chinese regulators issued requests to terminate those agreements, the company announced on Tuesday.
Tencent posted an announcement on one of its official WeChat accounts, saying it had notified all upstream copyright holders that their contracts would 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 non-exclusive collaborations.
Last month, the State Administration for Market Regulation, or SAMR, ordered TME to terminate all agreements within 30 days that locked copyrighted music into exclusive deals with the society. The SAMR then imposed a fine of 500,000 RMB (77,360 USD), the maximum amount for this type of anti-competitive behavior. The market watchdog said Tencent and its music arm own more than 80% of music library resources in China, giving the company the power to block new entrants and create an unfair business environment. .
TME was formed in 2016 after Tencent merged with China Music Corp to form a new digital music business. SAMR said Tencent tends to create monopolies by merging its business units with competitors to gain a large market share.
Tencent’s announcement was the top trending topic on Weibo and generated 550 million views on Wednesday. Some users pointed out that Tencent should also make its exclusive video content available to other platforms.
The company has been one of many targets of Beijing’s growing crackdown on tech giants. Its lines of business like video games, tutoring, and cloud computing are all being reshaped by new regulations.
Nevertheless, the top technopreneurs in China offer their gratitude to the government as their business landscape changes. The CEO of NetEase, a major competitor to Tencent and TME, said Tuesday that his company is “very grateful to regulators” and looks forward to more antitrust regulations that will limit anomalies in the market. “This is a very positive signal for the industry,” said NetEase CEO William Ding, adding that the regulations are long overdue by users and businesses.
Some investors believe the antitrust case against Tencent could jump-start the IPO process for NetEase’s music arm, Cloud Village, in Hong Kong. Earlier this month, Cloud Village’s IPO application was put on hold for undisclosed reasons.
Also on Tuesday, China’s second-largest short video platform, Kuaishou, entered into a licensing agreement with Warner Music Group, giving the company the right to stream Warner’s music on its overseas platforms, Kwai and Snack Video.
Kuaishou has stepped up overseas operations to compete with TikTok. Chinese media Late shipment reported that the company has earmarked $1 billion for user acquisition beyond China.
Read it: Young Chinese players are now limited to 3 hours of weekly game time