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Universal Music Group Inks Major Licensing Deal With Tencent in China

Universal, the world’s largest music company, today announced a huge licensing agreement that will see its music distributed in China by Tencent Music Entertainment Group on the streaming platforms, QQ Music, KuGou and Kuwo.

Tencent will also sub-license UMG’s content to third-party music service providers in the country, and promote its music on Tencent online properties and other media channels.

The companies will also work together to build Abbey Road Studios China, a recording and mastering facility inspired by the recording studio in London made world-famous by The Beatles and owned by UMG.

Tencent, which claims 15 million paying subscribers, is one of the largest music platforms in the region and represents a stabilizing force in the Chinese music market, which was plagued by piracy for decades. According to a release, the company provides over 17 million songs to 600 million active users every month. A report issued last month by the International Federation of the Phonographic Industry listed China as the world’s 12th-largest market for recorded music with $202.2 million in 2016, a 20% jump over the previous year. Its services also include Weixin/ WeChat for communications, Qzone for social networking, QQ Game Platform, QQ.com and Tencent News and Tencent Video for video content.

The company, which struck a licensing deal with Warner Music Group in 2014 and Sony Music two years later, now handles the music from all three major labels in China.

In making the announcement, UMG chairman/CEO Lucian Grainge (pictured) said, “We’re looking forward to working with Tencent as we develop local Chinese artists and repertoire, as well as global stars, in this dynamic and expanding music market. 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.”

Tencent president Martin Lau said, “We are honored to be UMG’s master distribution and licensing partner in China. With extensive user reach and deep industry knowledge, TME is the partner of choice for the music industry to engage with music lovers.  Our partnership with the world’s leading music labels will further demonstrate our commitment to cultivating a vibrant ecosystem that benefits music lovers, artists and songwriters.”

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.”

Cussion Pang, CEO of TME, said, “Leveraging UMG’s resources and our distribution capabilities, we can provide a rich and personalized experience to hundreds of millions of music lovers in China.  This strategic agreement will 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.”

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