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Tencent confirms its exclusivity deals have been cancelled

By | Published on Thursday 2 September 2021

Tencent Music

Tencent Music has announced that it has now notified all the music companies with which it still had exclusivity deals to confirm that the exclusivity elements of those deals no longer apply. It means that those companies can now enter into direct deals with Tencent’s competitors, most notably NetEase Cloud Music.

The Tencent music business is, of course, the biggest player in the Chinese digital music market. That dominance was partly achieved by the series of exclusive licensing deals it negotiated with a number of domestic and international record companies, including all three majors.

Those deals meant that Tencent could not only use its licensing partners’ recordings on all three of its streaming services – QQ Music, Kugou Music and Kuwo Music – but it was also the exclusive distribution partner of that music within the Chinese market. Which meant that competing streaming services either had to go without that catalogue or they had to negotiate licensing deals with their main rival.

It was an unusual situation that even the Chinese regulator eventually decided was anti-competitive. And in July the country’s State Administration Of Market Regulation – which has been cracking down on anti-competitive conduct across China’s tech sector – announced a ruling forcing Tencent Music to bring to an end most of its exclusive licensing deals within a month.

Some of those arrangements had already come to an end, in part as a result of past pressure from SAMR, with both Sony Music and Universal Music having already entered into direct deals with NetEase, for example. But the latest regulator ruling means that Tencent won’t be able to enjoy any exclusivity benefits moving forward, except via narrower partnerships with specific independent artists.

Tencent confirmed that all its licensing partners have now been notified about the deal changes in a post on one of its official WeChat accounts earlier this week.