Sour note: Tencent Music, record labels and licensing in China

MLex Market Insight

News

4.9 • 9 Ratings

🗓️ 16 September 2019

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

The content-licensing practices of Tencent Music – far and away China’s biggest music download service – have struck a discordant note with the country’s antitrust regulator, which is looking into the company’s exclusive licensing arrangements amid concerns that they are locking competitors out of the action in the world’s 7th-largest music market. The investigation of Tencent Music – the first such Chinese probe targeting a local tech giant, and the first involving non-price vertical agreements – has roped in the world’s biggest music labels, Universal Music, Sony Music Entertainment and Warner Music, alongside such corporate heavyweights as Apple, Alibaba, Baidu, NetEase and Huawei. It’s more than an attempt to rein in the dominant player in the market; it’s set to be a game changer for the entire industry. MLex Asia Managing Editor David Plott sat down with Chief China Correspondent Yonnex Li to explore the issues, and where the probe goes next.

Transcript

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0:00.0	Hello, I'm David Plott, Emlex's managing editor for Asia, coming to you today from our Bureau in Hong Kong.
0:18.4	If you're a newcomer to Emlex's podcast, a very warm welcome to you.
0:23.1	And if you've tuned into our podcast before, welcome back.
0:27.1	Today we're in China, looking at the story of a music industry giant that has hit the wrong
0:32.4	note with the country's antitrust regulator. We're talking about Chinese internet giant Tencent.
0:39.3	Tencent Music Entertainment, to be precise.
0:43.3	Tencent music has found itself under investigation
0:46.3	by the state administration for market regulation
0:49.3	because of its exclusive licensing agreements
0:52.3	with some of the world's biggest music labels.
0:56.0	They're players such as Universal Music, Sona Music Entertainment, and Warner Music.
1:02.0	The investigation is an antitrust probe, but with a difference.
1:07.0	Instead of focusing on dominance abuses, which might have been expected in a case involving
1:13.0	an online platform, the regular is looking at non-price vertical agreements.
1:19.7	It's the first probe of its kind in China.
1:23.1	It's also the first probe to target a domestic tech giant. It's set to reshape the way songs and
1:29.7	albums are distributed in one of the world's biggest music markets. Here with me now to talk about
1:36.7	this groundbreaking investigation is Emlex chief China correspondent Yonix Lee. Welcome with this
1:44.0	podcast, Yonix. Thanks, David.
1:47.1	Yonix, you reported exclusively last month on the investigation of Tencent Music. Your story was
1:54.0	picked up by Chinese media outlets and was mentioned more than 140 million social media posts. Walk us through what the story is all
2:03.3	about and why it generated so much interest in China. And tell us why it might be of interest
	...

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