Tencent Music Entertainment Group has signed a licensing agreement with Universal Music Group to distribute music from the U.S. company's roster of record labels and recording stars on its Chinese music streaming platforms QQ Music, KuGou and Kuwo.
Under the terms of the multi-year agreement, Tencent Music, a unit of Chinese Internet giant Tencent Holdings Ltd., will also be Universal's master distribution and licensing partner with the right to exclusively sub-license its content to third-party music service providers in China.
Tencent Music is the largest music platform in China, providing over 17 million songs to 600 million monthly active users. It has a roughly 50% market share of China's online music industry via its three major mobile apps QQ Music, KiGou and Kuwo, according to iiMedia Research. As an advocate of authorized music, Tencent Music has more than 15 million paying subscribers.
"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," said Sir Lucian Grainge, chairman and CEO of Universal. "Given recent developments in technology and the commercial environment there, now is the right time for an innovative strategic partnership with a leading Chinese company like Tencent that can meaningfully accelerate the development of the country's entire music ecosystem."
Both parties will work together to find new ways to develop artists and to innovate business models. The pair will also work together to design, build and develop Abbey Road Studios China, a state-of-the-art recording and mastering facility inspired by Universal's iconic recording studio in London.
Tencent Music is the result of a merger in 2016 between Tencent's QQ Music and music streaming company China Music Corporation, the operator behind the Kugou and Kuwo music apps. It is reportedly seeking an initial public offering at an estimated valuation of as much as US$10 billion.
"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," said Martin Lau, president of Tencent.