Tencent Music relinquishes exclusive control of copyrighted material
Tencent Music said it has complied with a directive and has relinquished most of their exclusive music streaming licensing rights, as the market watchdog moves to prevent the leading digital players from leveraging their dominant market position.
Music streaming copyright owners are free to authorize other online streaming service providers to access their content, Tencent said in a notice on Tuesday after being given a one-month period to terminate exclusive copyright agreements by the State Administration for Market Regulation in late July.
Tencent Music added that they will continue to collaborate with copyright owners and contribute to the music industry through partnership with stakeholders.
The arrangement excludes copyright agreements with independent music producers, which shall be no longer than three years. New releases can enjoy exclusive rights for no longer than 30 days.
As a part of the SAMR's anti-trust review regarding monopolistic behavior and unfair competition practices among digital firms, Tencent Music was found to be leveraging its dominant market position following Tencent Music's acquisition of the majority stake in China Music Group in 2016.
The SAMR investigation found the firm to be holding more than 80 percent of exclusive music library resources, which gave it leverage over upstream copyright parties and restrictions over new entrants. Tencent Music was assessed a penalty of 500,000 yuan (US$77,228).
The company is prohibited from making high pre-authorization patent payments or forcing copyright owners to give it preferential conditions, and is also required to submit annual updates on its business rectification initiatives to the SAMR within the next three years.
Tencent Music Group on Monday reported a 41 percent increase in the number of paid subscribers to 66.2 million for the second quarter, and total revenue rose by 15.5 percent to 8.01 billion yuan.
According to the state-backed China Internet Network Information Center (CNNIC), the number of users in China's online music entertainment market has reached 658.3 million in 2020, and CIC Consultancy estimates the user base will reach 792.8 million by 2025.
The domestic research firm Fast Data said Tencent's QQ Music and Kugou Music have a combined active monthly user base of more than 388 million, much higher than NetEase Cloud Music's 89 million.
NetEase Chief Executive Officer William Ding welcomed the new moves and the new regulatory movement that he feels will ultimately benefit the industry.
"We're pleased to see positive and uplifting signs for the whole industry brought by the recent antitrust policy," Ding said in a conference call after its quarterly earnings release late on Tuesday.
"We hope the relinquishing of exclusivity will truly be put into effect instead of just pretending to follow orders. We have ample capital support, and we hope to extend partnership with all major music labels and copyright owners, and we seek an open mindset and cooperation to cultivate healthy industry development," he added when asked about potential investment initiatives in the music copyright and content sector.
