Warner Music signs fresh China licensing deal with Tencent

Warner Music has agreed a fresh licensing agreement with Tencent to stream its music in China, as the record label behind Dua Lipa, Lizzo and Ed Sheeran looks to push further into the fast-growing music market.

Through the agreement Tencent secures the rights to recordings from thousands of artists, ensuring Warner’s songs remain on the dominant Chinese company’s online music platforms, including QQ Music, WeSing and some car audio systems in China.

The deal will help “make our artists impossible to ignore” in China, said Simon Robson, Warner Music’s president of international.

The multiyear agreement deepens the relationship between the Chinese tech giant and the world’s third-largest record label, giving Warner new ways to expand in China through a joint venture record label to develop artists together. 

Warner’s rivals, Universal Music and Sony Music, have also struck joint ventures with Tencent as large western music groups look to break acts in China. While China boasts nearly a fifth of the world’s population, it accounted for less than 3 per cent of the $20bn in global revenues made last year by record companies. Sales of CD and downloads have never amounted to much in China because of widespread piracy.

But it is growing quickly, making US music groups more optimistic about the potential to make money in the country, thanks to the rise of streaming services such as those owned by Tencent and Alibaba.

China’s recorded music market made $591m in 2019, up 16 per cent from a year earlier, with the vast majority of sales coming from streaming. 

Tencent has in recent years poured tens of billions of dollars into the US music market, acquiring a 20 per cent stake in Universal Music, a 9 per cent stake in Spotify and a 2 per cent stake in Warner Music. 

The company has been credited with helping to clamp down on rampant piracy in China, making the market more appealing to western music groups. Tencent Music, which owns China’s top-three streaming platforms QQ Music, KuGou and Kuwo, said in November it had 52m paying subscribers.

US music groups are ramping up investments in Asia, the Middle East and Africa as they look to capture new streaming customers in populous regions with smartphones.