Merlin, the London-based agency that represents 20,000 independent labels and makes up 12 per cent of the world’s digital music catalogue, signed deals with streaming services owned by Tencent, Alibaba and NetEase.
The body that represents some of the leading independent record labels has struck licensing deals with five of China’s biggest streaming services, the latest sign that the country is becoming an increasingly important one for western artists.
The company expects the deals will give acts such as Wu Tang Clan and Diplo access to 500m consumers, or 90 per cent of digital music listeners in China.
Charles Caldas, Merlin’s chief executive, said digital streaming has given independent record labels a new-found global reach, after distribution in the CD era favoured the few record label behemoths with the cash to press, promote and ship them to faraway countries.
“Music is moving around the world in ways that we’ve never experienced before,” he said. “A lot more value is going to come from markets that we were never really extracting value from in the physical [CD] world.”
The copyright deals come after the other three big suppliers of the world’s music — Universal Music, Sony Music and Warner Music — signed exclusive agreements with Tencent, which then sub-licensed their catalogues to other platforms in China.
Merlin had signed separate deals with Alibaba’s Xiami, Tencent’s QQ Music, KuGou and Kuwo, and NetEase’s Cloud Music.
Tencent had a 78 per cent share of China’s streaming market revenues last year, and has used its clout and cash to outbid rivals for distribution agreements with western labels. The tech group, which is reportedly looking to take its music arm public this year, has looked to capture content rights to bolster its prospects with investors.
China’s National Copyright Administration called for an end to exclusive deals in September, aiming to encourage more competition in the market.
Mathew Daniel, vice-president at NetEase Cloud Music, called the deal “a significant step forward for music licensing in China”.
Merlin on Thursday also announced that its Latin American earnings have grown fivefold between 2015 and 2017, as streaming on YouTube and Spotify boomed in countries such as Brazil. The region’s biggest economy is now the sixth largest moneymaker for independent record labels, ahead of France and Australia.
Independent labels are now hoping to find similar luck in China, where paid digital music sales were projected to rise 59 per cent last year, to $455m.
China presents a compelling opportunity, said Mr Caldas, noting that electronic dance music festivals have popped up across the country which “would not have been happening five years ago, before streaming”.
Source: ft.com
