China Prohibits All Music Platforms From Inking Exclusive Copyright Deals Following Tencent Music Crackdown

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Beijing, China. Photo Credit: zhang kaiyv

About four months after Tencent Music (NYSE: TME) officially canceled its exclusive-music deals to comply with an order from the Chinese government, a copyright-oversight agency has barred all domestic streaming platforms from signing the agreements.

This latest development in the Chinese government’s long-running tech-sector “antitrust” crackdown was issued specifically by the National Copyright Administration of China (NCAC), during a recent meeting in Beijing, according to a report from the Taipei Times.

Higher-ups from Chinese streaming services and the broader music industry assembled for the gathering in question, per a statement that the NCAC posted on Tencent’s WeChat app. And while the precise penalties for streaming services’ inking exclusive copyright deals remain unclear, the government body emphasized that it will prohibit the contracts except in “special circumstances” moving forward.

As mentioned, the prohibition of exclusive streaming-service deals in China follows a number of other “antitrust” initiatives, including compelling Tencent Music to nix most of the agreements.

The company operates domestically popular platforms such as QQ Music, Kugou, and Kuwo, and its stock price, despite growing 2.43 percent during today’s trading hours, is down nearly 68 percent from early January of 2021. (Of course, Tencent itself owns one-fifth of Universal Music Group as well as a small piece of Warner Music Group.)

Though it looks like the NCAC crackdown will affect all streaming services in China – the government entity didn’t disclose the companies whose execs appeared at the meeting – logic suggests that the move will benefit TikTok’s ByteDance parent should it decide to roll out a music platform of its own.

Reports last year indicated that the conglomerate would enter the streaming space by 2021’s conclusion, as TikTok (known as Douyin in China) remains extremely popular. ByteDance hasn’t yet addressed the rumor, but it seems likely that the reported streaming offering, avoiding exclusive-music competition, would benefit considerably from the prominence of Douyin.

More broadly, the quick-growing Chinese music market’s shift away from streaming exclusives arrives some years after service-specific tracks were shelved in Europe and the U.S. This pivot, however, was driven by the Big Three record labels – and Universal Music in particular – which argued that the practice damaged the paid-subscriber marketplace.

But workarounds of sorts (besides podcasts) have surfaced in the interim, with Apple Music having closed out 2021 by launching “a series of 24 exclusive DJ mixes.” And Amazon Music, capitalizing upon the shipping and processing capabilities of its parent company, debuted an artist-merch store last March and followed the effort with a live show from Ed Sheeran in late November.