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Tencent, Sony Strike China Music Distribution Deal

Shenzhen-based Tencent will also promote Sony Music's performers on its online platforms.

Christian Anwander/GQ

Chinese Internet giant Tencent Holdings has struck the latest in a string of music distribution deals, this time with Sony Music Entertainment, as it teams up with labels to try to develop China’s paid-for music market and curb piracy.

The partnership, announced on Tuesday, will give Tencent the right to distribute Sony Corp’s music catalog online in China, including artists like Daft Punk, Bob Dylan and Yo-Yo Ma. Tencent, which operates China’s biggest messaging app WeChat, did not disclose financial terms of the deal.

Shenzhen-based Tencent will also promote Sony Music’s performers on its online platforms, including social network QQ. According to Tencent, QQ has more than 820 million monthly active users.

Last month, Tencent signed a similar music distribution partnership with Warner Music Group. Earlier this month it also agreed to become the exclusive online distributor for South Korea’s YG Entertainment, which manages a stable of K-pop artists including “Gangnam Style” rapper Psy.

With a market capitalization of about $135 billion, Tencent is quickly becoming an entertainment empire in China. Its video games, the firm’s main cash cow, are among China’s most popular and Tencent mobile games regularly top download charts.

At the same time, the company is investing heavily in content for its online video site, with over 470 foreign TV seasons available in November and a China streaming deal with U.S. network HBO.

“The market dynamics are changing and we’re seeing the music market in general is very vibrant,” said Dowson Tong, president of Tencent’s social network group, in a telephone interview on Tuesday. “We just need to look at creative ways to develop the market.”

Tong sees Tencent making money not only from its music subscription service but also by taking its growing catalog of music and artists from its streaming services into China’s popular karaoke parlors. Holding online concerts for users could be another revenue stream.

The string of entertainment deals also reflects how attitudes toward China are changing. Domestic companies are striving to change the image of China as a hotbed of piracy and copyright infringement, a drive that will be supported by official deals with big Western music companies.

“China can easily become within a relatively short period of time one of the world’s largest music markets,” said Edgar Berger, Chief Executive of Sony Music Entertainment International, in a statement.

(Editing by Kenneth Maxwell)

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