INDIE LABELS JOIN CHINA GOLD RUSH

Independent labels have joined the race to legitimize China's music industry with global rights agency Merlin signing non-exclusive licensing deals for its members with the state’s biggest streaming services.

Aside from advance payments given to major labels in exchange for licenses, the market, which was previously plagued by piracy, has yet to generate serious revenue for the majority of rights holders. Is that set to change?

The Merlin deal—which will be serviced by market-leading music industry services company Outdustry—means NetEase Cloud Music (NetEase), Xiami (Alibaba), and Tencent’s QQ Music, Kugou and Kuwo will now be able to legitimately host music from a wealth of independent labels worldwide. The deal is unique in the fact it’s not exclusive to one service; Universal, Sony and Warner have all signed exclusively with Tencent.

Each partnership is uniquely structured, with incentives to build new infrastructures to promote future growth and provide accurate usage reporting, alongside substantial marketing opportunities for participating Merlin members.

The audience across those three companies and five streaming services is estimated to be half a billion people, which reps 90% of all digital music users in China. High-fidelity repertoire will be offered to paying service subscribers, with low-fidelity versions offered to users of free-to-access ad-supported tiers.

“For the first time, repertoire from the world’s leading independent record labels will be legitimately available across China’s five most prominent music services,” said Merlin CEO Charles Caldas.

“I am delighted that NetEase Cloud Music, Ali Music Group and Tencent Music Entertainment share Merlin’s confidence and aspirations to develop a new market narrative, and to lay the foundations and infrastructures of a more open, transparent and equitable future.

“Above all, Merlin members are now uniquely positioned to benefit from a set of truly transformative partnerships that will accelerate growth in one of the world’s most exciting and fast-evolving markets.”