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Warner and Tencent announce licensing deal


In the music industry’s latest effort to make money from China, the Warner Music Group has signed an extensive licensing deal with Tencent, one of China’s biggest Internet businesses, the companies announced on Thursday.


With its new deal, Warner — whose roster includes stars like Bruno Mars, the Red Hot Chili Peppers and Linkin Park — will grant licenses for Tencent to use its music through Tencent’s various outlets online. Those include the QQ Music streaming service but may also lead to innovative uses like Warner’s music in Tencent’s hugely popular gaming and mobile messaging platforms, the companies said.


China, which has a population of 1.36 billion, has some 632 million Internet users, according to one recent study. Tencent says that its mobile messaging platform has 820 million active users in China.


“In the end, China isn’t defined by the fact it’s currently an $80 million market,” said Stu Bergen, the president of international recorded music at Warner. “It’s defined by the potential of having over 800 million people — more than twice the size of the U.S.— using Tencent’s Messenger platform and creating a legitimate, long-term, rational music ecosystem that encourages artistry and entrepreneurial investment.”


The deal includes an unusual provision giving Tencent the right to distribute Warner’s catalog to “all legitimate local Chinese audio services,” the companies said, with the exception of mobile carriers, which are licensed by Warner Music China.


The licensing deal includes some revenue guarantees for Warner, which is controlled by the Russian-born billionaire Leonard Blavatnik. Other terms were not disclosed.


Tencent, based in Shenzhen, China, is considered a major power in mobile gaming and messaging. Its parent company, Tencent Holdings, had $9.9 billion in revenue in 2013, and is listed on the Hong Kong Stock Exchange with a market capitalization of $150 billion.


Warner’s deal with Tencent follows its purchase this year of Gold Typhoon, a Hong Kong-based label with popular acts throughout China, Hong Kong and Taiwan, including the singers Kay Tse, David Tao and Khalil Fong.



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