HYBE, the South Korea-based entertainment company behind BTS, has entered into a music distribution partnership with Tencent Music Entertainment (TME), a major player in the Chinese music streaming industry.
The partnership was reported by Seoul Economic Daily on Tuesday (May 23), a week after TME revealed in its first-quarter results that it established a “strategic collaboration” with HYBE. The news was also reported by Reuters.
The deal will see the catalog of HYBE artists including Seventeen and Tomorrow x Together available on Chinese streaming platforms QQ Music, Kugou and Kuwo.
The deal comes at a time when TME continues to grow its paying user base. In the first quarter, TME’s paying users reached 94.4 million, up 17.7% from a year ago.
In addition to existing music, the agreement between HYBE and TME also covers upcoming songs by HYBE artists. The specific terms of the contract were not disclosed by a HYBE official who confirmed to Seoul Economic Daily the signing of the agreement earlier this month.
This collaboration is significant for HYBE as it enables the company to accurately track sales and profits in the Chinese market. Without an official distribution contract, HYBE artists were unable to fully collect revenues from China, resulting in only 1% of HYBE’s overall sales in 2022 coming from the country, according to the report from Seoul Economic Daily.
In contrast, Japan accounted for 32.7% of HYBE’s sales in Asia, excluding Korea, in the first quarter.
The agreement will also allow HYBE to capitalize on the growing music market in China. In 2021, sales of Chinese record producers reached $1.06 billion, topping that of their South Korean counterparts, according to the Korean news outlet.
TME’s revenue from online music services in Q1 surged 33.8% YoY to 3.5 billion yuan (approx. USD $496 million).
Meanwhile, HYBE’s revenue jumped 44.1% YoY in Q1 to 410.6 billion South Korea won ($311 million), driven by strong album sales, which in turn was boosted by solo releases from BTS members Jimin and Suga, as well as robust album sales from Tomorrow x Together and Seventeen.
HYBE rival SM Entertainment has already been making strides in the Chinese market. In 2019, it signed a similar agreement with TME. That deal allowed SM artists such as SUPER JUNIOR, Girls’ Generation, SHINee, EXO, Red Velvet, KANGTA, BoA, TVXQ!, NCT and aespa to distribute their music on TME’s platforms in China.
Nearly a year ago, SM also struck a licensing deal with Chinese tech giant NetEase‘s subsidiary Cloud Village, which operates music streaming service NetEase Cloud Music. The agreement allowed Cloud Music to distribute SM’s music catalog in China.
The agreement with TME could also complement HYBE’s artificial intelligence moves as HYBE recently released a track with AI-powered vocals in six languages, which the agency says is the “first-ever multilingual track produced in Korean, English, Japanese, Chinese, Spanish and Vietnamese.”
TME has also been actively involved in producing songs using AI. Back in November, TME made waves by announcing the creation and release of over 1,000 tracks featuring vocals generated by AI, closely emulating the nuances of the human voice.
One of these AI-generated tracks has already surpassed 100 million streams, TME said at the time.
Music Business Worldwide