The music streaming wars in China are getting hotter.
NetEase Cloud Music (NCM) has reportedly just lost a copyright lawsuit against rival Tencent Music Entertainment (TME) in the region.
According to reports from the likes of Caixin Global, NetEase has been ordered by a court in Shenzhen, China to pay Tencent Music 850,000 yuan ($121,487) as a result.
The lawsuit was brought against NCM for infringing the copyrights of 178 songs by prominent Taiwanese singer Jay Chou, due to a lapsed contract with TME.
Chou is one of China’s biggest pop stars, having sold over 30 million records since his debut in 2000. Citing court documents, the South China Morning Post reported today (November 11) that in 2015, NetEase licensed 808 Jay Chou songs for a year from Tencent for 8.7 million yuan ($1.2 million).
In 2017 NetEase was again charged 18m yuan ($2.5m) to sub-license the same 808 songs for one more year.
TME then sued NetEase last year for continuing to host Chou’s songs after the sublicense lapsed.
Chou is a particularly important artist for Tencent Music Entertainment, as he’s at the center of a strategy to ‘window’ some premium content behind a paywall on the firm’s platforms in China.
Tencent Music Entertainment Group is currently under investigation by China’s antitrust authority after the country’s State Administration of Market Regulation green-lit the move in January this year.
TME’s deals with Warner Music, Universal Music Group and Sony Music Entertainment are under review.
Universal, Sony and Warner reportedly sold “exclusive rights to a major chunk of their music catalogues” to the music platform, which then “sub-licenses that content to smaller rivals”.
TME is majority-owned by Chinese media/entertainment giant Tencent Holdings, and trades on the New York Stock Exchange.
Earlier this year, when TME posted its financial results for the three months to end of March, the company’s CEO, Cussion Pang and Chief Strategy Officer Tony Yip said that the company was placing premium music content behind a paywall on its services to encourage free users to upgrade to paid-for accounts.
Jay Chou is one of the artists being ‘windowed’ by TME in this manner.
The windowing strategy’s effectiveness was underlined in September when QQ Music crashed from a high volume of free users trying to upgrade to the paid version in order to access Jay Chou’s single, Won’t Cry.
Due diligence on Tencent Holdings’ bid to acquire 10%-20% of Universal Music Group is due to be finalized in the coming weeks according to an investor update issued by UMG parent Vivendi last month.Music Business Worldwide