NetEase Cloud Music Reaches Licensing Deal with K-Pop Giant SM Entertainment

The partnership with SE Entertainment came after China expanded its antitrust efforts in the music industry, ordering Tencent to give up its exclusive music licensing rights last year.

BEIJING, June 10 (TMTPOST)— NetEase Cloud Music announced on Friday that it has inked a direct digital distribution relationship with SM Entertainment, allowing users of the NetEase unit to access rich content of the K-Pop giant.

Source: Visual China

Under the agreement, NetEase Cloud Music and SM Entertainment will have in-depth cooperation in music licensing, Korean music marketing and other areas. The NetEase unit said it now has licensed use of all the copyrighted music of SM artists such as KANTA, BoA, TVXQ!, Super Junior, Girls’ Generation, SHINee, EXO,Red Velvet,NCT and aespa.

NetEase CEO Ding Lei, also known as William Ding, expressed his optimism in expanding the music pool on the streaming platform that day. “Since our Cloud Village regained the license of SM Entertainment back, can other licensors be far behind?” Ding commented. He added his company would renew all the previous music licenses if given more time.

As a leading music streaming service provider in China, NetEase Cloud Music had over 1.18 million paid users in the first quarter of the year, compared with about 438,000 a year earlier. Its net revenue increased 38.6% year-over-year (YOY) to  RMB2.1 billion (US$326.1 million), and the gross profit margin jumped to 12.2% from the year-ago period’s 4.1%, primarily due to increased net revenues from its membership subscriptions and social entertainment services, as well as improved cost control.

The partnership with SE Entertainment came after China expanded its antitrust efforts in the music industry. Tencent Music Entertainment (TME), China’s No.1 online music service provider, terminated all exclusive copyright agreements in last August, a month after the State Administration for Market Regulation, China’s top market regulator, ordered Tencent to give up its exclusive music licensing rights and levied a  fine of RMB500,000 (US$77,141) for violations in its acquisition of China Music in 2016.

In the past year, NetEase Cloud Music has been actively expanding its broad portfolio, and has recently reached music copyright cooperation with a number of top record labels including Modern Sky, Emperor Entertainment Group and China Record Group.

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