Mind you, this approach is not unusual for China, nor is it unusual for Tencent -- the majority shareholder of Tencent Music. The latter company is reportedly in late-stage discussions to acquire 10–20% of Universal Music Group, which currently controls roughly a third of the world's recorded music market. Tencent Music already has a 7.5% stake in Spotify. When China gets criticized, Tencent has proven it is a willing and effective axe man.
The music industry has no choice but to work towards partnerships and relevancy in China, where more active support of copyright enforcement beginning in 2017 has enabled the country to grow to the seventh biggest music market, according to last year's annual IFPI rankings -- all the way from 14 in 2015. I've been told by senior execs whose careers depend on getting this right that they expect China to crack the top five in the next year or two and potentially be the No. 1 global market in five years. But if executives think that progress will be free from soul-searching deals with the devil, the Morey fiasco should be a massive wake-up call. What will Universal do when Lady Gaga decides to share her thoughts on human rights violations in China and Tencent plays hardball?
I took a dozen of my Bandier students to Beijing and Hong Kong in May (also to Seoul and Tokyo), and we sat with many of the most important and powerful people in the Chinese music businesses -- all of whom requested anonymity in exchange for honest insights, because, well... China. But two realities were eminently clear, regardless of who was doing the talking. The first reality is that Chinese businesses do what they are told when the government calls. An executive at one top company told us, "It isn't so much that the government officially bans anything. They talk to our government relations person and they say, 'We think it might be a good idea if...' and then we just know what to do."
There are no shortage of recent, high-profile examples. Just a couple of months ago, all broadcasts and streams of the Taiwanese Golden Melody Awards -- widely recognized as the Chinese Grammys -- were abruptly severed when a presenter voiced support for the Hong Kong protests. But it's not just political protests that get the kibosh. Last year, an official arm of the Chinese government issued a statement apparently banning hip-hop culture and people with tattoos from appearing on television. While my students and I were in China, several executives said that this was prompted by the television show Rap of China becoming too popular too quickly and pushing too many cultural boundaries.
And as long as the U.S. president's "great and unmatched wisdom" has us poised to go to trade war with China, the music business should keep what happened with K-pop in 2016 top of mind. China imposed sanctions against South Korea for the latter nation's support of a U.S. missile defense system (THAAD). And streaming services got the "We think it might be a good idea" call. I have a 19-year-old friend from Asia who was an avid consumer of K-pop and Korean shows on Chinese media platforms. (Again, this person's identity must remain anonymous for fear of retribution.) My young friend was not aware of THAAD at the time. What she was aware of is that she went to bed having just watched her favorite K-pop programs and when she and her friends woke up the next day, it was as if K-pop had never existed. The shows were gone. No explanation -- just disappeared.
We saw this draconian approach again this week when China banned South Park in response to an episode about Hollywood trying to please the Chinese government. China killed a lot more than Kenny -- all clips and episodes are gone from all streaming services and, if you search social media giant Weibo, you cannot find a comment about the show.
Since THAAD, no Korean K-pop star has performed in China. The big K-pop conglomerates increasingly back K-pop acts with Chinese performers in order to participate in that market. Want to know why some of these Chinese K-pop stars were recently in the news? For publicly backing China against Hong Kong protesters.
This is not unusual in the context of China, where the tour guide warned our students before visiting Tiananmen Square: "Do not talk about what happened at Tiananmen Square." Don't like it? Then consider the second reality that was made abundantly clear to me and to students by top Chinese executives. There may be growing interest and an acknowledgement of the opportunity represented in working with partners from the West. But if those Western partners don't want to play by China's rules, they should just stay home. You're a hip-hop star with lots of tattoos and profane lyrics? You aren't going to work in China. And if you want to speak out against any action the government has taken or is taking? No one in the Chinese music business wants that headache or association.
Keep in mind, part of the reason that China is such a giant, tempting market is that China's authoritarianism cuts both ways. Just two years ago, when China decided music services needed to support copyright, my friend in Asia had the exact same experience with pirated services she was using to stream K-pop as she did when her favorite TV shows disappeared amidst Korean sanctions. She just woke up one day and any trace of K-pop -- songs, artist profiles, anything -- had vanished from pirating sites. She is now a paying subscriber.
China giveth. But China also taketh away, and they do it with a rapid-fire, below-the-belt precision that will create new and certainly queasy realities for Western partners -- especially those representing artists with a social conscience or political bent. Universal Music Group may be getting the price they want per share from Tencent. But are they thinking through the true costs of the partnership? Time almost certainly will tell.
Bill Werde is the director of the Bandier undergraduate music industry program and the graduate Audio Arts program at the Newhouse School at Syracuse University. He is also the former editorial director of Billboard. Reach him on Twitter at @bwerde.