The companies also agreed to launch a new joint venture record label, leveraging Warner Music's global resources and experience in supporting artists’ careers, and Tencent’s sway in mainland China’s music and entertainment market. The two companies plan to work together “to discover unique talent and content” and “showcase ‘new generation’ artists to the global music market,” said TC Pan, TME Group vp content cooperation, in a statement. Artists signed to the unnamed label will have the benefit of Tencent Music’s 622 million monthly users.
The joint label follows news last month that Universal Music Group imprint Geffen Records would form a joint label with HYBE -- formerly Big Hit Entertainment, the Korean label behind BTS -- to be based in Los Angeles. Although the partnerships are in different countries, the joint labels put Warner and Universal into Asian markets where they don’t have the same presence as they do in the Americas and Europe.
Tencent and Warner Music have yet to work out details around the new joint label, including its timing and the music genres it will focus on, a Warner Music spokesperson tells Billboard. “We have agreed to the JV, but it’s early days,” she says.
The new Warner-Tencent Music partnership continues a relationship that extends more than a decade, according to a press release. In one of their first deals together, in 2014, Warner entered an agreement with Tencent Holdings Ltd. -- a social media and gaming company now worth $781 billion -- to become the first major label to license its music to an internet provider on mainland China. Tencent Holdings spun off Tencent Music in December 2018.
Warner is the last of the three majors to form a joint venture with Tencent Music. UMG announced its plan to form a record label with the streaming company in 2020, while Sony Music created a new music brand, EDM-focused Liquid State, in 2018.
The two other major labels also have financial ties to the Chinese company. Warner and Sony Music purchased 68.1 million shares of Tencent Music for $200 million in October 2018. In return, Tencent Music purchased 10% of Warner’s shares on the day Warner started trading on the New York Stock Exchange on June 2, 2020. In December 2020, Tencent Music’s parent company, Tencent Holdings., acquired a 10% stake in Universal for €3 billion (about $3.7 billion).
“Our collaboration with TME has already delivered tremendous results for local and international artists, and now we’re opening up even more opportunities together,” said Simon Robson, president, international, recorded music for WMG, says in a statement. “Alongside our increased investment in artist & repertoire and marketing in Greater China, this renewed and expanded partnership means we can help make our artists impossible to ignore in one of the world’s fastest-expanding music markets.”
In a global recorded music market worth $20.2 billion, China’s was the world’s seven-largest market with revenues of $590.9 million in 2019, an annual 16% increase, according to the latest global figures released by the IFPI.
Additional reporting by Alexei Barrionuevo