International

'A Black Hole for Revenues': Outdustry Partners With Reservoir in Chinese Publishing Deal

2 Chainz
Courtesy of Def Jam

2 Chainz

Deal involves non-exclusive licenses with all major Chinese DSPs and sub-publishing of Reservoir in China.

The growth of streaming, both local and international repertoire, has boosted revenues in China’s recorded music market the past few years. But publishing in China has remained a thorny challenge for songwriters seeking to generate income.

Deals in the country of 1.4 billion people have traditionally involved publishers taking up-front advances to license their rights to a single streaming platform, while not being able to reach users -- or tap revenues -- from others. And tracking metadata to determine who should be paid from streaming has proven difficult.

Outdustry, a 15-person music industry services company founded in 2006, is taking a step this week towards changing that. The company on Monday (June 29) launched Outdustry Songs, an indie music publisher specializing in the Chinese market. The new publishing arm has lined up non-exclusive direct licenses with all the major streaming platforms in China, including Tencent Music Entertainment’s Kugou, QQ Music and Kuwo; Netease Cloud Music; and Alibaba’s Xiami.

“For a lot of people China is a black hole for revenues, even though it is one of the most revenue-generating markets in the world,” says Alex Taggart, head of international at Outdustry. “These direct relationships we have with streaming platforms are going to be really helpful in realizing some of this revenue that is otherwise not making its way back to creators.”

As part of the deal announced Monday, Outdustry has partnered with New York-based independent publisher Reservoir Media to be the sub-publisher in China for Reservoir’s roster of writers and international catalog that spans 126,000 copyrights and 20,000 master recordings. Reservoir’s copyrights include world No. 1s from such from artists as Camila Cabello and Bruno Mars, as well as songwriting catalogs of Young Thug, Migos and 2 Chainz.

The goal is to be “licensed across as many platforms as possible,” says Hussain "Spek" Yoosuf, executive vp for international and emerging markets at Reservoir. “That’s ultimately where a market needs to get if it’s going to go from an immature market to a mature market.”

By all accounts, China’s music market, 90% of which is streaming, is growing rapidly. The country recorded $533.7 million in streaming revenues in 2019, up 16% from 2018, good for a number four ranking among global streaming markets, according to IFPI.

Outdustry’s China-based A&R team, led by China GM and head of A&R Marcus Rowland, has helped to deliver some of the Chinese pop industry’s biggest hits over the past few years, giving the new Outdustry Songs a catalog of local repertoire of some 40 songs performed by stars such as Chris Lee and Bibi Zhou. Outdustry writers have generated hit singles with three of the top 10 most-streamed artists in China -- KUN, Chris Lee and Rocket Girls 101 -- including the number one song in China this month, KUN’s “Lover,” which topped all major DSP streaming charts.

Like BMG and others, Outdustry has been linking up Chinese artists with American, European and even South Korean songwriters and producers. “Lover,” for example, was co-written by three Danish songwriters.

The publishing deal with Reservoir follows the recorded music partnership Outdustry forged in 2018 with Merlin, the global rights agency. In that case, Merlin entered into partnerships covering five of China’s digital music services, including NetEase, Ali Music Group’s Xiami, and the same three services operated by conglomerate Tencent as this week’s deal.

While China doesn’t rank as a top-10 market for Reservoir, the publisher expects that to change soon. “My view is certainly that over the course of the next five years, we’re going to start seeing a number of emerging markets start to move to the front of the pack, and start to become a lot bigger markets in terms of revenue, importance and priority,” Yoosuf says.