NetEase Cloud Music (NTES.Q) and Merlin Extend Partnership in China

NetEase Cloud Music (NTES.Q) and Merlin, the independent’s digital music licensing partner, have announced the extension of their strategic partnership in China to include a wide range of cooperation.

“Deepening our direct relationship with Merlin marks another important step in our strategy to bring high-quality music with style, character and vitality to our ever-growing user community…The expansive and diverse music of Merlin member labels span the global divide and increase the rich music experience we offer, which brings us closer to this goal,” said Ding Bo, Vice President of NetEase Cloud Music.

NetEase is a leading interactive music streaming service provider in China with more than 800 million users. The Company is dedicated to providing users with an elevated experience by offering personalized recommendations, promoting user interactions and creating a strong social community. Moreover, the platform has been recognized as the most popular entertainment app among China’s Generation Z community. NetEase’s streaming service is comparable to Spotify, one of the world’s largest music streaming platforms. With a rich and proven ability in copyright management and operating capabilities for international artists, NetEase has become the go-to platform for both international music lovers and artists in China.

“We’re always excited to work with partners who are eager to educate our members on how to use their platform, how to engage and build fanbases, and ultimately drive better activations around artists. NetEase has been a fantastic partner on these opportunities…Independent music is a real focus across the world, including in China, and Merlin is thrilled to renew its partnership with NetEase Cloud Music and bring the largest number of independent labels, distributors and other rights-holders and their artists’ repertoire to the platform,” said Jeremy Sirota, CEO of Merlin.

NetEase and Merlin’s original agreement was established in 2018. However, NetEase’s recently announced extended partnership with Merlin will include a multi-year licensing deal which will permit access to additional marketing and promotional opportunities for Merlin members. Merlin accounts for more than 15% of the global digital music market with its members representing tens of thousands of labels and even more artists from around the world. With this in mind, the music copyright scene is a downright nightmare to navigate. However, Merlin is able to pair its vast portfolio of digital music with NetEase’s reliability, making for a mutually beneficial deal.

According to Grand View Research, the global music streaming market size was valued at USD 20.9 billion in 2019 and is expected to expand at a compound annual growth rate of 17.8% from 2020 to 2027. With this in mind, China-based Tencent Music Entertainment group reported that the year-over-year revenue from online music subscriptions increased by 70% in the first quarter of 2020. Additionally, the number of online users experienced a year-over-year increase of almost 50%, totaling 42.7 million. The music streaming industry is doing exceptionally well and we can see this same growth reflected in NetEase’s stock performance in the last year.