China's Tencent, NetEase Sign Licensing Deal for 1.5 Million Songs

Pony Ma, founder of Tencent

Chinese Internet heavyweights are scrambling to respond to a recent government order banning the rampant streaming of unlicensed music.

QQ Music, the digital music platform of Chinese Internet giant Tencent Holdings, unveiled a deal late on Tuesday with rival streaming service NetEase that will boost the availability of legal and licensed online music to listeners across China.

Under the agreement, Tencent has sublicensed some 1.5 million digital songs to NetEase, and the two partners will explore opportunities to collaborate on digital album sales. 

QQ Music's licensed library currently contains over 15 million authorized songs from companies including Sony Music, Warner Music Group and YG Entertainment. Tencent signed landmark licensing deals with Sony and Warner in late 2014. 

The deal is the first major partnership announced since China introduced strict new anti-piracy rules for the streaming music sector last summer. At the beginning of July, China's National Copyright Administration ordered the country's fast-growing streaming companies to remove all unlicensed music from their services by the end of the month, or face "serious punishment."

For years, Chinese listeners had been accustomed to getting music for free from myriad online channels and apps, much of it not legally licensed. 

Tencent is said to have anticipated the crackdown on pirated content, and thus began acquiring licensed music from the major labels last year. The new sublicensing agreement provides the company with an additional revenue stream aside from subscription fees and direct sales via its in-house services.