BEIJING — Chinese competition regulators are considering a crackdown on Tencent Music Entertainment to bring the streaming giant down to size, but the company may already be losing its edge in the country’s rapidly developing music market.
Since its formation in 2016, TME has built its strength by relying on exclusive distribution deals with record labels and artists like Mandopop star Jay Chou to muscle out competition for the streaming services it owns. Lately, though, those arrangements have been unraveling even without the direct interference of regulators. In the past two years, Universal Music Group (UMG), Sony Music and Warner Music Group (WMG) have decided to diversify their distribution and leverage intensifying competition for better deals offered by companies like NetEase Cloud Music.
If regulators act, TME could essentially be penalized for dominating the industry, despite the key role it played in shifting China’s music business away from piracy and … Read the rest