Exclusive copyright agreements are officially banned in China

Monopoly is a huge issue in any market. It not only hinders the development of the market in the near future but will also create disastrous effects on the entire society in the long run. That’s why many great countries in the world have established their own Anti-monopoly law, best demonstrated in the recent Facebook monopoly lawsuit. In China, the same methods have also been applied but the scale is different. China’s government won’t target a single giant company but decide to change the laws from the basic to the root level with the official banning of exclusive copyright agreements. 

According to China’s copyright administration, as one of the methods applied to reach the goal of reducing and annihilating the monopoly status in China’s private sector, from now on, exclusive copyright agreements of digital music platforms are officially banned in China.

This decision has been given at a meeting in Beijing with influential digital music platforms, together with record and songwriting copyright firms.

According to a statement posted on WeChat by the National Copyright Administration of China (NCAC), the ruling that digital music platforms and record and songwriting copyright companies and online music platforms are not allowed to sign exclusive copyright agreements except in special circumstances is the latest effort made by Chinese regulators as they are trying to reduce China’s technology industry’s influence on the market through the monopolization act.

Not just recently but this goal has been slowly realized by China’s officials in a long time. The State Administration of Market Regulation (SAMR) has opened an antitrust investigation back in January 2021 and issued an administrative penalty in July 2021, ordering Tencent – a giant technology company, and its affiliates to take measures to restore the competitive state of the market. The measures applied can be the exclusive music copyrights releases within 30 days, etc.

The NCAC’s new order aims to regulate monopolistic behavior and unfair competition and protect consumer rights, and the overall development of the market and the country.

Overall, the enterprises both big and small in China and overseas should understand that the SAMR’s antitrust investigation and the NCAC’s new order doesn’t aim to destroy their efforts but to reflect China’s attitude to end the vicious competitions in the field of digital music and to construct a healthy ecosystem of digital music.

Expert opinions

Stating about this recent decision that aims to reduce the monopolization of big tech companies in the private sector in China, Mingming Yang, a partner at Wanhuida Intellectual Property in China said: “Digital music piracy used to be an issue that was widely criticized in China. To crack down the music pirates and to strengthen the protection of music copyrights, the National Copyright Administration of China (NCAC) issued a Notice on Ordering Online Music Service Providers to Stop Unauthorized Dissemination of Music on July 8, 2015, requiring all digital music service providers to take down all unauthorized dissemination of music works by July 31, 2015. According to reports, 16 service providers urgently took down more than 2.2 million unauthorized music works before the deadline.”

He adds: “However, the intense protection of music copyrights led to new issues beyond the NCAC’s expectation that the digital music platforms utilized the exclusive copyrights to carry out the competition and seized users by acquiring exclusive rights. To achieve exclusivity, the music platforms even acquired those companies that hold music copyrights. As revealed in the announcement of the State Administration of Market Regulation (SAMR) in 2021, Tencent and China Music Group had a relevant market share of around 30% and 40% respectively in 2016, while Tencent gained more than 80% of the exclusive music library resources by merging with its main competitors. It was also reported that losing copyright license of Jay Chou’s songs may have caused NetEase Cloud Music to lose 15% of its users.”

Discussing the future of China after this decision, Yang states that the cease of signing exclusive copyright agreement might result in lower revenue for creators on an individual platform in the short term, but will overall result in great development if you look at the whole picture: “The creators will have more cooperation channels, which may bring an increase of the overall exposure of music works and benefit creators in the long run. Moreover, some new musicians may have to agree to a buyout agreement with the platforms in the past and now they may have more options. Stopping signing exclusive agreement may also encourage veteran musicians to create new songs.”

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