Sony Music Entertainment doesn’t often shout about new deals with streaming companies in the press.
That means we often have to search for confirmation of its licensing agreement renewals with DSPs in company filings.
Today (May 13), we have learned that Sony Music has renewed a multi-year deal with Tencent Music Entertainment, the biggest owner of music streaming platforms in China.
That news was revealed within the Q1 financial filing published this morning by TME, which operates platforms including QQ Music, Kugou Music, Kuwo Music, and WeSing.
Sony Music Entertainment previously inked a multi-year deal with the company back in 2021.
China is the world’s fifth-largest recorded music market according to the IFPI.
Sony Music rival Universal Music Group announced its own multi-year licensing renewal with Tencent Music in January 2024. UMG’s partnership with TME included music streaming in Dolby Atmos and high-definition (HD) formats.
“We strengthened our partnerships with record labels to further enrich our classic music library. Notably, we renewed multiyear contracts with Sony Music Entertainment, bringing 360 reality audio sound privileges to SVIP members.”
Cussion Pang, TME
Interestingly, according to Tencent Music’s latest earnings announcement, the Sony Music renewal “introduc[es] the 360 Reality Audio sound privilege” for members of TME’s pricier super premium (SVIP) tier.
360 Reality Audio is an immersive experience using Sony Corporation‘s “object-based 360 Spatial Sound technology.”
The format, launched in January 2019, aims to make listeners feel as if they are immersed in sound from all directions.
According to Sony, “Each sound – whether it’s vocals, instruments, sound effects, or voices – can be placed in a 360 spherical sound field with location data,” which, it says, “allows listeners to experience an immersive, three-dimensional sound field as intended by the artists and creators”.
Tencent Music’s SVIP subscribers get access to enhanced features and exclusive content. An SVIP subscription costs around RMB 40 per month, five times as much as a regular RMB 8 subscription.
It’s becoming an increasingly important part of the company’s product mix, with TME pointing to its 7.5% YoY ARPPU (Average Revenue per Paying User) growth in Q1 as being “primarily due to the expansion of [its] SVIP membership program”.
According to TME’s latest earnings report, the company’s total number of paying users increased by 8.3% YoY to 122.9 million in Q1 2025, up by 1.9 million versus the prior quarter of Q4 2024 (see below).
TME’s Monthly ARPPU grew to RMB11.4 (USD 1.58) from RMB10.6 ($1.47) in the same period of 2024.
According to TME, premium audio quality remains “a key attraction” of the pricier SVIP tier, with approximately 50% of its SVIP members “actively enjoying this elevated listening experience”.
Other than premium audio, TME noted in its filing that a “range of unique perks have proven effectively in driving SVIP conversions, including album discounts, special badges, and early access to merchandise and live events”.
TME also said on Tuesday that long-form audio content has boosted its SVIP retention.
Last month, Bloomberg reported that TME was in advanced negotiations to acquire Chinese podcasting company Ximalaya Inc. in a deal valued at USD $2.4 billion.
The acquisition, which would significantly expand TME’s audio content offerings beyond music, is expected to involve a combination of cash and shares, Bloomberg reports, citing people familiar with the matter who asked not to be named.
Ximalaya’s current shareholders reportedly include TME’s majority-parent company, Tencent Holdings, plus Baidu and Sony Music Entertainment.
According to an SEC filing reviewed by MBW, Sony Music acquired 4.6 million Series E-2 preferred shares in Ximalaya for a consideration of USD $50 million in 2020.
Elsewhere in TME’s earnings announcement, the company revealed that it has inked “extended cooperations” with local labels Emperor Entertainment Group and Rock Records, “further elevating [its] music library with immersive Dolby Atmos sound”.
TME also said that it “partnered with Dream Music Group to expand [its] catalog with a broader selection of popular Chinese rap”.
Additionally, to cater to a rising interest in Korean, English, and Japanese-language tracks on its platforms, TME noted that it recently “deepened collaborations with South Korea’s Starship Entertainment and YG Entertainment, alongside Japan’s leading ACG entertainment company, further strengthening our international music offerings and enhancing cultural diversity across our platform”.
TME Executive Chairman Cussion Pang confirmed the Sony Music deal renewal on the company’s earnings call on Tuesday.
“We kick off 2025 with a strong first quarter performance, demonstrating robust top-line growth and stronger profitability,” said Pang. “This underscores the successful execution of our high-quality growth strategy. With the sound foundations we have built, a thriving music ecosystem, and healthy financial position, we are well equipped to navigate global uncertainties with confidence.”
He added: “As music becomes more accessible and personalized, we see user preferences becoming increasingly diverse. Our platform is uniquely positioned to inspire deeper and broader music consumption through enriching our ecosystem and expanding suite of services.
“Let me share some of the key highlights. First, we strengthened our partnerships with record labels to further enrich our classic music library. Notably, we renewed multi-year contracts with Sony Music Entertainment, bringing 360 reality audio sound privileges to SVIP members. We also expanded collaborations with Emperor Entertainment Group and Rock Records, enhancing the listening experience with immersive Dolby Atmos sound.”
MBW has reached out to Sony Music for comment about the renewal.
The success of TME’s super premium tier is being watched closely by the global music industry as rival Spotify continues to work behind the scenes on its highly anticipated “Music Pro” tier, potentially priced at an additional $5.99 per month on top of a Premium subscription.
This higher-priced tier is expected to include perks like early access to concert tickets, AI-powered remix features, and higher-fidelity audio.
Spotify CEO Daniel Ek was recently asked about the superfan tier on the streaming platform’s Q1 earnings call. He confirmed that the platform is still working on it, but indicated that SPOT “need[s] partners to come to the table and be part of this journey”.Music Business Worldwide
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