In-Depth Analysis of the Strategic Partnership Renewal Between NetEase Cloud Music and Universal Music Group

Based on collected data and news information, I now present to you an

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NetEase Cloud Music and Universal Music Group have recently renewed their multi-year strategic partnership with a new agreement[0][1]. The core contents of this cooperation include:

• Continued provision of Universal Music’s massive library of authorized music content
• Deeper collaborative cooperation in areas such as music products, services, and artist promotion
• Top artist resources under Universal Music: International superstars such as Taylor Swift, Ariana Grande, Billie Eilish, The Weeknd, Kendrick Lamar, as well as Japanese musicians Fujii Kaze, Ado, and Korean singers HEYOON, DEAN, etc.[1]

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According to the latest 2025-2026 market data, China’s music streaming market presents a

[2]:

Platform	Market Share	Remarks
QQ Music	28%	Tencent Music Entertainment subsidiary, ranked first
KuGou Music	22%	Tencent Music Entertainment subsidiary
NetEase Cloud Music	18%	Ranked third, preferred by young users
KuWo Music	12%	Tencent Music Entertainment subsidiary
Soda Music	10%	ByteDance subsidiary, emerging player
Others	10%	Including Apple Music, Migu, etc.

Tencent Music Entertainment Group, with its portfolio of

, holds an overall market share of , maintaining an absolute leading position[2][3].

1. Tencent Music (TME)
   : Its dominant position is stable, but it faces growth pressure; non-GAAP profit is expected to reach RMB 8 billion in 2025, with a P/E ratio of approximately 22x[3]
2. NetEase Cloud Music
   : Adopts a differentiated competition strategy, with young users and community culture as core competitive advantages
3. Soda Music (ByteDance)
   : Has risen rapidly relying on AI recommendation technology, focusing on short video linkage[3]
4. International Players
   : Apple Music maintains a certain share among high-end user groups

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[0][1]:

Value Dimension	Impact Level	Analysis
Copyright Content	95/100	Access to music content from top global artists, effectively countering Tencent Music’s copyright advantages
User Stickiness	85/100	Exclusive/priority copyright content increases user switching costs
Brand Premium	75/100	In-depth cooperation with Universal Music enhances the platform’s international image
Artist Resources	80/100	Access to Universal Music’s artist promotion resources, strengthening the platform’s exclusive content
Commercial Monetization	70/100	International content helps expand paid membership and derivative income

• NetEase Cloud Music’s
  copyright content dimension (88 points)
  has approached that of Tencent Music (90 points), with the gap significantly narrowing[2]
• Technology Innovation Dimension (85 points)
  : Excellent performance, especially in personalized recommendations and community interaction
• User Experience Dimension (82 points)
  : Remains competitive, leading in penetration among young user groups

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NetEase Cloud Music (Hong Kong Stock Code: 9999.HK, a subsidiary of NetEase Inc.) has maintained stable financial performance recently[4]:

Indicator	Value	Industry Comparison
Market Capitalization	$70 Billion	Large technology company
P/E Ratio	17.34x	Lower than Tencent, slightly higher than the industry average
ROE	24.67%	Excellent, strong shareholder return capability
Net Profit Margin	32.45%	At a high level in the technology industry
Gross Profit Margin	Approximately 54%	Continuous improvement in music streaming business

1. Growth in Membership Revenue
   : Exclusive copyright content supports membership price increases and renewal rate improvements
2. Increase in Advertising Revenue
   : High-quality content attracts more brand advertising budgets
3. Reduction in User Acquisition Costs
   : Content advantages lower the difficulty of user acquisition

1. Construction of Copyright Barriers
   : Long-term cooperation forms an exclusive content moat
2. Monetization of Artist Economy
   : In-depth cooperation expands artist commercialization opportunities
3. International Expansion
   : Explores overseas markets with the support of Universal Music’s resources

1. Music Ecosystem Integration
   : Evolves from a single streaming platform to a music industry ecosystem
2. Appreciation of Copyright Assets
   : Long-term copyright cooperation forms intangible asset accumulation
3. Dual-Driven by Technology + Content
   : Synergistic effect of AI technology and high-quality content

Profit Contribution Model of the Partnership Renewal:

ΔProfit = ΔMembership Revenue + ΔAdvertising Revenue + ΔDerivative Revenue - Copyright Cost Increment

Assumptions:
- Membership revenue growth contribution: +8-12%
- Advertising revenue growth contribution: +5-8%
- Copyright cost increase: -3-5% (scale effect offsets part of the increase)

Estimated net profit margin improvement space: 2-4 percentage points

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• Counterattack from Tencent Music
  : It is expected that Tencent Music will increase copyright investment to consolidate its advantages
• Rise of Soda Music
  : ByteDance’s AI recommendation technology may reshape the competitive landscape[3]
• Impact of AI-Generated Content
  : AI-generated music may reduce reliance on traditional copyrights (industry analyst opinion)[3]

• The cost of renewing copyrights with Universal Music may continue to rise
• The overall price level of the music copyright market may move upward

• China’s antitrust regulation may affect the exclusive copyright model
• Uncertainty regarding music copyright opening policies

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Assessment Dimension	Rating	Rationale
Content Competitiveness	Significantly Improved	Obtained top global music copyrights, narrowing the copyright gap with Tencent Music
Market Position	Consolidated and Enhanced	Third-place market share is stabilized, and advantages among young users are strengthened
Profitability	Long-Term Positive	Membership revenue and commercial monetization capabilities are enhanced
Valuation Support	Positive	Appreciation of content assets supports valuation premium

• Short-Term
  : The partnership renewal eliminates copyright uncertainty, and the stock price is expected to receive support
• Medium-Term
  : Focus on the realization of membership growth and ARPU improvement
• Long-Term
  : Driven by the dual engines of content and technology, NetEase Cloud Music is expected to upgrade from a music platform to a music ecosystem

1. Monthly Active User (MAU) growth rate
2. Changes in paid member penetration rate
3. Ratio of copyright costs to revenue
4. User retention rate and Lifetime Value (LTV)

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[0] Jinling AI Financial Data API

[1] NetEase News - “NetEase Cloud Music Renews Multi-Year Strategic Agreement with Universal Music Group to Cooperate in Multiple Fields” (https://www.163.com/dy/article/KJN6JTHL05178FFG.html)

[2] CNPP Brand Rankings - “Top 10 Online Music APP Rankings - 2026 Music Listening Software” (https://www.cnpp.cn/china/2026/list_6275.html)

[3] Xueqiu - “Tencent Music-SW(01698) Stock Price, Market Trend, News, Financial Reports, Data” (https://xueqiu.com/S/01698/time?page=1)

[4] Jinling AI Brokerage API - Corporate Financial Data and Market Data