Chinas Music Market: A Complex Web of Growth, Regulation, and Fragmentation

In March 2026, the IFPI Global Music Report announced that China had eclipsed Germany to become the world’s fourth‑largest recorded‑music market, powered by a 20.1 % jump in 2025 – the sharpest rise among the major economies.

The headline numbers speak for themselves: China’s recorded‑music revenue hit $6.4 billion in 2025, up 6.4 % from the previous year, while global revenue reached $31.7 billion. Growth is concentrated in paid streaming, live performance, and brand licensing, yet the market’s fragmented structure hampers foreign artists and labels from converting that expansion into substantial earnings.

Foreign performers cannot secure a commercial‑performance permit on their own. The permit is issued by a local Culture and Tourism authority, but only through a licensed performance agency. The application demands a setlist, venue, date, and lineup, and approvals can be withdrawn at short notice. The agency that holds the permit also controls the sub‑licensing chain and is frequently a party to the royalty collection.

China’s licensing landscape is dominated by two collective‑rights societies. The Music Copyright Society of China (MCSC) manages rights for musical works – composition and lyrics – while the China Audio‑Video Copyright Association (CAVCA) covers sound and video recordings, with a particular focus on karaoke licensing. Unlike the U.S. model, there is no competitive layer of performance‑rights organizations; the two societies are the sole legal entities that can collect public‑performance fees.

The 2020 Copyright Law, effective June 2021, introduced punitive damages for willful infringement and granted sound‑recording producers a right to payment for broadcast or public performance. In practice, however, the collection infrastructure remains underdeveloped. Many venues play recent international hits in KTV or shopping malls, yet the royalty stream rarely reaches the rights holder.

Contract pitfalls add another layer of risk. Foreign songwriters often sign agreements that appear to grant a license but in fact assign the rights. The default to a buy‑out clause means that a single payment can transfer ownership of a composition or recording to a Chinese partner. The clause is usually drafted to assume assignment, not licensing, and the songwriter may not grasp the full scope of the transfer.

Spotify is absent from mainland China, leaving Tencent Music Entertainment Group (TME) as the dominant paid‑streaming platform through QQ Music, Kugou and Kuwo. In 2025, TME reported subscription revenue of 17.66 billion yuan ($2.53 billion), a 16 % increase, with 127.4 million paying users and an average revenue per paying user of 11.9 yuan. The company’s other‑streaming revenue – concerts, merchandise and advertising – grew 39.2 %. After a 2021 regulatory change that forced TME to give up long‑term exclusive lock‑ups with major labels, the platform now offers exclusivity only for independent artists, limited to three years, and a 30‑day exclusive release window for new songs. That window is a valuable bargaining tool; a platform will pay a premium to secure the first release of a track.

China’s music consumption is split across at least seven loosely connected markets: the festival circuit, brand and advertising, Douyin (the Chinese version of TikTok), paid streaming, the idol industry, indie/livehouse, and the ACG (anime, comics, games) subculture. Success in one segment does not automatically translate into another.

A recent illustration is rapper Lan Lao. His 2024 single “Ba Fang Lai Cai” went viral on Douyin in early 2025, generating billions of views. The short‑video buzz drove listeners to QQ Music and NetEase Cloud, where the track earned royalties and helped Lan Lao chart on Spotify’s Chinese‑language artist list, sell out shows in Singapore, Australia and Europe, and secure a brand tie‑in with Carlsberg.

Brand licensing operates as a separate channel. In 2025 lululemon commissioned independent musician Ding Ke to write “Back to Spring” for a campaign featuring Li Yuchun. The song was released on streaming platforms and used in the brand’s advertising, illustrating how brands prefer original local music or a local ambassador over licensing a foreign hit.

China’s music market remains a patchwork of legally and commercially distinct ecosystems. Foreign artists and labels must navigate performance permits, local licensing agencies, two collective‑rights societies, and multiple market segments, each with its own gatekeepers and revenue models. While the country’s recorded‑music revenue continues to grow, the complexity of the regulatory and commercial landscape means that simply entering the market does not guarantee success.