Universal China
Rock Records, the leading independent music label in China and Asia as a whole, has just entered into an agreement with Universal Music for sales & distribution in mainland China. Rock Records is based out of Taiwan and has a number of successful Mandarin-language artists.
This is not the first deal between Rock & Universal. In 2003, these two companies entered into an agreement for sales & distribution in Taiwan, Hong Kong, Korea, Malaysia and Singapore. But during that time, Rock Records still handled their own distribution in mainland China. That will change now with this new deal.
We are really beginning to see a lot of partnerships between different labels for distribution in different areas. On the 11th, I blogged about EMI & Warner’s international partnerships. It makes great sense for labels to enter into these agreements. For Rock Records, they now have the distribution channels of a major label. And for Universal, this deal offers an unbelievable amount of insight into consumer purchase behavior and to what is hot in the Asian market.
My main concern in these deals though is the label’s interest. For example, what is Universal has Artist A who is very similar to Artist B from Rock Records. In fact, what if they are so similar that consumers will mostly just purchase one album or the other. Universal will make more money on the sale of an Artist A album. So, their incentive is to ultimately look out for themselves in this hypothetical scenario.
What if Rock Records continued distributing on their own? Would the cost in manpower and distribution outweigh the benefits of having control of the distribution channel? Or what if Rock Records went with a third party distribution group that didn’t have competing interests? I’m sure they looked into these options carefully and concluded that Universal would be the best deal.
This partnership will last for 4 years. I will be curious to see how both companies proceed after the 4 years, or if they are still even around.
Stay tuned,
Erik
erikrostad.com 
