It was another quiet day for TENCENT HOLDINGS ADR (OTCMKTS:TCEHY) as it closed at the end of the last trading session with a minor gain of 0.65%. The lack of any real trading activity was evident from the volume of the day at 1 million against the daily average of 894,000. The stock has rallied very sharply from the 52 week low at $13.55 in the last 10 months and currently is in a sideways trading range, taking a pause. The long term direction of the stock in the la next few months may be determined by the price action around $20 levels.

TENCENT HOLDINGS ADR (OTCMKTS:TCEHY) stated that company’s digital music platform termed as QQ music has entered into a contract with streaming service entity NetEase under which it will sublicense nearly 1.5 million songs. This measure is taken so as to improve availability of approved and legal digital music in China.

The highlights

The partnership between NetEase and music streaming sites QQ is seen as a deal that will result in increased revenue and more business for both companies. Also, a collaboration contract on the digital music albums revenue marks a robust platform for future exploration. The announced deal is anticipated to expand TENCENT QQ’s digital music library to over fifteen million licensed and authorized songs. In fact, the library will have songs from Korea’s YG group, Warner Music group and Sony Music.

This contract markets the first collaboration of streaming sites in China after National Copyright Administration stated to remove unauthorized and illegal music from digital avenues in this July. It should be noted that stricter anti-piracy rules are forced in China so as to boost legalized music and songs on digital platforms.

The plans

Tencent’s management saw the shift of licensing music from a peer platform as an extension of company’s idea to improve growth of legal music. This step would support legitimization of online music market, and the increased respect for the intellectual assets of the artists. It is projected that Tencent’s extended entry into the Chinese digital music market will prove beneficial for music customers in nation.

All major firms in the Chinese e-commerce market intend to diversify their product portfolios so as to hedge risks. This latest change in market has given rise to a win-win scenario for other markets associated with respective industry in China. Also, Tencent has associated with JD.Com Inc (ADR)(NASDAQ:JD) to help its increase its sales on approaching November 11 Singles Day.