NetEase Cloud Music Sues SM Entertainment Over Alleged ‘Market Abuse’ — Trial Reportedly Set for August 6th

SM Entertainment act Red Velvet. Photo Credit: TV10

Closer to 2025’s beginning, reports pointed to “extended” licensing negotiations between Chinese streaming service NetEase Cloud Music and K-pop giant SM Entertainment. Now, these evidently fruitless talks have made way for a lawsuit.

That’s according to coverage surfacing out of China, where NetEase Cloud Music has reportedly sued SM for “market abuse.” As described by Technode and others, the claims center on exclusive licensing terms and are scheduled to head to trial just two days from now, on Wednesday the 6th.

Beyond this overview, concrete details about the actual allegations are few and far between at present. But it’ll be worth tracking the complaint’s outcome – and its impact on China’s increasingly lucrative music market.

NetEase Cloud Music rival Tencent Music Entertainment (TME), which operates QQ, Kugou, and Kuwo, remains the largest streaming company in the nation of 1.4 billion. Adding another layer of complexity to the NetEase v. SM dispute, TME and its namesake parent haven’t hesitated to expand their K-pop reach as of late.

On one side, said reach refers to investments. Most conspicuously, it was only in May that Tencent moved to purchase a sizable piece of SM Entertainment from Hybe, thereby becoming SM’s second-largest stakeholder. Of course, ahead of BTS’ much-anticipated comeback, that deal was strategically significant on multiple levels.

Tencent also owns parts of YG Entertainment as well as Kakao Entertainment and is reportedly looking to scoop up interests in leading Korean ride-share platform Kakao T and gaming company Nexon to boot.

On top of those and different holdings, Tencent Music, now reporting north of 123 million paid users, is uniquely suited to unlock domestic revenue for international acts.

In the K-pop arena, this important capability isn’t confined to straight streaming. Q1 2025 saw TME spearhead “exciting new offline initiatives, including aespa’s first-ever exhibition and BABYMONSTER’s debut pop-up store in mainland China,” besides kicking off a merch partnership “with K-pop icon G-Dragon.”

Stated briefly: Between Tencent’s SM investment and TME’s growing list of K-pop initiatives, the NetEase Cloud Music licensing hurdles don’t exactly come as a surprise. Nor does the related complaint; DMN reached out to SM for comment but didn’t receive a response in time for publishing.

However, investors don’t appear particularly concerned about the action. SM shares (KOSDAQ: 041510) dipped when word of the dispute first surfaced but rebounded by nearly 5% during today’s trading, finishing at $98 (₩135,600) a pop.

Bigger picture, this isn’t the first time Tencent Music has faced regulatory scrutiny over its exclusives. In September 2021, the company said it’d nixed the relevant pacts in response to an antitrust penalty that reportedly centered on major-label releases.

Link to the source article – https://www.digitalmusicnews.com/2025/08/04/netease-cloud-music-sm-entertainment-lawsuit/