Naxos Digital Service US has filed a lawsuit against Beijing-based Kuke Music, claiming $1.86 million in unpaid fees under their 2018 digital distribution agreement. The case highlights growing tensions in the classical music licensing sector.

The agreement, set to run until 2026, allowed Kuke to sell Naxos services including music, spoken-word, and video libraries to Chinese customers and institutions. The contract specified increasing minimum license fees, reaching $1.34 million for 2023-2024.

Key developments in the dispute:

• Kuke has allegedly failed to meet multiple payment obligations, including fees for third-party distributed labels
• The pandemic significantly impacted Kuke's operations, with its stock losing over 66% value in six months
• Naxos moved to terminate the agreement following failed payment catch-up attempts
• A complex business relationship exists between the companies, with Kuke's CEO holding 75% equity in Naxos

Adding to the complexity, Kuke announced plans in May to acquire two Naxos-related companies: Angelina Assets and HNH International. This potential acquisition remains subject to due diligence and final agreements.

The case highlights the intricate relationships between major classical music distributors and the challenges faced by international licensing partnerships during economic downturns.

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