Naxos has launched legal action against Chinese music company Kuke over alleged unpaid fees totaling $1.86 million related to a 2018 digital distribution agreement.

The lawsuit, filed in a Tennessee federal court by Naxos Digital Service US, stems from a contract that allowed Kuke to sell Naxos services (including music, spoken-word, and video libraries) to customers and educational institutions in mainland China through 2026.

Key Details of the Dispute:

• Contract included escalating minimum license fees, reaching $1.34 million for 2023-2024
• Kuke allegedly failed to make multiple required payments
• Agreement covers both Naxos content and third-party distributed labels
• Naxos has the right to terminate the agreement for missed payments

Background Context:

• Kuke is a major classical music service provider in China
• Company organizes the Beijing Music Festival
• Stock has declined over 66% in six months, raising NYSE delisting concerns
• Pandemic disrupted Kuke's operations significantly

Corporate Relationships:

• Kuke CEO He Yu owns 75% equity stake in Naxos
• Companies share "decades-old relationship"
• Kuke announced potential acquisition of Naxos One Holding subsidiaries in May
• Acquisition remains subject to due diligence and final agreements

The case highlights growing tensions in the classical music distribution space and the challenges facing Chinese music companies amid market pressures and pandemic recovery.

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