Naxos Digital Service US has filed a lawsuit against China-based Kuke Music, claiming $1.86 million in unpaid fees under their 2018 digital distribution agreement.

The agreement, set to run until 2026, allowed Kuke to sell Naxos services (including music, spoken-word, and video libraries) to customers and educational institutions in mainland China. The contract included an escalating "minimum license fee," reaching $1.34 million for 2023-2024.

Key developments in the dispute:

• Kuke allegedly failed to make multiple payments, including those involving Naxos' third-party distributed labels
• The pandemic significantly impacted Kuke's operations, with its stock losing over 66% value in six months
• Naxos exercised its right to terminate the agreement following failed payment catch-up attempts
• The lawsuit seeks the full recovery of $1.86 million in missing payments

Adding complexity to the situation, Kuke announced plans in May to acquire two Naxos-related companies: Angelina Assets and HNH International. Notably, Kuke's CEO He Yu holds 75% equity interest in Naxos, their largest content provider, highlighting the intricate relationship between both companies.

The case demonstrates the growing tensions in international music licensing partnerships and the lasting impact of pandemic-related disruptions on the classical music industry.

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