Tencent Music Entertainment Group, the music arm of Tencent Holdings, on Wednesday announced with Sony Music Entertainment that they are forming a new music label, marking Tencent's first move into having its own music label.

The new label, called Liquid State, will be dedicated to promoting electronic and dance music by showcasing Asian and international DJs in a genre that Tencent Music chief executive Cussion Pang said was getting increasingly popular in Asia.

Tencent, China's largest gaming and social media company, competes against Alibaba Group and NetEase Inc. for China's growing digital music market, where more and more young people are willing to pay for content.

Revenue from live broadcast, video streaming and music streaming contributed to a 18 percent rise in Tencent's third-quarter social networks' revenues to 15.28 billion yuan.