Tencent and Alibaba reached an agreement on music copyright cooperation and granting exclusive music licensing rights to each other. This cooperation casts a massive shadow on another popular music streaming app in China—NetEase Music.
With its IPO drawing near and the recent news of its new round of financing (worth about 300 million USD), Tencent Music is making yet another major move. This time, it’s looking to cooperate with Ali Music on music copyright.
On the evening of September 11th, a CBN reporter confirmed the news with Ali Music. However, specific details disclosed by the joint press release on the 12th should be taken as final.
An anonymous person disclosed to the reporter that the parties involved in the copyright licensing this time are the following four music groups: Sony Music Group (SMG), Warner Music Group (WMG) and Universal Music Group (UMG), and Rock Records (a Taiwanese record label). Tencent and Alibaba has both obtained exclusive copyrights to distribute the repertoires of the record labels, with the first three groups distributed under the former and Rock Records distributed under the latter. Due to the difference in valuation figures for the two companies, the cooperation this time may involve evening out the difference through financial transactions.
Recently, Tencent Music and NetEase Music were faced with copyright lawsuit disputes. The cooperation between the two parties used to rely mainly on NetEase purchasing the licensing rights of music distribution from Tencent’s library. The copyright licensing cooperation between Tencent and Alibaba’s this time has more of an interchangeable nature behind.
The direct effect of a music copyright cooperation such as this one goes to the expansion of the library resources to both merging parties. For QQ Music (An app that was launched after consolidating Kugou and Kuwo in 2016, both of which are other musical apps in China), whose library resource already takes up a formidable amount throughout the entire Chinese music market, this cooperation make their advantages on this front even more prominent. And for Rock Records, Tencent set its eyes on it due to the massive Hong Kong and Taiwanese music resource that the label holds.
Clearly, this is an important step for Tencent Music on the music market as it has a very positive effect on raising the company’s performance and valuation. Otherwise, it would be a rather odd and surprising cooperation between both companies, seeing as how they are both constantly competing against each other in a myriad of fields.
As for how both companies were able to bury the hatchet, there are two explanations. For one, on the music market, both companies are looking to expand via the route of merger and acquisition. Furthermore, popular music apps in China such as QQ Music, Kugou, Xiami, and TT Pod don’t exactly have the sort of pent up disdain for each other due to competition, as both Tencent and Alibaba have accumulated throughout their competition in virtually every field of business such as their social apps, e-commerce, and mobile payments, etc. Thus, it makes cooperation for these music apps much easier. Secondly, on the topic of music copyright, Alibaba and Tencent are both third parties and not playing the roles of creators such as their own respective mobile payment apps. Thus, looking from this point of view, it also raises the possibility of a smooth cooperation for both companies when it comes to music.
This article originally appeared in Yicai and was translated by Pandaily.
Click here to read the original Chinese article.