Alibaba, Tencent collaborate on music streaming, with potential to remake industry

September 13, 2017
Industry News
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Sarah Dai

The licensing between Alibaba and Tencent on music licensing may put an end to the era of free-to-stream music while reshaping the market, says analyst

In a rare move, China’s omnipresent technology giants Alibaba and Tencent have shaken hands on a music-streaming rights sharing deal.

Under the agreement, Tencent Music and Entertainment Group will sub-license music from Sony Music, Warner Music and Universal Music to Alibaba, while Ali Music Group will share with Tencent its exclusive content bought from Rock Records, the two announced on Tuesday.

Tencent’s three music-streaming apps – QQ Music, Kugou and Kuwo – are seen as having a dominant market share in China.

“Despite no disclosure of the transaction amounts, the deal appears to be on an equal footing,” said Xiong Hui, an analyst with independent research firm iResearch, adding that it will put big pressure on NetEase and smaller players in the field.

Tencent’s mobile messaging app WeChat blocked Alibaba-owned music streaming service Xiami on its platform in 2015, leaving users unable to share tracks directly with their friends. The block was later withdrawn after causing friction between the two firms.

The record labels involved are believed to be the major drivers behind the deal, said Xiong.

“Both Alibaba and Tencent are distributors on a contract basis”, he added, so if the two do not operate actively enough, the record labels can halt the licensing or decide not to renew.

With the ownership and distribution rights now in place, the next step will be encouraging users to pay for music, in a market plagued by privacy, said the veteran analyst.

“Even Spotify, the world’s largest music-streaming provider, is unable to chalk up a profit using subscription as well as advertisement fees generated from free users. It’s inevitable for the platforms to start charging users.”

Alibaba and Tencent said in their statement that their alliance will enable the industry to move forward in terms of protecting copyright and encourage more high-quality, original music. Continue Reading
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