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China’s Music Streaming War: The Era Of Being Squished By Giants Is Not Over
It was probably only a matter of time until Alibaba folded its two music streaming investments, Xiami and Tiantian, into something shiny and new under the Ali brand.
This month, they quietly put the acquired brands under Alibaba Music Group, headed by celebrity music executive Gao Xiaosong and backed by a partnership with BMG as well as Chinese labels Rock Records and HIM Records. The switch comes just as the Chinese government laid out a country-wide ban on unlicensed, free music which – with some proactive enforcement – has the potential to completely alter the music streaming landscape in China.
The edict requires companies to rid their platforms of unlicensed music by this Thursday, and have comprehensive paid-model plans ready within three months. While it’s a mere road bump for internet giants like Ali and Tencent who have already concreted some licensing partnerships, it’s a thumping great wall for smaller players who don’t have the capital to play with the giants.
Alibaba’s two brands together represent just under 18% of the music streaming market, which gives them the uumph to outperform arch-rival Tencent’s QQ Music, if only by around 1%. Both brands still trail behind the market leader Kugou, which found a whopping 35% of the market by tapping into tier two and three cities.
As foreign services Apple Music and Spotify steer clear of the market for various reasons the unification of Ali music is setting the stage for the next in a series of entertaining – if not exhausting – feuds between our favorite internet giants. Like the taxi-app saga that eventually led to an Ali-Tencent coalition under Didi-Kuaidi, we could be gearing up for a music streaming war in China.
This time however, the stage could look very different. In the case of Kuaidi-Didi, it was a battle for dominance that would compromise traditional taxis. This time, they could be compromising something much closer to the heart of average Chinese consumers; the ability to pirate virtually anything.
It’s still unclear whether the services fortified by licensed, paid models will quash the country’s appetite for free music, but the companies themselves seem to believe there will be a substantial future in paid streaming for China.
“The sale of music, film and television content will become a major revenue driver in China in coming years,” said Alibaba in a release.
Alibaba recently cemented their spot in another important entertainment vertical; film and television. Last year, they acquired close to a 60% stake in Hong Kong-listed ChinaVision Media Group, then earlier this year they consolidated the purchase under the brand of Alibaba Pictures Group. They’ve since set down roots in a dizzying number of sub-verticals. Last month, the new group announced an investment of an undisclosed amount in Paramount Picture’s Mission Impossible: Rogue Nation, they also announced a partnership with DMG and Hunan TV early this month to establish China’s first entertainment bundling service.
It’s long been the prerogative of Chinese internet giants to put down feelers in as many verticals as possible, and its seems there’s no limit to how thin the can spread their empires, with music streaming and connected cars hot on the agenda. And while a fresh generation of entrepreneurs claim the landscape is changing, it appears the stage is set for at least a few more years of industry domination by China’s internet giants.