Baidu Inc. has announced today that Baidu Music will merge with Chinese music company Taihe Entertainment Group, creating a new company. It’s the latest asset Baidu has spun off for investment as they focus funds on expanding their online marketing and transaction ecosystem, including Nuomi and Baidu Wallet.
“The new company will combine Taihe’s upstream strengths—its extensive intellectual property, and its artists and repertoire (A&R) resources—with Baidu Music’s powerful downstream digital platform and distribution capabilities,” said Baidu in a release.
Taihe has been consolidating an increasing amount of local and international content. The merger could give them greater leverage to deal independently of other music streaming services including those backed by Tencent and Alibaba.
The new company will be part of Baidu’s wider “aircraft carrier program,” which has opened series of Baidu assets up to investment with the goal of developing out their ecosystem under the guidance of Baidu. Other assets under the program include Baidu Takeaway [Baidu Waimai], Zuoyebang, and 91 Desktop, a desktop theme app.
“We’re very open to whatever works best to give these companies the highest chance of success, that brings in the best strategic partners, that structure them optimally to incentivize their management,” company spokesperson Kaiser Kuo told Technode on Thursday.
“Baidu Music is the latest but likely not the last.”
Baidu has recently concentrated core funds to expand services in the highly-competitive online to offline (O2O) sector. The company invested $3 billion into group buying site Nuomi, as they push to gain an early market share against. In October, Meituan and Dianping merged to form the market’s biggest on-demand services provider, competing directly with Nuomi. The companies are now locked in a battle for market share, re-routing funds to heavily subsidize the services.
“Baidu’s resolve and commitment to winning the O2O market remains unshaken,” said Baidu CEO Robin Li during an October earnings call.
“A small sliver, less than 5% of the local high-frequency transaction services market, namely restaurants and local entertainment is online today. Baidu can win in this market,” he said.
Baidu has declined to comment on the terms of the deal between Baidu Music and Taihe, though they say the tech giant will contribute “search technology, big data, and massive online infrastructure” to compliment Taihe’s licensing strengths.
Update 2:30pm 3/12: This article has been updated to reflect comments from Baidu.