The music business’s gold rush to China has intensified – as BMG exclusively commits 1.9m songs and 600,000 recordings to a new digital partnership with Alibaba in the region.
A distribution agreement between Alibaba and BMG was first signed nearly two years ago and has now been extended for another three years.
If you want to know how big a deal this is for BMG, you only need look at the above photo, and note the presence of Bertelsmann boss Thomas Rabe alongside BMG CEO Hartwig Masuch and others.
According to the IFPI, China generated $169.7m for recorded music rights-holders last year – up 63.8% on 2014 – making it the 14th biggest region for labels and artists.
However, with a population of more than 1.35bn people, China’s annual per capita (person) spend on recorded music last year was just $0.10.
The population of China is three times the size of Japan and the USA – the world’s two biggest music markets – combined and therefore holds a wealth of potential.
The music industry has been cashing in on that potential in recent years.
All three majors have named China as a key strategic priority, including Universal parent Vivendi – while Sony recently signed a major refresh of its deal with Alibaba rival Tencent – which also has exclusive deals in place with Warner Music Group and Believe.
Thew new BMG deal gives Alibaba’s digital music platforms Ali Music, Xiami, and Ali Planet access to recordings from the likes of Janet Jackson, Rick Astley, blink-182, Scorpions, Kylie Minogue and Black Sabbath.
Also included is copyrights in songs from David Bowie, Kurt Cobain, Bruno Mars, Roger Waters, will.i.am, John Legend, Robbie Williams and Mick Jagger and Keith Richards.
Alibaba and BMG say they plan to jointly leverage their capabilities and competences to make moves into other entertainment markets like film, TV, fan interaction or e-commerce.
The first fruits of this new cooperation are due in 2017.
Alibaba currently has a $230bn market cap on the New York Stock Exchange – ten times the size of Vivendi and $120bn behind Amazon.
The value of sales on its Black Friday equivalent Singles Day last week, at $18bn, was more than the annual turnover of the recorded music business last year ($15bn).
Weidong Yang, president of Youku and CEO of Ali Music said, “Working with BMG, the top global music rights management company, will allow Alibaba Digital Media & Entertainment to access significant international content and perspectives.
“WE BELIEVE THE COOPERATION WITH BMG WILL BE DEEPENED, EXPANDED AND EXPLORED IN THE FUTURE.”
WEIDONG YANG, YOUKU AND ALI MUSIC
“We believe the cooperation with BMG will be deepened, expanded and explored in the future.”
Lucky Yu, the chairman of Alibaba Digital Media & Entertainment Group, added: “The Alibaba Digital & Entertainment Group was established to better accelerate the cultural and entertainment ecosystem of Alibaba.
“We believe that joining hands again with BMG is a great opportunity. By integrating internet technology, content and business in cultural products, we aim to provide users with a rich and valuable cultural experience.”
BMG CEO Hartwig Masuch said: “We have been very satisfied with the rapid progress we have made in our relationship with Alibaba, surely one of the most innovative and customer-focused businesses in the world.
“BY DEEPENING OUR RELATIONSHIP WITH ALIBABA WE ARE NOT ONLY HELPING TO PIONEER THE NEW MUSIC BUSINESS IN CHINA, WE ARE DELIVERING NEW REVENUE FOR OUR ARTISTS AND SONGWRITERS.”
HARTWIG MASUCH, BMG
“By deepening our relationship with Alibaba we are not only helping to pioneer the new music business in China, we are delivering new revenue for our artists and songwriters.”
Alibaba launched a dedicated music app, Planet, earlier this year, which is licensed by Universal Music Group and BMG.
The firm has also been consolidating its entertainment business by bringing together its digital media assets under the Alibaba Digital Media and Entertainment Group banners.
Included in that is plans for a 10 billion yuan ($1.48 billion) fund for new projects.
Yesterday, BMG parent Bertelsmann named expansion in China is a key priority over the next three to five years.
The firm plans to raise its investment in Brazil, India and China from €500 million ($536 million) to €1 billion ($1.07 billion) over the next three to five years, in part through acquisitions.
Pictured L-R: Thomas Mackenbrock (Executive Vice President Global Business Strategy, BMG), Sherry Zhuo (Managing Director BMG China), Thomas Rabe (CEO Bertelsmann), Annabell Long (Chief Executive Officer, Bertelsmann China Corporate Center ), Yongfu Yu (Chairman Alibaba Entertainment Group), Weidong Yang (CEO , Youku Tudou and Ali Music), Hartwig Masuch (CEO, BMG) and LiJuan Zheng (Content Cooperation of Digital Entertainment of Alibaba Music)
Music Business Worldwide