NetEase and Alibaba: swap agreements confirmed for music streaming

06/03/2018

The end of China’s music war for streaming, maybe is near. NetEase Music and Ali Music Group announced that they have signed an agreement to swap music copyrights. An agreement that favours both.

These swap (a derivative contract where two parties exchange financial instruments) provide that NetEase Music will have the access to catalogues of leading music producers like EE-Media, Avex Group, Forward Music and HIM International Music Inc. Therefore, NetEase Music would have the copyrights from a series of hit singers in Taiwan, Japan, and the Chinese mainland.

On the other hand, Ali Music Group will have the copyright  for the catalogues of Taiwan’s Rock Records, Korean’s S.M. and BMG; which have a rich list of highly-coveted titles of the Chinese and Korean top musicians such as Jonathan Lee, Wakin Chau and Fish Leong.

These pacts arise from the decision of the Chinese government to regulate the music market. From that decision, a heated competition for exclusive music copyrights was unleashed, even with prohibitive costs. As an example, NetEase’s deal with Taiwan’s leading music production company HIM International Music Inc., for less than 2,000 songs, it cost RMB 150 million ($23 million).

The country’s copyright authorities play as important a role and, through governmental mediation, Tencent Music and Entertainment Group (TME) have collaborated with Ali Music Group last years.

Regarding Tencent Music, the agreements envisaged are not only with Chinese operators, but also with foreigners, indeed, in preparation for its estimated $10 billion initial public offering, Tencent is also actively seeking counterparts like Spotify.

This battle for musical rights, unfortunately, leaves out the little ones. Digital music streaming app Duomi, has shut down after 10 years of music streaming.

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