Alibaba, Yunfeng invest $700m in NetEase Cloud Music
NetEase Cloud Music, one of China's largest music streaming platforms, has secured a $700 million investment from Alibaba Group and Yunfeng Capital, a private equity firm established by Alibaba founder Jack Ma.
According to AVCJ Research, NetEase Cloud Music has received a Series B round of $600 million from Baidu, Boyu Capital and General Atlantic in 2018. This followed a RMB750 million ($105 million) Series A round backed by China International Capital Corporation (CICC) and two strategic investors – Shanghai Media Group and Hunan Broadcasting System-owned Mango Media.
Alibaba's commitment to NetEase Cloud Music may change the dynamics of China's online music market. The industry is dominated by Tencent Music Entertainment Group (TME), operator of the QQ Music, Kugou and Kuwo platforms. Kugou and Kuwo were absorbed through the acquisition of China Music Corporation in 2016. TME went public in the US last year.
Alibaba is already present in the space through Ali Music Group, which operates the Xiami streaming app. Last year, it reached an agreement with NetEase Cloud Music to share parts of their libraries, giving users access to a wider variety of artists.
NetEase Cloud Music, which launched in 2013, has a strong youth following. According to Beijing Institute of Big Data Research, 69% of its users were under 30 years old in the first quarter of 2019, compared to 58% for QQ Music. It also led the way in terms of daily average time spent on the platform: NetEase Cloud Music posted 26 minutes per user; Kugou, Kuwo, and QQ Music were on 23 mins, 15 minutes and nine minutes.
However, the three Tencent apps remain the market leaders by monthly active users (MAUs). NetEase Cloud Music and Xiami ranked fourth and fifth. The former had 140 million MAUs, less than half Kugou’s 294 million. NetEase Cloud Music has also yet to turn profitable; TME has already achieved this.
NetEase Cloud Music was one of two deals involving Alibaba and NetEase announced on the same day. In the other, Alibaba agreed to acquire NetEase's Kaola for $2 billion. It will integrate the business with Tmall to create China's largest cross-border e-commerce platform.
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