In a bid to increase its online entertainment offerings, Alibaba has struck an agreement with music publisher BMG, which gives it access to over 2.5 million tracks. The partnership is notable because it represents the first time Alibaba’s digital entertainment unit has signed with a music partner outside of Asia.
The business already has agreements with Taiwanese music companies Rock Records and HIM International Music.
The deal gives Alibaba access to BMG’s catalog, which includes tracks from Bruno Mars, the Rolling Stones, Aerosmith, and Kylie Minogue. Music will be made available to consumers through streaming apps Xiami and TTPod, both of which are operated by Alibaba’s digital entertainment business.
It’s important to remember that Alibaba is more than just an e-commerce company. It is also one of China’s biggest mobile Internet players, competing head-to-head with Tencent, which has already struck similar arrangements with Warner Music Group and Sony Music Entertainment.
Alibaba’s growth plans include selling other online services to the huge user base it has grown by operating China’s top e-commerce platforms and online payment service Alipay.
In addition to online entertainment, the company and its subsidiaries also has aspirations in healthcare management, cloud computing, and financial services like a credit scoring system that uses data from Alibaba’s family of e-commerce platforms.
Streaming music is a potential growth market for Chinese Internet companies, but only if they succeed in dealing with piracy. According to the Financial Times, China accounted for less than one percent of the $15 billion in global revenues made in 2013 by record companies, in part because pirated tracks are easy to obtain.
The government, however, has begun to crackdown on copyright infringement, and deals like the ones Alibaba and Tencent have struck with BMG, Warner Music Group, and Sony Music Entertainment give music publishers more power over their IP in China.
In a statement, Alibaba said “the agreement will not only significantly boost earnings by BMG artists and writers from the world’s most populous nation, but also give them a powerful ally in hleping grow the legitimate music market in China.”
This means that Alibaba will help BMG keep an eye on pirated music and work with them to take legal action against services that are using tracks that violate BMG’s copyright.