The music arm of Chinese e-commerce giant Alibaba has picked up a minority stake in South Korean music agency SM Entertainment, which houses some of K-pop’s most popular groups like TVXQ, Girls’ Generation, EXO and others. Ali Music picked up a 4% stake in one of the largest record labels in South Korea’s K-pop industry. Alibaba invested $29.7 million for 870,000 shares of SM Entertainment.
The deal to help Alibaba, SM better serve customers
Back in 2014, there were rumors that the Hangzhou-based company was going to pick up a stake in SM Entertainment for $90 million. But the Korean record label had rubbished those rumors. The new investment is part of a strategic partnership between Ali Music and SM Entertainment in online music distribution and e-commerce in mainland China.
An Alibaba spokeswoman said the collaboration with SM Entertainment would harness the two companies’ diversified platforms to better serve customers. The Jack Ma-led company launched Ali Music in July 2015 as part of its wider push into the digital entertainment business. SM Entertainment said in a statement that the deal with Ali Music would enable it to further localize and expand its business in mainland China.
Ali Music fostering alliances to grow big
Earlier, Ali Music had secured rights agreements with entertainment firms like BMG for recordings by popular artists including The Rolling Stones. It has also partnered with Taiwanese labels HIM Records and Rock Records, according to the South China Morning Post. BNP Paribas analysts estimate that Alibaba may spend up to $38 billion on mergers & acquisitions this year. Last year, the company had made 23 investments totaling $11 billion.
The new deal comes just days after Alibaba said hackers had attacked close to 21 million user accounts on its Taobao marketplace. The attackers had stolen login details of 99 million people from other websites. And since most people use the same login details on multiple platforms, their accounts on other platforms become vulnerable if hackers obtain their details from one site. Alibaba said the attackers tried most of the 99 million login details on Taobao, and 20.59 million user details matched.