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Alibaba takes a minority stake in NetEase (NTES) Cloud Music, a freemium streaming service, for $ 700 million.
Alibaba already has its own music streaming app called Xiami. And the company has already partnered with NetEase to share music libraries.
But the last agreement, announced Thursday, significantly strengthens the relationship between the two – and this could be bad news for Tencent Music (TME)Analysts at Citi Research wrote in a research note on Friday.
Tencent Music had 652 million monthly active users and 31 million paid subscribers in the three months to 30 June. The social networking giant has developed a fortress in the market across its popular streaming platforms QQ Music, KuGou and Kuwo.
NetEase said in its latest earnings report that its cloud-based music platform has over 800 million users, although Citi analysts have set its active user base at 139 million. monthly in July. NetEase ranks fourth among active users after Tencent's three services, analysts said.
Recent statistics based on Xiami's monthly active users were not available. But by the end of 2017, the service had 18.4 million active users, according to market research firm QuestMobile.
Yu Xue, an Internet research analyst at IDC China, said that Alibaba could help boost the growth of its new partner by sharing content and promoting the service through its other applications.
"Ali Baba [needs an] alliance to compete with Tencent in the streaming music market, "Yu said.
The investment was leaked in parallel with another transaction between Alibaba and NetEase. Alibaba buys NetEase's e-commerce platform Kaola for $ 2 billion to boost its online shopping business.
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