Alibaba Makes BMG Deal

Chinese e-commerce company Alibaba Group Holding Ltd. has signed a digital music distribution deal with Germany’s BMG in a bid to become the world’s biggest digital media empire. 

According to Reuters, it is the first deal of its kind in China that involves a major music publisher “rather than a label,” and will bring more than 2.5 million copyrights to Alibaba, whose music platform is already huge.

Valued at $210 billion, the company is counting on China’s market potential to make the deal work, in terms of digital products and physical products, even if so far Chinese consumers have shown a marked preference for pirated media content.

Despite this very formidable cultural obstacle, Alibaba also faces fierce competition from other content distributors, namely Tencent Holdings, the country’s biggest social network, and search engine leader Baidu Inc., not to mention Baidu’s online video unit iQiyi.

BMG’s advantages are perhaps clearer. The tie-up will give the music rights company a chance to boost the China earnings of its artists as it helps “grow the legitimate music market in China,” according to a statement released by the company.

BMG is already in a partnership with China independent Giant Jump to “manage publishing and recording rights both at home and overseas,” according to Reuters.

The plan is for Alibaba to “promote BMG writers and artists through channels such as streaming apps” and “monitor and take action against digital and mobile services who may infringe on the rights of BMG clients.”