NetEase Cloud Music completes $600m raise to take on Tencent

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Chinese music streaming platform NetEase Cloud Music has completed a $600m round of financing with investors, including strategic partner Baidu, General Atlantic, Boyu Capital and several other investors.

NetEase, Inc., one of China’s leading internet and online game services providers, remains the controlling shareholder of the NetEase Cloud Music business.

Launched in April 2013, NetEase Cloud Music is one of China’s largest digital music players, with more than 600 million registered users.

The company says that it has added 200 million registered users in the past 12 months. Its main rivals in the territory are market leader Tencent Music – which has struck licensing deals with all three major labels – plus Alibaba.

NeatEase Cloud Music has a growing reputation amongst independent artists: over 70,000 independent acts have uploaded over 1.2 million songs to the platform.

Major milestones in the past 18 months include a direct licensing agreement with Kobalt, in addition to a non-exclusive agreement with independent music agency Merlin.

“Baidu has always been committed to creating the most powerful content ecosystem. We have found that Chinese users still have a lot of room for online music,” said Mr. Wang Lu, Vice President of Baidu.

“Netease Cloud Music has made a name for itself in terms of its differentiated user offering; together with Baidu’s leadership in feed business [and] search content distribution capabilities in China, we look forward to working together to provide users with enhanced service through the strongest content distribution, and the highest quality content ecosystem.”

“We are deeply impressed with the NetEase Cloud Music team’s understanding of the music industry and their commitment to the user experience.”

With a population of 1.4 billion, China’s recorded music market was 45 times smaller than that in the U.S. in 2017 – yet China’s per capita spending on recorded music is projected to quadruple from 2017 to 2023, according to iResearch.

“Pay-for-content is a growing trend, especially among Generation Z users, driven by increasing affordability and improving protection of intellectual property,” said Eric Zhang, Managing Director and Head of China for General Atlantic.

“We are deeply impressed with the NetEase Cloud Music team’s understanding of the music industry and their commitment to the user experience. We are excited to partner with NetEase Cloud Music and its strategic partners as the platform delivers one of the best online music streaming services and supports independent artists for content creation in the China online music market.”

Joey Chen, Managing Director of Boyu Capital: “China’s online music market is attractive with huge growth potential. We believe that NetEase Cloud Music commands unique value in the market as a clear leader in incubating independent musicians and enjoys proven popularity among a young generation of users in China who have formed an active community on the platform. We are confident that NetEase Cloud Music is well-positioned to capture the rising opportunities and achieve sustained high growth.”

“Content creation and user experience differentiation is embedded in our corporate DNA,” said Mr. William Ding, Chief Executive Officer and Director of NetEase. “A focus on quality and craftsmanship is prevalent in all our product offerings, including online games and e-commerce, among others. NetEase Cloud Music is no different. Music is particularly region-specific and we strive to create the largest interactive community for music lovers in China by providing users with convenient access to both mainstream and independent artists.

“We remain relentlessly focused on continuous improvement, and we are confident we can further unlock the value of this important asset in China’s thriving online music services market.”