Baidu Music, Taihe Music Group to Merge into New Company
Baidu, 12/03/15
Chinese internet company Baidu (Nasdaq: BIDU) has announced that it will merge its digital music service Baidu Music with talent agency and entertainment company Taihe Entertainment Group (Taihe Music Group) to create a new company. The Baidu Music brand and service will remain the same, but Baidu Music’s downstream digital platform and distribution capabilities will now be augmented by Taihe’s upstream strengths - its extensive intellectual property, and its artists and repertoire (A&R) resources. With Baidu's online platform, large user base, and big data analysis technology, the new music company hopes to develop a fan-oriented online music business.
According to Baidu, the merger represents a breakthrough in the digital music industry - the first-ever full integration of a leading Internet platform and a traditional music company.
The two partners each contribute strategically valuable and complementary resources and expertise to the new company. Baidu Music boasts over 150 mln monthly active users, and brings the power of search technology, big data, and massive online infrastructure to the new company. Taihe Entertainment Group has deep experience in music operations and licensing, and holds the rights to over 700,000 recordings with tremendous commercial value, along with long-term cooperation agreements with hundreds of international and domestic music institutions.
The merger of Baidu Music with Taihe is the latest move by Baidu to open up quality assets to financial and strategic investment. Dubbed the "Carrier Plan," this strategy, which has already opened properties like Baidu Takeout Delivery, 91 Desktop, and Zuoyebang to outside investors, aims to promote the independent development of these quality assets, and to foster the development of Baidu’s open ecosystem to better connect people with services.
As the intellectual property regime continues to improve in China and users are increasingly willing to pay for online content, prospects for the Chinese digital music industry look increasingly bright.
Editor's Note: First announced in July 2015, Baidu's Carrier Plan has designated 10 Baidu businesses to be spun off for independent operations and acceptance of outside investment from third parties. For more information on this topic, please see "Baidu to Accept Third-party Investment in Select Projects," MD 7/31/15 issue and "Baidu Takeout Delivery Wins USD 70 Mln Investment Led by Ajise," MD 7/30/15 issue and "91 Desktop Wins New Funding at USD 100 Mln Valuation," MD 12/22/15 issue.
Keywords: Internet Baidu online music BIDU Baidu Music Taihe Music M&A Carrier Plan
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