Cloud Music Inc. Expands K-Pop Portfolio with Kakao Entertainment

Rhea-AI Summary

NetEase Cloud Music has expanded its K-Pop portfolio by entering into a licensing agreement with Kakao Entertainment, a South Korean entertainment company. This partnership aims to distribute Kakao Entertainment's music catalog in China, promoting Korean music to a broader audience. Kakao Entertainment, known for its K-Pop artists and tracks, will benefit from NetEase Cloud Music's large user base and interactive platform. The agreement signifies a strategic move to enhance the music offerings on NetEase Cloud Music, fostering cross-cultural music exchanges and connecting artists with fans across borders.

Positive

• NetEase Cloud Music enhances its music content library by partnering with Kakao Entertainment, expanding its K-Pop portfolio.

• The licensing agreement opens up opportunities for Kakao Entertainment's artists to reach a wider audience of music enthusiasts in China.

• The collaboration between NetEase Cloud Music and Kakao Entertainment strengthens cross-cultural music exchanges and promotes Korean music globally.

• Both companies aim to provide a diverse range of high-quality music content to users, enhancing the overall music experience on the platform.

Negative

• None.

Insights

Music Industry Analyst

The licensing agreement between NetEase Cloud Music and Kakao Entertainment is significant as it represents a strategic expansion of NetEase's K-Pop offerings to its substantial user base in China. With 206 million monthly active users and a solid number of paying subscribers, NetEase Cloud Music can leverage Kakao's diverse catalog to strengthen its competitive position in the Chinese streaming market. This partnership could have several implications for NetEase's growth trajectory and market share, particularly as K-Pop continues to resonate with younger audiences globally. The collaborative efforts in promotion and distribution can potentially lead to increased user engagement and retention for NetEase, catering to the high demand for K-Pop content.

Consumer Behavior Specialist

The cultural phenomenon of K-Pop has observed a surge in international popularity and NetEase's strategic move to incorporate Kakao Entertainment's catalog is poised to tap into this trend. User experience and personalization being key aspects of NetEase Cloud Music's platform, this expansion could cater to the evolving tastes of China's younger listeners. The platform's interactive community could enhance artist-fan interactions, offering a unique value proposition. This may lead to a positive feedback loop where increased engagement drives subscription growth, which in turn, fuels revenue and potentially NetEase's stock value.

Financial Analyst

It's important to examine the potential financial implications of the deal between NetEase Cloud Music and Kakao Entertainment. NetEase's investment in its music catalog, specifically in the lucrative K-Pop genre, may lead to revenue growth through both subscription increases and advertising revenue. However, the costs associated with licensing agreements and their impact on the company's profitability should be monitored. Investors should consider the long-term financial health of NetEase and weigh this partnership's potential to enhance NetEase's market position against the costs incurred by the company.

HANGZHOU, China, May 13, 2024 /PRNewswire/ -- Cloud Music Inc. (HKEX: 9899, "NetEase Cloud Music" or the "Company"), a leading interactive music streaming service provider in China, today announced that it has entered into a licensing agreement for digital music distribution ("the Agreement") with Kakao Entertainment Corp. ("Kakao Entertainment"), a leading entertainment company in South Korea, granting NetEase Cloud Music the right to distribute Kakao Entertainment's music catalog in China.

Under the terms of the Agreement, the two companies will engage in diverse approaches to unlock more opportunities for Kakao Entertainment's vast and influential catalog as well as its prominent artists to effectively build influence among younger generation users in China. Both parties will work collectively to carry out in-depth cooperation, jointly promoting Korean music and bringing more high-quality content to music lovers in China, further amplifying NetEase Cloud Music's broad music content library.

Established in 2010, Kakao Entertainment (formerly, "SeoulRecords" (founded in 1978) and "LOENentertainment") is a leading entertainment company in South Korea with a well-diversified portfolio offering everything from webtoons to films and dramas, talent management, and K-Pop all under one roof. They are also a major investor and distributor in the Korean music industry, with a fast-growing influence in markets around the world based on strong fandoms.

Kakao Entertainment's comprehensive music business strategy includes planning, production, distribution, and investment, with 70000 track distribution rights and 50+ star artists. Kakao Entertainment's robust portfolio boasts a number of influential K-Pop artists and their popular tracks, including JAY PARK's "GANADARA," Chungha's "I'm Ready," FTISLAND's "Severely," CNBLUE's "Can't Stop," N.Flying's "Rooftop," THE BOYZ's "Nectar," STAYC's "Bubble," KISS OF LIFE's "Shhh," and more. The company has been at the forefront of popularizing K-Pop music, establishing extensive influence globally, and captivating millions of fans with the charm of K-Pop music.

NetEase Cloud Music, as one of China's leading online music platforms, has long been a preferred online destination for music enthusiasts. In 2023, it had 206 million monthly active users and over 44 million paying subscribers to its online music membership. The platform's unique community atmosphere, advanced personalized recommendation, and content operation demonstrate its capability to promote music and facilitate artist-audience interaction.

NetEase Cloud Music has gained popularity among the younger generation, who have varied tastes and a desire to discover new music. The platform is upgrading its advanced music recommendations to better connect music production and consumption, which bodes well for Kakao Entertainment's ability to efficiently distribute content in China. Additionally, NetEase Cloud Music's highly interactive user base and music-oriented community atmosphere create opportunities for Kakao Entertainment to facilitate the interaction and connections between Korean artists and their Chinese fan base. NetEase Cloud Music's prevalence in China provides aspiring artists with exposure to its sizeable community of music lovers, including the large group of K-Pop fans, backed by abundant resources that support artists with significant promotion and marketing opportunities.

"We are excited to partner with Kakao Entertainment and share the passion for delivering exceptional music experiences to users. This partnership further solidifies NetEase Cloud Music's position as a prominent platform for international music, particularly resonating with our vibrant music community," said Vivian Wei, Vice President of Copyrights at NetEase Cloud Music. "At our core, we are committed to connecting music lovers with their beloved artists and songs. We are thrilled to have access to Kakao Entertainment's extensive catalog of top-tier artists, which further cements our dedication. Through our shared endeavors, we look forward to offering music lovers an even greater selection of top-notch Korean music while exploring more opportunities to benefit our passionate community of music enthusiasts," Wei added.

Kakao Entertainment commented, "We are delighted to announce our licensing agreement with NetEase Cloud Music in China. This partnership presents exciting opportunities for our renowned artists to connect with younger music lovers throughout China via NetEase Cloud Music. As industry leaders in music and entertainment, both Kakao Entertainment and NetEase Cloud Music are constantly seeking broader opportunities for the appreciation and enjoyment of the world's most iconic music. Through our partnership with NetEase Cloud Music, we eagerly anticipate collaborating on a variety of approaches that will enable our talented artists to resonate with their fans at a local level. We are thrilled about the potential this collaboration holds and the new avenues it will open for our artists."

NetEase Cloud Music has been actively expanding its broad portfolio. The platform had approximately 149 million cumulative music tracks by the end of 2023. Recently, NetEase Cloud Music has reached music copyright cooperation agreements with a number of top record labels, including Modern Sky, Emperor Entertainment Group, China Record Group, Feng Hua Qiu Shi, Yuehua Entertainment, Linfair Records, SM Entertainment, TF Entertainment, YG Entertainment, Avex, Pony Canyon, B'in Music, and JYP Entertainment. In the future, NetEase Cloud Music will continue to promote its collaborations with upstream copyright owners and provide more high-quality music content for Chinese music enthusiasts.

About Cloud Music Inc.

Launched in 2013 by NetEase, Inc. (NASDAQ: NTES; HKEX: 9999), Cloud Music Inc. (HKEX: 9899) is a well-known online music platform featuring a vibrant content community. Dedicated to providing an elevated user experience, Cloud Music Inc. provides precise, personalised recommendations, promotes user interaction and creates a strong social community. Its focus on discovering and promoting emerging musicians has made Cloud Music Inc. a destination of choice for exploring new and independent music among music enthusiasts in China. The platform has been recognised as the most popular entertainment app among China's vibrant Generation Z community.

Please see http://ir.music.163.com/ for more information.

Forward Looking Statements

This press release contains forward-looking statements relating to the business outlook, estimates of financial performance, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties, the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved, and investors should not place undue reliance on such statements.

Investor Enquiries:

Angela Xu
Cloud Music Inc.
music.ir@service.netease.com

Media Enquiries:

Michelle Chan
hzchenjiayi01@corp.netease.com

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SOURCE NetEase Cloud Music