Alibaba Bought 4% Stake In SK Entertainment

Alibaba has purchased 4% of S.M entertainment's stake to tap some of the  very famous Korean pop groups

The leading entertainment agency of South Korea S.M Entertainment stated on Thursday that it has established a strategic tie up with Alibaba Group Holding Ltd.

The Hangzhou based company will purchase newly issued stock of S.M for around $30m which would help it get 4% ownership in the company listed at Kondaq. By purchasing its stake in the entertainment service provider, Alibaba is looking to use music streaming applications Tiantian and Xiami and newly established music unit Ali music to benefit from the talent of  some of the most famous K-pop groups.

The artists of S.M include Girls’ Generation first in the Power Celeb 40 of Forbes Korea for previous two years and EXO. AliMusic was established in July last year to extend into the online music sector. A handful of months later  Youku Tudou known as  “China’s YouTube” in November, which has  over 500 million online video users.

The online retailer will also be provided access to some of the topmost expertise in the field of online music marketing and distribution. The videos of S.M on its Youtube channel SMTOWN has got more than 3.8 billion views, over that of Lady Gaga and Bruno Mars.

In November, the Seoul based company recorded an increase of 41% in profits totaling $30 million in the last year’s first 3 quarters, whereas its revenue increased by 14% to reach $200 million.

S.M stated the growth was mainly a result of the increased revenue earned by it from China and Japan, with $10 million being earned from only China in the second quarter, jump by 110% from the past year.

Majority of the sales revenue was generated from concerts and other events, music royalties didn’t contributed to it so, S.M is expecting to earn a larger part of revenue from the Chinese region since it started to do regulation of  illegal music streaming facilities in July last year.

S.M has been making efforts to develop itself in China for over a decade. It has used all types of tricks to become appealing to the China market, such as appointing its Chinese representative in a group, creating subgroups speaking Mandarin and even giving Chinese names to its Korean members.

After partnering with the online trading giant, S.M is currently collaborating with the 3 largest internet enterprises in China, such as Tencent and Baidu have signed a contract to make it as its official content provider.

In 2014, it was speculated that the company would procure a $90 million share in S.M. In the same year, Korea Economic Daily reported that by purchasing $90 million stock Alibaba would turn into second biggest shareholder of S.M, but the entertainment service provider has denied that.