A viral Weibo post on Sunday claimed that Alibaba will close its music streaming app Xiami in January of next year, causing consternation among netizens. “Is this the end of an era?” reads the post by Xiang Zheng, who is verified by the microblogging site as the former China head of Warner and Universal Music Group. While rumors kept circulating, Alibaba declined to comment on Monday after being approached by local media outlets.
“Xiami’s design, recommendation, indie music library, genres, initiatives, and the whole vibe are incomparable,” a Weibo user commented. Some Xiami listeners expressed concerns about their paid memberships. Founded in 2006 by Wang Hao, an Alibaba engineer and guitar player himself, the music service was initially known as Emumo—short for “earn music and money.” Xiami was originally a user-generated-content (UGC) platform, where everyone could upload clips. Its niche taste and efforts in nurturing indie musicians earned it a flock of loyal devotees.
In 2013, Alibaba acquired Xiami, which reportedly had five million registered users by then, and established a music unit to consolidate its push into the entertainment industry. The e-commerce giant also bought the popular mobile music player app Ttpod later that year, ratcheting up its competition with Tencent.
In 2016, Alibaba Music launched an online platform, dubbed “Alibaba Planet”, allowing users to connect with stars, merchants, and others in the entertainment industry, according to the company. However, despite being backed by the deep-pocketed internet giant, Alibaba Planet turned out to be a flop—shut down one year later due to sluggish growth.
Tencent, meanwhile, purchased China Music Corporation to strengthen its music offerings in 2016. Additionally, its digital music spinoff Tencent Music Entertainment (TME) went public in the US in 2018, raising nearly USD 1.1 billion. TME now operates a constellation of music services including QQ Music, Kugou, Kuwo, as well as the karaoke app Wesing.
Losing out
Alibaba Music, which suffered from frequent strategy adjustments, management reshuffles, and a lack of content rights, was gradually losing ground. In the first quarter of 2019, the Xiami app ranked fifth among Chinese online music streaming services in terms of monthly active users (MAUs), a BigData Research report shows. Xiami had 140.5 million MAUs in the first quarter of 2019, compared to Kugou’s 294.4 million, QQ Music’s 269.7 million, and Kuwo’s 157.8 million. NetEase’s Cloud Music ranked fourth with 140.5 million MAUs.
Alibaba, however, didn’t put all its eggs into one basket. In September of last year, it bought a minority stake in Netease Cloud Music, in a USD 700 million co-investment alongside Jack Ma’s Yunfeng Capital. This August, Netease Cloud Music’s VIP services were included into “88VIP program,” one of Alibaba’s customer loyalty projects.