China investor seeking another slice of K-Pop with music agency deal

By Joyce Lee SEOUL (Reuters) - Talent agency Cube Entertainment Inc is poised to become the latest K-pop producer to link up with a Chinese partner, banking on the popularity of everything South Korean from make-up to music in the world's second largest economy. IHQ Inc, which controls Cube, said on Monday its parent C&M was in talks with Chinese investors over a possible investment, without providing further details. Cube represents popular K-pop groups Beast and 4minute. Online media firm Money Today said the investment could be worth up to 100 billion won ($80.7 million), citing an unnamed source. News of a potential deal sent shares in Cube surging by the 30 percent ceiling on Monday. K-pop is big in China, part of the broader "Korean wave" of cultural exports popular in Asia and globally, and partnerships between Chinese digital music service providers and K-pop producers have accelerated since China stepped up music copyright protection in July 2015. "As with copyrights, there are signs that China's music market is changing, and we expect K-pop agencies to eventually be able to get a share of the concert profits instead of the current fixed sum," said Kyobo Securities analyst Chung Yu-Seok. Earlier this month, a Singapore-based unit of Alibaba Group Holding Ltd agreed to acquire a 4 percent stake in South Korea's largest entertainment management agency S.M. Entertainment for 35.5 billion won, as part of a strategic partnership, S.M. said in a filing. Another K-pop agency, FNC Entertainment, attracted investment of 33.7 billion won from Shanghai-based Suning Universal Media in November, according to an FNC filing. Some K-pop agencies are known to boost physical album sales by releasing different versions of the same song. S.M., for example, released 18 versions of group EXO's hit album late last year, in both Korean and Chinese, so fans can collect them all. Agencies such as S.M. and YG Entertainment Inc are also expected to leverage their digital music exposure in China by increasing the number of concerts they stage there, analysts said. In China, digital music made up about 72 percent of the music industry 2014 revenue of $790 million, according to PwC data, larger than 46 percent globally, according to the International Federation of the Phonographic Industry (IFPI). IFPI said informal estimates suggest Chinese-language music accounts for around 80 percent of China's music market, with K-pop and Japanese J-pop combining for another 10 percent, and other international music accounting for the remainder. ($1 = 1,239.5000 won) (Editing by Miral Fahmy)