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China's Baidu Works With Labels on Music Downloads

Top Chinese search engine Baidu is considering sharing ad revenue from its music search service with record labels, or remunerating the labels in some other way. Baidu's move toward authorized downloads comes after years of criticism of the search service for linking to downloads of pirated songs on other Web sites.

The move comes after rival Google expanded its own licensed music download search, offered only in China, earlier this year.

Baidu is cooperating with multiple labels to find a "mutually beneficial and sustainable" model for its music search, a company representative said Wednesday. Sharing ad revenue is just one model being considered, the person said, without giving details.

Baidu's music search has come under attack from Chinese and foreign music industry groups for copyright infringement, but it has also been a crucial draw for users.

The service accounts for 20 percent to 30 percent of searches on Baidu, according to consumer surveys by Shanghai-based China Market Research Group.

Google launched its own music search service to draw more young users, a group Baidu dominates even more than it does China's wider search market, said Shaun Rein, director of the research firm.

Baidu held about three-quarters of China's search market last year, compared to one-fifth for Google, according to China's domain registry agency.

Google this year added songs from major global and independent labels to its music service, which had suffered from limited selection compared to Baidu's search. Google splits revenue from the ad-supported service with a partner Chinese music Web site and with the record labels that own the rights to the songs.

Baidu's music search service could be ailing. Its contribution to Baidu's income and total traffic has fallen in the last few years, company CEO Robin Li said during a conference call with analysts last week.

But the target of its latest move is Google. Google's challenge to Baidu has grown in the last year after a round of hiring and new efforts to roll out localized services, said Rein.

"With Google coming on strong, Baidu needs to combat them," Rein said.

(IDG, the parent company of IDG News Service, is an investor in Baidu.)

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