China's top search engine Baidu.com Inc clinched a deal with EMI Music
yesterday in an effort to legitimize its controversial online music search
Under the agreement, EMI Music will authorize Baidu to stream its Chinese
repertoire on Baidu's music search channel. In return, Baidu will share the
revenue from ads that Baidu users will be exposed to when they listen to EMI's
music online for free.
The two companies also agreed to explore a free music download service.
Shawn Wang, Baidu's chief financial officer, said the cooperation would not affect
Baidu's existing search services, refuting speculation that it would no longer
provide Web links in its search results that enable users to download copyrighted music without charge.
Baidu is the biggest player in the Chinese online search market with a share
of around 60 percent, triple that of second-largest player Google. But experts
said a large part of Baidu's market share is based on its music search channel,
a controversial service that has seen Baidu accused of copyright violation.
"The cooperation is good news for Baidu and EMI Music, since it will help
Baidu ease increasing criticism of its music search service and will help EMI to
win a better position in the battle against its competitors such as Sony BMG,
Warner Music and Universal Music," said Liu Bin, an analyst with BDA China.
EMI, the world's third-biggest music company whose catalog includes the
Beatles, Coldplay and Robbie Williams, has seen its market share decline in
recent years. It said its digital music business represented about 9.4 percent
of its music division revenue, compared with the industry average of 11 percent.
"The cooperation between Baidu and EMI also moves us towards jointly
controlling digital piracy, something that is important to EMI in the Chinese
digital music market," said Norman Cheng, chairman of EMI Music Asia. "It is
also part of EMI's strategic roadmap to expand digital music development across
the region," Cheng added.
Last November, EMI and a group of leading international record companies,
including Sony BMG, Warner Music and Universal Music, lost a lawsuit against
Baidu in which it accused the search firm of engaging in illegal downloading and
playing copyrighted music.
Although the cooperation will benefit both Baidu and EMI, Liu said the
advertising-supported free model of distributing music would hurt the existing
music download business.
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