Financial Chronicle
Trying to gain ground in China, Google, the search engine company, said Monday that it had begun to offer links to free music downloads — a service it does not offer anywhere else in the world.
Google executives said they were responding to the phenomenal popularity of free music downloads in China, one of the few markets where the company lags, by forming an alliance with the music industry, including Sony, Universal Music and Warner Music.
The search engine company hopes the demand for music downloads will raise Google’s profile in China, which has already overtaken the United States as the world’s biggest Internet market with nearly 300 million users, and also help the company gain market share against its chief rival here, Baidu, the nation’s dominant search engine.
“This is a huge leap of faith for us,” Kai-fu Lee, the president of Google Greater China, said in a telephone interview Monday. “We hope this will move the landscape to a legal model.”
The deal, which was announced at a news conference in Beijing, is significant for Google and the global music industry because Chinese consumers are addicted to searching for music and downloading free music, often through illegal sites.
Baidu, which has about 62 percent of the Chinese search engine market, has grown incredibly popular partly by offering music search services and linking to sites that offer free downloads of music.
By comparison, Google — which until now has not offered links to free music downloads — has only about 28 percent of the search engine market in China, according to Analysys International, a Beijing research firm.
Saying they are losing big money in China, the big global music companies have sued Baidu in a bid to stop the company from linking to illegal web sites. But Baidu has defended itself, saying it is simply offering search links. The cases are pending.
Baidu also says it has its own revenue-sharing deals with 100 record companies. And last December, the company hired Catherine Leung, a former executive at Universal Music Group China, to head its digital entertainment division.
But Monday, Google said it was determined to catch Baidu, adding that it would offer Chinese consumers exactly what they want but would do so legally by striking a deal with a Chinese partner and the global music industry, including independent music companies.
The Google service allows Chinese consumers to search for music, link to a Beijing company called Top100.cn, and download licensed music from that Chinese site, which has signed contracts with the music industry
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