Baidu strikes licensing deal with music labels
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Baidu, China’s largest search engine, has struck a deal to license songs from three major record labels, giving music companies a rare victory against piracy in the world’s most populous country.
Terms of the multi-year deal, announced Tuesday, call for Baidu to pay Warner Music Group, Universal Music Group and Sony Music Entertainment for every song download or stream served up by Baidu’s new ad-supported social network, dubbed Ting.
Baidu also agreed to pay the labels for songs delivered through its MP3 Search service. Terms of the license were not disclosed.
The labels sued Baidu in 2008, claiming that the Chinese company violated copyright laws by serving up links to pirated music. The music companies lost the case in 2010, but pursued an appeal in a higher Chinese court. Baidu’s agreement to now pay for licenses effectively settled that lawsuit.
The Obama administration, through the Office of the U.S. Trade Representative, has been pressuring China and other ‘notorious markets’ to rein in piracy, counterfeiting and other copyright infringements. The U.S.T.R., in a report last year, cited Baidu for providing ‘deep links’ to sites that let users directly download pirated content.
The Chinese market, with 477 million Internet users, has been particularly nettlesome to content providers as they seek ways to build businesses there. Downloading music is the second most popular Internet activity in China, according to the China Internet Network Information Center. But the amount of revenue from digital music in China, estimated to be $175 million last year, is a fraction of the $7.2 billion worldwide, according to PriceWaterhouseCoopers.
Agreements with major players in China such as Baidu, which reported $534.1 million in profit on $1.2 billion in revenue in 2010, is seen as key to establishing a beachhead in that market for legitimate music providers.
-- Alex Pham