Christian Living

chinaconnection 02/08/08

Free Legal Music Downloads Coming Soon!

As China's over 210 million Internet users in China will soon surpass those in the U.S., Google's quest to lose its also-ran status in China continues.  

Baidu.com has reign as China's search engine king has flourished, now attracting over 60% of China's market, versus Google's 25.9%.  However, Google may have found a chink in Baidu's armor when it comes to music downloads. 

Seven percent of Baidu's visitors come to the site for free music dowloads (which are also unlicensed),  causing Google to find a new adversary in its quest for China: the music industry.  Since Google can't compete with Baidu when it comes to music downloads, the Wall Street Journal has reported that Google and Top100.cn have joined forces to offer free, licensed music downloads.  Top100 already has contracts with Universal Music, as well as hundreds of other smaller companies, to offer their licensed music without additional charges to consumers.

According to the International Federation of Phonographic Industries (IFPI), 99% of all Chinese music files are pirated, severely cutting into potential revenues from this growing market.  If more measures were in place to promote the distribution of legal music downloads, China's Internet market could be very lucrative for various record companies, especially considering the fact that 90% of China's Internet users listen to illegally downloaded music daily.

Unlike the iTunes revenue model, where users pay a fee per song, the group's profits will come from online advertisers.  Talks for this joint venture with Google are still in the final phases, but they could launch this new service within the next few weeks.

Interestingly, on Monday, Universal Music, Sony BMG and Warner Music filed a suit against Baidu.com and Sohu.com, demanding they remove links with unlicensed music from their sites.  Music companies have lost a previous case against Baidu, but China has tightened its copyright protection.  Last December, the music industry had a favorable ruling in a similar case against Yahoo China.

If the court rules in favor of the music companies, Google's arrangement could be even more profitable in terms of increasing its competitiveness with Baidu.  On the other hand, considering the fact that Baidu has over twice as much traffic as Google China, will a lucrative music deal be enough to increase its presence?

Beyond China, however, this arrangement could also have big implications for Internet users worldwide.  If people in China are able to download licensed music for free in China, and they're not just getting Chinese songs from Top100.cn, but songs in English, Japanese, Korean, etc.,  why should people in the U.S. pay for music online?  With a simple Internet translator, even the one offered by Google, anyone could feasibly log into the site and take advantage of it. 

Granted, the advertisements probably aren't geared towards consumers outside of China, but it could be a matter of time before the impact of this arrangement cuts into the iTunes audience, for example.  I don't expect it to happen automatically, but this deal could signal that the days of record labels profiting from users, rather than advertisers, paying for music online could be coming to an end.

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