China Strikes Deal to|Battle Music Piracy

(CN) - China's leading Internet search engine, Baidu, has partnered with three of the global music industry's largest companies to begin legally distributing music within the county, an effort by the parties to curtail widespread piracy and end years-old copyright infringement litigation that reached Beijing High People's Court.

One-Stop China (OSC), a joint venture between Universal Music, Warner Music and Sony Music, on Tuesday announced a two-year licensing agreement that will allow China's estimated 450 million Web users access to over 500,000 songs.

From Justin Bieber to John Coltrane, once indie-darlings The Black Keys and ever-angry Eminem, and music in Mandarin and Cantonese, OSC catalogues will be stored on Baidu's servers and available to stream or download for free. Baidu will foot the bill, paying the labels on a per-play and per-download basis.

For now, listeners must register on Baidu's ad-supported website, Ting, which will float its payments. The company plans to release a premium, fee-based service later this year.

The "landmark agreement," as Baidu called it in a press release, included a conciliation agreement endorsed by the Beijing High People's Court, ending the music companies' copyright infringement claims.

Universal, Warner and Sony sued Baidu in 2005, and again in 2008, for allowing users to pirate their catalogues. They lost both cases, but had appealed to higher courts.

Music was not stored on Baidu's servers, the courts ruled, as the result of "deep linking," or providing search result that directed users to unlicensed content on other websites.

Deep linking is banned in the U.S., which faces its own challenge in stopping music piracy.

In 2010, peer-to-peer software program and file-sharing network LimeWire agreed to pay 13 major labels $105 million for copyright violations in an out-of-court settlement. The Recording Industry Association of America had asked for $75 trillion in copyright damages, which Federal Judge Kimba Wood called "absurd."

In its partnership, Baidu agreed to remove all deep linking to OSC content, but other music may remain available via its search services.

A report last January by the International Federation of the Phonographic Industry said China has a music piracy rate of "virtually 100 percent." Chinese online music content and service providers earned around $349.8 million in 2010, a 14.4 percent jump from 2009, according to a report released by the country's Ministry of Culture.

"Our partnership with One-Stop China marks an exciting new beginning. I'm confident that Baidu, the Chinese music fans, recording artists, and the record companies alike will all benefit from this win-win partnership," Jennifer Li, Baidu's chief financial officer, said.

Warner Music Asia Pacific's Lachie Rutherford, Universal Music's Max Hole and Sony Music's Thomas Hesse, on behalf of OSC shareholders, added, "This deal connects One-Stop's world-class repertoire of licensed music to a massive audience, creating crucial new opportunities for artists. All parties, especially music fans, will benefit from the growth of this type of compelling music service."

According to Beijing-based market research firm Analysys International, Baidu accounts for about 80 percent of country's Web-search traffic. Google, in comparison, held a 19 percent share of the Chinese market in the second quarter of 2011.

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