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Baidu-EMI Alliance Completed
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China's top search engine Baidu.com Inc put the finishing touches on a deal with EMI Music yesterday as it tries to legitimize its controversial online music search service. Under the agreement, EMI Music will authorize Baidu's streaming of its Chinese repertoire on Baidu's music search channel, with Baidu sharing ad revenue in return.

The two companies also agreed to explore a free music download service.

Shawn Wang, Baidu's chief financial officer, stated the cooperation would not alter Baidu's existing search services, refuting speculation that it would cease including Web links in its search results that enable users to download copyrighted music free of charge.

Baidu is the biggest player in the Chinese online search market with a share of around 60 percent, triple that of second-placed Google. Negative echoes emerged from experts saying a large part of Baidu's market share is due to 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 with a catalog including the Beatles, Coldplay and Robbie Williams, has suffered from a downturn in popularity in recent years. It said its digital music business represented about 9.4 percent of its music division revenue, compared to an 11 percent industry average.

"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 accusing the search firm of engaging in illegal downloading and playing copyrighted music.

Although the cooperation will benefit both Baidu and EMI, Liu added that the advertising-supported free model of distributing music would nevertheless hurt the existing music download business.

(China Daily January 17, 2007)

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