Baidu buys into e-book retailer

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Baidu Inc, China's biggest search engine by market share, has bought approximately 40 percent of a Chinese e-book seller, That's according to a person close to the matter who declined to be named.

The search engine has been in discussions about cooperation with Fanshu, a website on which users can search, share and purchased licensed e-books, since last year, according to the source.

Last month, an announcement on the website of China Beijing Equity Exchange (CBEE) said Fanshu was planning to transfer 40 percent of its stake worth 47.6 million yuan ($7.39 million). It's not known how much Baidu will pay if the deal goes ahead.

Zhu Guang, Baidu's vice-president, said the company "doesn't comment on rumors". Zhao Ge, chief executive officer of Fanshu, also declined to comment.

Analysts said if the deal goes ahead it would lead to a combination of Baidu's huge volume of traffic and its user base with Fanshu's resources in licensed books.

"Fanshu's development has been relatively slow, and it does need the support of a greater volume of traffic and a wider user base. It will also good for Baidu to cooperate with a company with licensed book resources," said Zhang Yanan, an analyst with the consultancy Zero2IPO Group.

However, Fanshu's future success depends on whether its can persuade publishers to sell e-book copyrights, because many are still cautious about digital publishing, Zhang added.

Companies such as Shanda Interactive Entertainment Limited and Alibaba Group Holding Ltd have already launched e-book platforms to cash in on the burgeoning industry.

Baidu has long been the subject of allegations that it infringed copyright with its music search service Baidu MP3, which has links directing users to content, and its Baidu Wenku service, where users can read, share and download documents and books free of charge.

Baidu recently announced that it is cooperating with three major international record companies to provide licensed digital music.

Fanshu, which came online in July 2009, was 60 percent owned by Shanghai Founder Digital Publishing Technology and 40 percent owned by Zhongsou Online Software Co Ltd.

Fanshu reported a net loss of 21.58 million yuan ($3.34 million) with revenue of 1.14 million yuan last year, and it lost 11.44 million yuan over the first quarter of this year with revenue of 1.9 million yuan, according to the CBEE announcement.

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