Deaf To Music Piracy

By Bruce Einhorn and Xiang Ji | Business Week
September 10, 2007

Chinese search engines make it easy to steal Net tunes

Eric Zhu is just the sort of customer that Western music labels want to reach in China. The 28-year-old Beijing resident is a sales director for a local company and enjoys listening to Western pop, from the Backstreet Boys to the Spice Girls, on his MP3 player. Zhu doesn't pay for his tunes, though. Like millions of other young Chinese, he downloads them for free using Baidu.com (BIDU), the country's biggest search engine. Baidu makes it so easy--just hit the MP3 tab on the home page, type in the name of the song, and click. What's more, Zhu doesn't believe he and his friends are doing anything wrong. "I think it's a problem with the law, not with us users," he says.

China, home to a thriving commerce in counterfeit software and bootlegged films, has also become the world capital of pirated music. Almost 100% of music downloaded from the Net is stolen, according to Leong May See, Asia director for the International Federation of the Phonographic Industry, an umbrella group that includes Sony BMG Music, Universal Music, and Warner Music. It doesn't help that two of the country's most popular search engines, Baidu.com and Yahoo China (YHOO), help users find and download songs quickly, and, Leong alleges, illegally. The two provide "deep search" services that allow listeners to download free MP3s from the databases of other sites without ever having to go to those sites themselves. "We have huge problems in China," says Leong.

It's not just the international music in- dustry that has a beef with China's search engines. Google China (GOOG) is struggling to compete against Baidu, which has an edge thanks to its music downloads. Local startups trying to build businesses around selling music online also gripe about Baidu and Yahoo China. "Baidu is at the root of the problem of illegal music downloading," says Wu Duanping, chief executive of online music seller Zhejiang Flyasia Electronics Business Co., based in Hangzhou. Baidu and Yahoo China declined to comment.

>> Read the complete article