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Google Gets Into Free Music Download Biz in China

Google on Monday launched free downloads of licensed songs in China, while sharing advertising revenue with major music labels in a market rife with online piracy.

Lee Kai-Fu, president of Google (NASDAQ: GOOG) in greater China, said one reason Google lagged in the mainland search market was because it did not offer music downloads, the missing piece to its strategy in a market where it trails leader Baidu.com (NASDAQ: BIDU).

"We are offering free, high quality and legal downloads," Lee told reporters. "We were missing one piece ... we didn't have music."

The service offers downloads of some 350,000 songs -- from Chinese and foreign artists -- a number that will rise to 1.1 million in the coming months, said Gary Chen, chief executive of Google's partner www.Top100.cn, a Chinese music Web site co-founded by basketball star Yao Ming.

Music from artists signed by Sony Music, Warner Music, EMI and Universal Music will be available on the service, which Google has no current plans to expand beyond China, said Lee.

"This is the first serious attempt to start [monetizing] the online market in China. I can't overestimate how important this is," said Lachie Rutherford, president of Warner Music Asia Pacific and Asia chairman of the International Federation of the Phonographic Industry (IFPI).

Users will be able to search by musical measurements such as the level of "beat" in a song and "instrumentality," as well as by artist and song name.

IFPI said last year that more than 99 percent of all music files distributed in China are pirated, and the country's total legitimate music market, at $76 million, accounts for less than 1 percent of global recorded music sales.

The new service will attract users away from illegal download sites because the music and service will be of a higher quality, said Warner's Rutherford.

Downloads of unlicensed music and videos are rampant in China, the world's biggest Internet market by number of users.

While Google dominates the global Web search market, Baidu holds more than 60 percent of the market in China, more than double Google's share.