Google aims for breakthrough in China with free music

Posted on Saturday, February 09 2008 @ 3:20 CET by Thomas De Maesschalck
Google is cooking up a plan to gain more marketshare in China. WSJ reports Google is forming a joint venture with a Chinese online music firm to provide free legal music downloads in China.
The service, which is likely to offer access to tunes from three global music companies as well as dozens of smaller players, could start in the next several weeks barring any last-minute hiccups. The music pact marks a turning point in Google's battle with Baidu to gain dominance in an Internet market that is soon expected to surpass the U.S. this year in number of users.

Baidu has proved a brash adversary for the much larger Google, leveraging its status as hometown champion in China to beat the U.S. Internet giant at its own game. From the start, Baidu has boasted that its knowledge of China and the Chinese language would give it a natural advantage over foreign rivals.

"We've been the No. 1 Web site in China for a number of years, and in fact we are the largest Web site outside of the U.S.," says Robin Li, Baidu's co-founder and chief executive. "When people get to know about the Internet, the first Web site they learn is about Baidu in China."

Google declined to comment on the China music plan. In the past, Google executives have made clear the company's determination to overtake Baidu. "We were late entering the China market, and we're catching up," Google Chief Executive Eric Schmidt said during a visit to Beijing last April. "Our investment is working and we will eventually be the leader."

A significant part of Baidu's success has been its music search service, which draws a sizable chunk of traffic -- at least 7% of its total -- to the site by facilitating easy access to free music. Baidu makes money by selling ads directly on its music pages. The free music also entices users to come back for other services, all of which helps the company sell advertisements.

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