The music industry isn't exactly known for giving away music for free. But Britain's EMI is doing just that, teaming up with Chinese portal and Motley Fool Rule Breakers selection Baidu.com (Nasdaq: BIDU ) to launch an online music service where Chinese Internet users can listen to songs at no cost.
Chinese-language EMI songs will be available for free to Chinese patrons of Internet giant Baidu. The songs will stream to users' computers for a one-time listen, rather than being available for download, which should help circumvent piracy concerns.
Music piracy's a huge concern to major music labels like EMI, Sony (NYSE: SNE ) , Warner Music (NYSE: WMG ) , and Vivendi's (NYSE: V ) Universal. And if they're worried about piracy here in the States, China's an even bigger point of concern in that department; the country's piracy of software, movies, music, and other intellectual property is endemic. Baidu's previously been in hot water with music companies (and the Beijing court) over accusations that its search engine helped piracy by directing users to illegal music sites.
A streaming music service should be far more palatable to EMI as it tries to reach out to Chinese consumers accustomed to free content. Since Baidu and EMI will have advertising on the service, they may even make money off the deal. Baidu said it's also talking to other music companies about similar ventures.
EMI's certainly not the first American company to hook up with Baidu. The company is China's version of Google (Nasdaq), commanding the lion's share of Internet searches in its native market. Baidu runs the world's fourth most popular site, behind Google, Microsoft (Nasdaq: MSFT ) , and Yahoo! (Nasdaq: YHOO ) . And since it also functions as an entertainment portal, EMI has good reason to want a presence on its site.
The desire to do business in China may seem like a no-brainer for many companies, but some are finding it trickier than expected. Baidu's huge popularity in China has established the company as a powerful partner for foreign firms seeking exposure to the nation's large and growing Internet audience, which should make it a stock worth watching in the years to come. As for the music industry, given the trouble it's had adapting its business model to the digital age here in the U.S., I can't help wondering whether it'll be forced to adopt even more creative strategies to thrive in China.
Searching for more on Baidu.com? Look no further:
- One Fool nominated Baidu as the best international stock for 2007.
- Review how Baidu did in 2006.
- Flash ahead to a preview of 2007 for Baidu.
Alyce Lomax does not own shares of any of the companies mentioned.