Realizing that it would rather work with record labels than battle them in court, Baidu (Nasdaq: BIDU) launched a licensed music service last week.

Offering legal digital tunes isn't new in China. Google (Nasdaq: GOOG) teamed up with Top100.cn to offer a free ad-based music service two years ago. The problem is that it's too easy for music buffs to download unlicensed tracks.

Piracy is a major problem in China. The International Federation of the Phonographic Industry reported a couple of years ago that more than 99% of the music downloaded in the country is acquired illegally.

Baidu has been part of the problem in the past. It runs a popular music search portal that is so thorough in its web scouring that it can link to unlicensed tracks offered by third parties. The new licensed service doesn't mean that Baidu will be shuttering its controversial music search portal.

Is Baidu culpable for the content waiting at the other end of its search query results? There are sound arguments to be made on both sides, but the pressure is on for China's leading search engine to finally get it right.

Baidu has been validated in court. Yahoo! (Nasdaq: YHOO) may have lost its music battle in China four years ago, but hometown faves Baidu and Sohu.com's (Nasdaq: SOHU) Sogou have emerged victorious. That sentiment may be shifting, though. Reports last month indicated that the government was getting ready to punish the popular ear-candy portals.

There's a meaty decision to make here. Will Baidu's popularity fade if it cracks down on deep linking to unlicensed downloads? Are there style points to be earned if it cleans up its site? One can always argue that the music industry is already too far gone. It may be up to a strong champion of legal downloads -- like we saw stateside with the launch of Apple's (Nasdaq: AAPL) iTunes Music Store -- to move young downloaders away from the profitless dark side.

Baidu took an important first step last week, but it can't be the only step it takes.

What will it take to curb musical piracy in China? Dream out loud in the comment box below.

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Longtime Fool contributor Rick Munarriz has been a fan of China's growth stocks for several years now, even though he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.