China's top search engine Baidu.com Inc clinched a deal with EMI Music yesterday in an effort to legitimize its controversial online music search service.

Under the agreement, EMI Music will authorize Baidu to stream its Chinese repertoire on Baidu's music search channel. In return, Baidu will share the revenue from ads that Baidu users will be exposed to when they listen to EMI's music online for free.

The two companies also agreed to explore a free music download service.

Shawn Wang, Baidu's chief financial officer, said the cooperation would not affect Baidu's existing search services, refuting speculation that it would no longer provide Web links in its search results that enable users to download copyrighted music without charge.

Baidu is the biggest player in the Chinese online search market with a share of around 60 percent, triple that of second-largest player Google. But experts said a large part of Baidu's market share is based on its music search channel, a controversial service that has seen Baidu accused of copyright violation.

"The cooperation is good news for Baidu and EMI Music, since it will help Baidu ease increasing criticism of its music search service and will help EMI to win a better position in the battle against its competitors such as Sony BMG, Warner Music and Universal Music," said Liu Bin, an analyst with BDA China.

EMI, the world's third-biggest music company whose catalog includes the Beatles, Coldplay and Robbie Williams, has seen its market share decline in recent years. It said its digital music business represented about 9.4 percent of its music division revenue, compared with the industry average of 11 percent.

"The cooperation between Baidu and EMI also moves us towards jointly controlling digital piracy, something that is important to EMI in the Chinese digital music market," said Norman Cheng, chairman of EMI Music Asia. "It is also part of EMI's strategic roadmap to expand digital music development across the region," Cheng added.

Last November, EMI and a group of leading international record companies, including Sony BMG, Warner Music and Universal Music, lost a lawsuit against Baidu in which it accused the search firm of engaging in illegal downloading and playing copyrighted music.

Although the cooperation will benefit both Baidu and EMI, Liu said the advertising-supported free model of distributing music would hurt the existing music download business.

source: China Daily