Google chases Chinese users with free music

Google is offering Chinese users free music downloads as it aims compete with domestic search rival Baidu and help record labels squeeze revenue from a market rife with piracy.

Google will initially offer 350,000 tracks, increasing to 1.1m in the next few months. The service is launching in partnership with Chinese music site, Top100.cn, and with the support of the four major record labels, Warner Music, Universal, EMI and Sony.

In total, Google will let users download or stream music from 140 labels. Users outside of China will not have access to the free downloads.

Google intends to share ad revenues from the music service with the record labels, helping them extract precious pennies from the Chinese market, where an estimated 99% of music files are circulated illegally. Despite now constituting the world’s largest single internet population, China accounted for just 1% of the global market for legal downloads last year, spending a meagre USD76m on legal MP3s.

The situation is so dire that some key figures in the music business have described the Chinese online market as ?completely unmonetised by the music business?.

As well as generating revenues for record labels, the new service could help Google win market share from the dominant Chinese search engine, Baidu, which controls three quarters of the market, according to the Chinese Internet Network Information Centre. Rival researcher Analysys International pegs Baidu’s 2008 market share at 62%.

According to Kai-Fu Lee, Google's Greater China president, the music service is ?the key missing piece? in Google's Chinese offering. He says the current lack of music search is the most common reason Chinese users give for using a rival search engines over Google.