Music Ally

Chinese search giant Baidu has been found guilty of copyright infringement for providing unauthorised links to lyrics in its Baidu MP3 Lyrics search service. The case was brought by Chinese publisher MCSC which found 50 of its songs available on the service. According to local reports, Beijing People’s Court, Haidian district ordered that Baidu remove the links and pay 50,000 Yuan (GBP £4,750 or USD $7,300) plus 10,000 Yuan (£950) for litigation expenses.

While Baidu is expected to appeal, the case is nevertheless a notable step by the Chinese courts to assert the validity of copyright in the country. Baidu is China’s biggest search engine with over 60% market share; and also operates the largest online music service in the country, providing links to MP3 files hosted elsewhere on the net. Since the Baidu MP3 Search service links to music files on the web the company claims that it is not infringing copyright as it is not actually hosting the files. This claim was contested by the IFPI which fought a legal battle against Baidu but uiltimately lost in January this year when the Beijing No. 1 Intermediate People’s Court ruled that linking to content does not constitute infringement.

The ruling against the IFPI appeared to be a huge blow against advocates of stronger intellectual property protection in China; but some observers have suggested that rather than proving that the Chinese courts are not sympathetic to copyright concerns, it instead suggests that the IFPI failed to bring a proper case.

This latest ruling in favour of a local music publisher certainly indicates that music rights owners in China can be heard; and it’s not the first time that Baidu has been slapped down by the courts. In 2005  Shanghai Busheng Music Culture Media Company, an affiliate of EMI, won an infringement case against Baidu’s MP3 Search feature. However, at the time press reports suggested that the MP3 Search feature may be disabled as a result, but Baidu continued regardless. It’s not yet clear whether this latest legal ruling will have any discernable effect on the search engine’s claim that linking to content is fine; or whether it marks a small but significant turning point in the way the Chinese courts are prepared to back rightsholders.

Google has announced that it is abandoning its policy of censoring search results on its Chinese search engine, in response to a sophisticated cyber attack that tried to gain access to Gmail accounts of Chinese human rights activists.

“We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all,” writes SVP of corporate development and chief legal officer David Drummond. “We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”

Why are we writing about this? Last year, Google launched a free ad-supported music downloads service in China. It was hailed for its piracy-deflating potential, not to mention the contrast between it and local search engine Baidu, which has provoked anger in the music industry by deep-linking to copyrighted songs in the past.

Don’t get us wrong: this is much bigger than music. Google squaring up to the Chinese government will be welcomed around the world – its original decision to censor search engine results there has been criticised often. But it will be interesting to see what the knock-on effects are at a time when the Chinese government is also trying to make the country more hospitable for legal music services.

Beggars Group has announced a partnership with Outdustry for a push into China, including a dedicated website for Mandarin speakers.

The Beggars catalogue will be made available digitally through wa3.cn for online subscription and mobile distribution, while physical releases will go out through local labels Jingwen and Hi-Note. Beggars artist British Sea Power will be playing Hong Kong, Taiwan and Beijing as part of the expansion this October.

“We’ve witnessed there’s a vibrant music scene within China and awareness of Western music is developing fast, so it’ll be a challenging market for us to work in,” says Beggars Group’s Simon Wheeler. It’s a good time to be looking at China, since the government there has just announced plans to crack down on online music piracy, including search engines providing links to illegal downloads.

We have to confess, the news that Spotify is to launch in China took us completely by surprise. However, it’s official. A Spotify spokesman told us: “we can confirm that we are looking forward to working alongside the TOM Group with the ultimate aim of making Spotify available to music fans across Greater China.”

As Spotify becomes more and more of a household name, stories about the company which are only half-true can spread like wildfire. Yet this time, it seems Spotify has been almost Apple-like in its ability to keep this under wraps; and the company is still being incredibly tight-lipped about its plans. Music Ally has spoken to a well-placed source in China who is similarly surprised about the news.

Spotify has become a huge success in several European markets, where users love suddenly having access to totally free streaming music on demand. But Chinese internet users have been used to this for years; and now with Google’s music service sanctioned by the labels in China it seems that free streams are now fully entrenched in the country. As this article points out - “Tencent, Sina, Baidu and three main telecom operators including China Mobile, China Telecom and China Unicom all have their own music online streaming portals already.”

In addition Chinese music fans demand Chinese music. Surely prioritising a US launch would have made more sense?  West was certainly the direction most people expected the company would travel, particularly after announcing yesterday the hiring of Faisal Galaria (previously international managing director of travel site Kayak.com and before that a European director at Skype) to set up a global business development team.  “I am passionate about building disruptive companies”, saysFaisal on the company blog. “Spotify is changing the way we all enjoy music and the old paradigms of music ownership. It’s going to be fun.”

It’s hard to question Spotify’s business acumen so far. Founder Daniel Ek claimed at a Music Ally panel at the Great Escape Festival this year that he’d spent just GBP £5,000 on marketing so far. Perhaps, then, with a little more marketing it’s possible to conquer China.

The key, for Spotify, has always been unlocking advertising revenue – particularly in China where the premium subscription model won’t fly. And on that basis the partner TOM is a good choice: the company runs a massively popular online entertainment portal, and also provides an online advertising platform in China.

We’ll keep you posted as more details come to light.

It might be engaged in a public licensing spat with the music industry in the UK, but in China Google is the good guy, following its launch of a free and fully licensed music downloads service.

It’s launched with 350,000 songs from artists on all four major labels, with plans to expand the catalogue to over 1.1 million this year. Google is sharing advertising revenues from the service with the labels, and working with Chinese music site Top100.cn to run it.

Google hopes to gain ground on local search rival Baidu, while the labels hope it’ll attract Chinese consumers away from illegal download sites.

IFPI boss John Kennedy has already hailed the move, describing it as “fantastic news” and “the perfect marriage between first-class technology and creative talent to produce a great product”.

There are no plans at present to expand the service beyond China.

Chinese hackers have cracked the codes used for iTunes Store vouchers using key-generators, and as a result are selling $200 voucher codes for as little as $2.60 online. That’s according to a report on the blog of Chinese music industry consultancy Outdustry.

It points out that thousands of these hacked vouchers are for sale on Chinese online shopping site Taobao, where users are paying the hackers to generate codes for them to sell.

Apparently six months ago, a $200 card went for around 320 RMB (roughly $47), but the price has since plummeted to around 18 RMB ($2.60) as more sellers pile in. “But we make more money as the amount of customers is growing rapidly,” one tells Outdustry.

As Apple reportedly prepares to launch its iPhone in China, the news is sure to cause concern within the company – especially if these hacked voucher codes start being sold in the West too.

Chinese digital music firm A8 has released its interim figures and two remarkable facts stand out. Firstly the company is reporting a tripling in revenues to RMB 329m (GBP £26m) and profits of RMB 136m (£11m). To put that in context A8’s total revenue is roughly equivalent to the entire digital music market in France (EUR 36m) The income comes primarily from mobile; and here’s the other startling fact: (more…)

Internet users in China are reportedly having problems accessing the US iTunes Store, with the problem allegedly due to the Chinese government’s unhappiness with the release of a recent Songs For Tibet compilation on Apple’s digital store. The group behind it, The Art of (more…)

We love the name of Beijing firm R2G’s new music subscription service: it’s called Wawawa and launched last Friday, with more than a million tracks from indie digital distributor IODA. The service costs 20 yuan a month (around $2.93) on an eMusic-style model where subscribers get up to 88 downloads a month, while also being able to stream their purchases over the Web (an important feature in China, where internet cafes are popular). (more…)

More news from China – a market coveted and feared by music firms in equal measure for its size and piracy – with Google apparently about to launch an MP3 search engine to compete with local search site Baidu. (more…)