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Cloud Call Center Community Featured Article

[March 17, 2006]

Baidu.com Tries to Solve Dispute with Record Companies

(Comtex Business Via Thomson Dialog NewsEdge)BEIJING, Mar 17, 2006 (SinoCast China IT Watch via COMTEX) --Baidu.com, the largest Chinese web search engine, recently put forward a cooperation scheme to ease the relationship with record companies, sources disclosed.


The Chinese search giant tries to transfer part of its advertisement income to record companies in exchange for the right to download network songs, according to the scheme. But record companies have not nodded assent yet.

Because of the offer of some unauthorized MP3 download on its search webs, Baidu.com was brought into court by seven Hong Kong-based record companies on September 26 last year, which required a compensation of CNY 1.67 million. The seven plaintiffs are Universal Music, Warner Music Hong Kong, EMI, Sony BMG, Go East Entertainment, Gold Label Entertainment, and Cineploly, and their representative is International Federation of the Phonographic Industry (IFPI). In court, the two parties expressed their willingness to mediate with each other. However, they have not reached an agreement so far.

Baidu.com suggested in the new scheme that record companies may come in for a share of the advertisement income on a website if their contracted songs or singers appear on the website. In return, record companies have to authorize Baidu.com the copyrights of these songs. In one word, this is an "advertisement for copyright" plan.

It is the first time that Baidu.com played up to record companies since the dispute took place last year. Keywords and character advertisements are the two main income sources of Baidu.com. Its advertisement income every month is about CNY 30 million on average, and MP3 search accounts for nearly 30% of the total. If record companies accept the suggestion, Baidu.com will pay a large number of advertisement dividends to them. But it will not be plagued by the dispute of music copyrights.

Why is it willing to pay such a high price? At present, Baidu.com still offers music download to users free of charge. Insiders note that if the court asserts the right infringement, Baidu.com will need to compensate much more to record companies. In light of current cases, ordinary pirate compensation is based on the sales volume of songs. If calculated from the date of the launch of MP3 search, over 100 millions songs have been downloaded, and the compensation would amount to CNY 1 billion. But the income of Baidu.com last year was no more than CNY 300 million.

In the prospectus, Baidu.com mentioned the music copyright especially, saying there would be legal risks. If it can not properly solve the problem, it may come across even bigger loss in the future. Therefore, it is economical to pay some advertisement income to record companies.

Baidu.com refuses to disclose the proportion of the advertisement dividend suggested. Taihe Rye Music, the first record company joining hands with Baidu.com, shows interest in the scheme. Since the combination of the traditional music and Internet, there have appeared tremendous changes to the spreading mode and channel of songs, an executive of the company said. Compared with paid music download, advertisement dividend is a fresh way and connected with the click rate and download volume of songs directly. As along as the two parties are satisfied with the proportion, it will be a good solution to the copyright dispute.

However, Universal Music, Warner Music, EMI, and Sony Music have not pronounced on the suggestion, according to a director from IFPI. The director said that since the lawsuit had not been concluded, so it was too early to talk about the cooperation between the two parties.

(USD 1 = CNY 8.04)

From www.ccidnet.com, Page 1, Thursday, March 16, 2006
info@SinoCast.com

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