Google Expands Music Search Engine in China; New Label Deals

Google (NSDQ: GOOG) has expanded the breadth of its music search engine in China, signing deals with all four major record labels to put their tracks on the site. The service, launched in August, lets users look up songs by singer, song, album title or beat and then download MP3s for free. Initially, the search engine had about 350,000 songs. With the addition of EMI, Sony (NYSE: SNE) Music, Warner Music Group (NYSE: WMG) and Universal Music the site’s catalog will jump to 1.1 million songs. “We were missing one piece … we didn’t have music,” Lee Kai-Fu, the president of Google in greater China, tells Reuters.

The music search engine is a major part of Google’s strategy to compete with Baidu (NSDQ: BIDU), which dominates the search market in China. A substantial portion of Baidu’s traffic comes from searches for MP3s. But many of the MP3s Baidu links to are illegal, and Baidu has been sued by the major labels for linking to them. Google’s service promises to offer legal — and higher-quality — tracks.

For the record labels, which will share ad revenue with Google and Chinese music company Top100, the deal will give them access to a market where they have generated almost no revenue due to piracy. More than 99 percent of all music downloads in China are illegal, according to industry group IFPI, which blames “deep-linking music sites” for half of the copyright infringement. “This is the first serious attempt to start (monetizing) the online market in China. I can’t overestimate how important this is,” says Lachie Rutherford, president of Warner Music Asia Pacific, in an interview with Reuters.