Music companies sue China's Baidu, Sohu

Music companies have started a new fight with China's Internet industry over piracy, filing lawsuits accusing popular Web sites Baidu.com and Sohu.com of aiding illicit online copying, an industry group said Wednesday.

The suits, filed Monday, ask a Beijing court to order Baidu and Sohu to remove from their search engines links to thousands of sites that carry unlicensed copies of music, the International Federation of Phonographic Industries said.

Music companies lost an earlier lawsuit against Baidu. But China later changed its piracy standards, and companies won a similar case last year against Yahoo's China arm.

"We sent notices to Baidu to get them to take down the links and they failed to comply, so we had to sue them," said the IFPI's Asia regional director, Leong May Seey.

In another moved aimed at undercutting Baidu's popularity among music fans, Google Inc. is poised to offer an advertising-supported service in China that will offer legal downloads of songs for free, according to The Wall Street Journal.

The new Google service, which could debut in the next few weeks, will be offered in a joint venture with Top100.cn, a Beijing-based Web site that already has licensing agreements with Universal Music Group and about 100 other labels. The Journal's report cited unnamed people close to the situation.

Google declined to comment on the report. "We're continually exploring opportunities in search, but we don't have anything to announce at this time," the Mountain View-based company said in a Wednesday statement.

Although it handles more than 60 percent of Internet search requests worldwide, Google is a distant second to Baidu in China, which is expected to emerge as an increasingly attractive market for advertisers as the country's economy continues to expand.

The latest lawsuit against Baidu and Sohu was filed by Universal Music Ltd., Sony BMG Music Entertainment Ltd. and Warner Music Hong Kong Ltd., as well as Hong Kong-based Gold Label Entertainment Ltd., according to the IFPI.

"All of the Chinese companies involved operate similar services based on delivering music to their users via `deep links' to hundreds of thousands of infringing tracks on third-party sites, with the aim of driving their own advertising revenue," the IFPI said in a statement.

Phone calls to Baidu and Sohu were not answered Wednesday, the first day of China's official Lunar New Year holiday.

China is a leading source of pirated music, software, movies and other goods. Companies say violations are growing even though Beijing has stepped up penalties and enforcement efforts.

The IFPI says more than 99 percent of all music files distributed in Chin are pirated. It says that despite China's large potential market, the country's legitimate sales of $76 million a year account for less than 1 percent of global sales.

Baidu.com has about 60 percent of China's search market, while Sogou — Sohu's search engine — has about 1.2 percent, according to Beijing-based research firm Analysys International.

Baidu, Sohu and other Chinese Web sites say they should not be held liable for violations by other Web site operators. After earlier complaints, Baidu added a disclaimer to its site in 2006 saying it "fights piracy."

"The music industry in China wants partnership with the technology companies. But you cannot build partnership on the basis of systemic theft of copyrighted music," IFPI Chairman John Kennedy said in the group's statement.

Leong said the IFPI also filed a new action against Yahoo China accusing it of failing to pay 210,000 yuan ($27,000 in damages and asking a Beijing court to compel the company to comply.

Yahoo's China operations are run by the company's local partner, Alibaba.com Ltd.

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On the Net:

International Federation of Phonographic Industries: http://www.ifpi.org

Baidu.com (in Chinese): http://www.baidu.com

Sogou.com (in Chinese): http://www.sogou.com