Zhu Guang, VP of marketing and public relations for Baidu (Nasdaq: BIDU), and Baidu music division GM Catherine Leung announced today Baidu will partner with the Music Copyright Society of China (MCSC) to launch an online music community in May, at which time it will also begin offering a library of licensed music.
Baidu will pay royalty fees to the MCSC for every song downloaded, Zhu said, but declined to reveal any figures. Under the arrangement, song-related fees will be paid to the MCSC by Baidu, and distributed to rights holders by the MCSC according to the society's own arrangements. Baidu will pay for every MP3 file played or downloaded through a link from Baidu, Zhu said, "even links to pirate sites," meaning that ad revenues from the company's MP3 channel will be insufficient to cover its expenditures on music.
The first move in Baidu's transition, Zhu said, will be to acquire copyrights; thereafter it may consider ways of increasing revenues.
Leung said that Baidu would make royalty payments to the MCSC based on song plays and downloads, adding that the company had built a backend system to monitor plays and downloads that it will launch in Q2. In the future, she said, Baidu's music communities may experiment with paid value-added services, but these will not include SP-like services like mobile ringback tones.
Editor's Note: For more background on this topic, please see "Chinese Music Industry Accuses Baidu of IPR Infringement" MD 3/08/11 issue.