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 MCSC & R2G Announce Anti-Piracy Initiative Against Baidu

27 February 2008 — R2G

(Beijing – 27th Feb). China’s appointed music rights organization, Music Copyright Society of China (MCSC) and leading digital music distributor, R2G today jointly announced the initiation of anti-piracy action against China’s leading music search engine, Baidu.

MCSC and R2G highlighted that Baidu has camouflaged its illegal activities under the guise of search engine activities while it infringes music copyrights in order to avoid legal regulations. Both parties also called on the music, advertising and other related industries to oppose Baidu’s actions so as to allow the legal digital music industry and China’s cultural environment to develop positively.

Over the past few years, blatantly ignoring music copyright laws, Baidu has also taken advantage of music publishers’ relatively limited technology sophistication to stealthily provide unlicensed music streaming and downloading via their website and thus earn significant advertising revenues via its massive online traffic brought about by its music download service. It is important to note that it is advertising revenue that supports and perpetuates Baidu’s piracy activities. Based on Baidu’s financial reports, its net revenue in the fourth quarter of 2007 was about $78 million and revenues in 2007 jumped more than 100% to $239 million, the bulk of it coming from advertising.

With Baidu’s music search and download service accounting for over 70% of the music search market based on official CNNIC surveys, legal music revenues on the internet in China are dropping at an alarming rate. MCSC’s Director-General Qu Jing Ming stated that MCSC’s publishing revenue in 2007 was one-tenth that of 2005. Due to Baidu’s existence, legal music providers’ revenues are suffering and some may even be forced to closed down.

Despite music copyright holders’ efforts to engage Baidu via negotiations, Baidu’s stonewalling, delaying tactics and even distorted interpretations of the law to their benefit have forced copyright owners to resort to litigation. Even then, copyright holders have an uphill task as Baidu hides behind the guise of a “neutral search engine” and employs sophisticated technological barriers with links to mysterious websites and deep links which without the requisite technology expertise makes it almost impossible for copyright holders to detect and protect their rights by exposing Baidu’s dubious activities.

As Baidu has been seriously violating rights over a sustained period of time, it is time for rights holders to actively protect their interests and to this end, in January, MCSC filed a lawsuit against Baidu of infringement of at least 50 songs including the well-known “Ai Wo Zhong Hua” seeking compensation and ceasing of all violations. R2G has also issued a legal letter to Baidu requesting the de-linking of all its unlicensed content and in due course, R2G will also initiate its own lawsuit. At the same time, MCSC and R2G will be communicating with advertisers and advertising agents to call on their understanding and co-operation to take appropriate measures to refrain from allocating the revenue that feeds copyright infringement on Baidu.

MCSC’s Qu Jing Ming states that the lawsuit is only the start. MCSC and R2G as allied partners have assumed a stance that they will not tolerate Baidu’s usual delaying tactics and refuse to engage in negotiations with Baidu unless they take down links and stop access to illegal content completely.

Both R2G and MCSC believe that a fair judgment will arise from the judicial system based on the true facts. However, in addition to the available legal options to protect the rights and interests of the copyright association members, other approaches will be considered involving the mobilization of the copyright industry, record label groups, related investors, advertisers, operators and ISPs who also collectively bear responsibility to not only disengage themselves from those associated with piracy like Baidu, but to make a
joint effort to safeguard the development of the digital music industry.

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