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 Baidu Advertisers Asked to Boycott on Piracy Claims

2008-06-03   Bloomberg


June 3 (Bloomberg) -- Vivendi SA's Universal Music Group and Warner Music Group Corp.are among record companies asking advertisers to stop using Baidu.com Inc. Web sites because they claim the Chinese search engine encourages copyright violation. The companies, also including Bertelsmann AG and Sony Corp.'s Sony BMG venture, have joined music industry associations in China, the world's biggest Internet market by users, to step up efforts to combat online piracy.

Universal Music, Warner Music and Sony Corp. filed a lawsuit against Baidu in February claiming the Beijing-based Internet company's search service violates copyright by helping users find links to pirated music on non-affiliated third-party Web sites.Baidu, which controls 60 percent of China's search market, won a similar lawsuit the record companies filed in 2005.

``We're only earning about 20 percent of the revenue we expect from China's musicbusiness, while the rest is lost to piracy,'' Monica Lee, Warner's Hong Kong-based Asia Pacific regional general manager, told reporters at a news briefing in Beijing today. ``I expect the numbers to be similar industry-wide. We expected some piracy when we made the decision to enter the market, but current levels have exceeded what's acceptable.''

The Music Copyright Society of China, China Audio-Video Copyright Association, the International Federation of the Phonographic dustry and Chinese record labels were among 16 companies and organizations supporting a statement released today calling on advertisers to stop ``providing direct or indirect financial support'' to Baidu.

Positive Response

The organizers have received a ``very positive'' response from Baidu advertisers contacted, said Wu Jun, chief executive officer of R2G, a Beijing-based licensing firm for digital content. He declined to identify the advertisers.

``Baidu takes intellectual property rights seriously'' and ``welcomes future cooperation with'' recording companies, Baidu said in an e-mailed statement.

The Beijing No. 1 Intermediate People's Court in April accepted a lawsuit by the International Federation of the Phonographic Industry on behalf of Universal Music, Sony BMG and Warner Music, seeking $9 million in damages from Baidu. EMI Group Ltd., which signed an agreement to offer legal music on Baidu's Web site in January 2007, isn't involved in the suit.

Universal Music, Sony BMG, Warner Music and EMI sued Baidu in 2005 for copyright violations and lost.

More than 99 percent of online music in China is pirated, according to the federation.

``It's not easy now to find even pirated CDs in China,'' Guo Biao, the International Federation of the Phonographic Industry's China chief representative, said today. ``Consumers see no point paying for pirated CDs when they can get music for free online.''

Online Distribution

About 56 percent of pirated music in China is distributed through search engines with Baidu accounting for an estimated three-quarters of that figure, Guo said.

The industry can't rely on the law alone, and needs to use ``business and administrative initiatives, public opinion and other methods so that eventually we will marginalize and blacklist pirating organizations,'' Qu Jingming, head of the Music Copyright Society of China said in a statement issued before today's briefing.

Baidu had a 60.7 percent share of the Chinese Internet search market in the first quarter, according to research company Analysys International. Google Inc. had 26.8 percent and Yahoo! Inc. had 8.3 percent, according to the Beijing-based researcher.


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