Billy Bragg | Comment is free | guardian.co.uk

A better way to sink internet pirates

The only way to tackle illegal filesharing is not suppression, but to offer reliable, easy to use, fairly priced alternatives

Last week the Featured Artists Coalition (FAC) convened a meeting of artists at Air Studios in London with the intention of seeking common ground on the issue of what to do about illegal filesharing before the end of the government’s consultation period, which has now closed.

The statement that we produced is the first real sign that artists are ready and willing to become involved in the debate about the shape of the new digital music industry. There were many views in the room, from those who wished to disconnect illegal downloaders, to those who believed that there was no technical solution to the loss of revenue that the recording industry is experiencing.

Despite our differences of opinion, we were able to agree on bandwidth restriction as final sanction for egregious offenders. We held back from suspension of internet accounts because we felt it was disproportionate and punitive, but most of all, we held back because we didn’t believe it was in the best interests of our profession.

The suppression of illegal filesharing is a long-term, highly expensive, technologically fraught strategy with serious implications for personal privacy. It is questionable whether any of the money saved will ever find its way to the artists who have suffered loss of income.

While the recording industry continues to make threatening noises towards kids who swap music files among themselves, our real enemies, the illegal download sites that make money giving our music away for free, are disappearing off the radar into darknets.

This is a war that no one can win.

As the pirates always manage to stay one step ahead of the latest clampdown, the recording industry will continue to ask legislators for ever tighter sanctions, leading ultimately to an internet controlled by and for big business, which can only be accessed by those willing to pay.

The loss to the creative community would be catastrophic. The internet has made it possible for individual artists to make, distribute and promote their own works with the active support of P2P networks. For new artists to flourish, it is vital that the internet remain free to all.

We believe that this sense of freedom is the key to constructing a viable digital business model for the recording industry. The successful music sites such as MySpace, YouTube and Spotify all offer free access. The next step is to create “feels like free” services. We need legal networks licenced by record companies that give users access to all the music they want for a subscription fee. We need P2P communities that spread the word for new artists while offering advertising platforms so that an artist whose work is downloaded can receive reciprocal payment from advertising revenue.

Artists must be prepared to work with the record industry and with legislators on a programme of education aimed at increasing awareness of the damaging aspects of illegal downloading on the livelihoods of the creative community and those who work with us to produce our work.

However, we will not be able to marginalise the pirates until we can offer accessible, easy to use, fairly priced alternative business models that people will actually want to buy their music from. While we may never be able to sink The Pirate Bay, the challenge we face is to make it look boring, shoddy and unreliable.

True To You

Morrissey would like it to be known that he has not been consulted by EMI/HMV/Parlophone with regards to two forthcoming boxed sets of Morrissey singles. Morrissey does not approve such releases and would ask people not to bother buying them. Morrissey receives no royalty payments from EMI for any back catalogue, and has not received a royalty from EMI since 1992. Morrissey also does not approve of, and was not consulted on, the Rhino box of Smiths CDs, or the Warner releases of Smiths LPs on 180 gramme vinyl. Morrissey last received a royalty payment from Warners ten years ago, and, once again, he would ask people not to bother buying the reissued LPs or CDs.

Op-Ed Columnist  – NYTimes.com

The problem is that if people can get the music they want for free, why would they ever buy it, or even steal it? They won’t. According to a March study by the NPD Group, a market research group for the entertainment industry, 13- to 17-year-olds “acquired 19 percent less music in 2008 than they did in 2007.” CD sales among these teenagers were down 26 percent and digital purchases were down 13 percent.

And a survey of British music fans, conducted by the Leading Question/Music Ally and released last month, found that the percentage of 14- to 18-year-olds who regularly share files dropped by nearly a third from December 2007 to January 2009. On the other hand, two-thirds of those teens now listen to streaming music “regularly” and nearly a third listen to it every day.

This is part of a much broader shift in media consumption by young people. They’re moving from an acquisition model to an access model.

Even if they choose to buy the music, the industry has handicapped its ability to capitalize on that purchase by allowing all songs to be bought individually, apart from their albums. This once seemed like a blessing. Now it looks more like a curse.

In previous forms, you had to take the bad with the good. You may have only wanted two or three songs, but you had to buy the whole 8-track, cassette or CD to get them. So in a sense, these bad songs help finance the good ones. The resulting revenue provided a cushion for the artists and record companies to take chances and make mistakes. Single song downloads helped to kill that.

A study last year conducted by members of PRS for Music, a nonprofit royalty collection agency, found that of the 13 million songs for sale online last year, 10 million never got a single buyer and 80 percent of all revenue came from about 52,000 songs. That’s less than one percent of the songs.

So it was no surprise that The Financial Times reported on Monday that Apple is working with the four largest labels to seduce people into buying more digital albums. It’s too little too late.

YouTube Biz Blog

Last week the world watched in wonder as Jill Peterson and Kevin Heinz’s wedding party transformed a familiar and predictable tradition into something spontaneous and just flat-out fun. The video, set to R&B star Chris Brown’s hypnotic dance jam “Forever,” became an overnight sensation, accumulating more than 10 million views on YouTube in less than one week. But as with all great YouTube videos, there’s more to this story than simple view counts.

At YouTube, we have sophisticated content management tools in place to help rights holders control their content on our site. The rights holders for “Forever” used these tools to claim and monetize the song, as well as to start running Click-to-Buy links over the video, giving viewers the opportunity to purchase the music track on Amazon and iTunes. As a result, the rights holders were able to capitalize on the massive wave of popularity generated by “JK Wedding Entrance Dance” — in the last week, searches for “Chris Brown Forever” on YouTube have skyrocketed, making it one of the most popular queries on the site:

This traffic is also very engaged — the click-through rate (CTR) on the “JK Wedding Entrance” video is 2x the average of other Click-to-Buy overlays on the site. And this newfound interest in downloading “Forever” goes beyond the viral video itself: “JK Wedding Entrance” also appears to have influenced the official “Forever” music video, which saw its Click-to-Buy CTR increase by 2.5x in the last week.

So, what does all of this mean? Despite compelling data and studies around consumer purchasing habits, many still question the promotional and bottom-line business value sites like YouTube provide artists. But in the last week, over a year after its release, Chris Brown’s “Forever” has again rocketed up the charts, reaching as high as #4 on the iTunes singles chart and #3 on Amazon’s best selling MP3 list. We’ve seen similar successes in the past with partners like Monty Python.

One of our main goals at YouTube is to help content creators effectively make money from the distribution of their content online. That they can do so in a way that brings artists and our community together to create fun, spontaneous and inspiring works, is one of the best and most exciting things about YouTube.

Posted by Chris LaRosa, Technical Account Manager, and Ali Sandler, Music Partner Manager

Zeropaid

The music industry knows how to hang out itself, even if it lacks the correct length pf rope. EMI, certainly reeling from declining physical album sales like the other Big 4 record labels, is now apparently telling independent album retailers that it will no longer sell them CDs.

That’s right, EMI apparently told them over the phone a few weeks ago, an oddly perverse means of notification, that henceforth it will no longer sell them physical albums and that they must go to “one stops” like Wal-Mart or Best Buy to buy product like everybody else to then in turn sell.

“Several I have spoken with are so upset that they vow never to buy any EMI catalog again–or any new artist releases either,” says Wayne Rosso, former president of the P2P program Grokster, on his blog. “Only the certifiable hit product that they know will sell. They will no longer take chances on new EMI artists.”

It’s a odd turn of events for EMI, adding another blow to its physical CD sales while inversely arguing that illegal file-sharing is the real culprit behind declining revenues. If its concerned with losses then why get rid of customers? It just doesn’t make any sense.

Adding insult to injury is the fact that one stops don’t have nearly the selection needed to maintain an indie retailers bottom line, nor could they ever hope to have a price point necessary to make a living.

In short, the loss of EMI’s catalog means the job of indie record stores to stay in business just got even tougher.

Nice job EMI.

Beyond Binary – CNET News

Of all the losses suffered by the music industry, one of the biggest may be the fact that nearly all of the investors that once were building digital music services have moved on.

“There are not a lot of entrepreneurs involved in this space,” said David Pakman, a music industry veteran and now venture capitalist at Venrock Associates.

By Pakman’s count, there have been 109 venture-backed digital music start-ups. Fewer than five, though, produced a substantial return, he said.

“Investors lost a lot of money in this space,” he said, speaking on a breakfast panel at the Fortune Brainstorm: Tech conference here. The loss for the industry, he said is that entrepreneurs have moved on to areas like Twitter and Facebook.

FT.com / Technology –

Apple is working with the four largest record labels to stimulate digital sales of albums by bundling a new interactive booklet, sleeve notes and other interactive features with music downloads, in a move it hopes will change buying trends on its online iTunes store.

The talks come as Apple is separately racing to offer a portable, full-featured, tablet-sized computer in time for the Christmas shopping season, in what the entertainment industry hopes will be a new revolution. The device could be launched alongside the new content deals, including those aimed at stimulating sales of CD-length music, according to people briefed on the project.

Physical album sales have fallen sharply as music retailing has evolved from CD album purchases in retail outlets to digital downloads of songs from online stores.

Although consumers continue to purchase large amounts of digital music, they are buying individual tracks rather than higher-margin albums.

Apple is working with EMI, Sony Music, Warner Music and Universal Music Group, on a project the company has codenamed “Cocktail”, according to four people familiar with the situation.

The labels and Apple are working towards a September launch date for the project, which aims to boost interest in albums by bundling liner notes and video clips with the music.

“It’s all about re-creating the heyday of the album when you would sit around with your friends looking at the artwork, while you listened to the music,” said one executive familiar with the plans.

Apple wants to make bigger purchases more compelling by creating a new type of interactive album material, including photos, lyric sheets and liner notes that allow users to click through to items that they find most interesting. Consumers would be able to play songs directly from the interactive book without clicking back into Apple’s iTunes software, executives said.

“It’s not just a bunch of PDFs,” said one executive. “There’s real engagement with the ancillary stuff.”

The music companies declined to comment.

Album sales in the US fell 14 per cent in 2008 to 428.4m units, according to Nielsen SoundScan, which tracks retail sales data.

The new touch-sensitive device Apple is working on will have a screen that may be up to 10 inches diagonally.

It will connect to the internet like the iPod Touch – probably without phone capability but with access to Apple’s online stores .

Apple is gambling that it can succeed where everyone else has flopped, including Microsoft, which tirelessly pushed a tablet-ready version of its Windows operating system as a personal favourite of founder Bill Gates.

The entertainment industry is hoping that Apple, which revolutionised the markets for music players and phones, can do it again with the new device.

“It’s going to be fabulous for watching movies,” said one entertainment executive.

Book publishers have been in talks with Apple and are optimistic about their services being offered with the new computer, which could provide an alternative to Amazon’s Kindle.

mediabistro.com: FishbowlLA

But Chris Anderson Said The Future Of Music Is Free…

Comprehensive Management of Music Rights for Songwriters and Performing Artists – BMG RM.

Bertelsmann AG and Kohlberg Kravis Roberts & Co. L.P. (“KKR”), announced today that they have agreed to create a joint venture to develop a global music rights management business to which Bertelsmann AG will contribute its BMG Rights Management music rights unit. Upon funding of the transaction, Bertelsmann will own 49 percent in the joint venture and KKR will own 51 percent. Bertelsmann AG’s Hartwig Masuch, currently CEO of BMG Rights Management, will continue as CEO of the new company.

The new company will benefit from BMG Rights Management’s know-how in licensing and administrating music rights, its large number of music catalogues and artists, the established BMG brand and its experienced management team. KKR will significantly enhance BMG Right Management’s financial position and create new growth potential by providing access to its global network. The partners envisage building a major music rights management business over the medium term through organic growth and acquisitions. KKR expects to contribute to BMG’s development by providing substantial equity investments through its European private equity funds.

“KKR shares our views on future business models for the music industry. I am excited to work with such a partner. With many high-visibility contracts and the foundation of an international organization in six European countries, it has taken BMG Rights Management only nine months to position itself successfully in the market. Songwriters and performers respond very well to our service oriented approach,” said Hartwig Masuch, CEO of BMG Rights Management and CEO of the joint venture. When BMG Rights Management started its business in October 2008, its rights catalogue consisted of about 200 artists; since then, another 100 contracts with songwriters and other rights owners have been signed.

“With access to meaningful investment capital, we expect the partnership with KKR to contribute significantly to accelerating the development of the business. We complement each other perfectly for this venture. We both want to broaden BMG’s global reach faster than originally anticipated. In this way we will be able to actively participate in the expected market consolidation,” said Thomas Rabe, Bertelsmann CFO and Chairman of the joint venture. With the music industry at an important turning point, the market for licensing and administration of music rights presents attractive growth opportunities. Among other things, it is driven by the increasing importance of music in the licensing of other areas beyond the recording business, such as broadcast and live performances as well as the synchronization of broadcasting, commercial and movie productions.

“The music rights sector offers opportunities for significant growth across the globe. BMG has proven leadership and a strong track record of organic growth. Our financial strength combined with BMG’s sector expertise will create a unique platform for building up a global music rights management business,” said Johannes Huth, European Head of KKR. In the context of this transaction, BMG Rights Management will be integrated into the equity fund Bertelsmann set up two years ago. The company will be developed from this platform. KKR’s funds will invest into a new holding company of BMG Rights Management. The foundation of the new joint venture is subject to approval under applicable competition laws. The parties expect to complete the transaction within a few months.

CNET News

The suit appears to have been initiated by Music Copyright Solutions (MCS), which claims to administer copyrights for more than 45,000 compositions. MCS is named as the lead plaintiff, along with a number of songwriters including Mark Farner of Grand Funk Railroad fame. These folks allege that Microsoft, Yahoo, and RealNetworks improperly licensed the rights to more than 200 compositions that they offered as on-demand streams or limited downloads via the Zune Marketplace, Yahoo Music, and Rhapsody.

Surely these companies paid somebody for the rights to offer these songs. But there’s a catch, which TechDirt pointed out earlier Tuesday: these companies may have licensed the rights to the recordings, but that doesn’t mean they licensed the rights to the compositions (also known as publishing rights). As section 23 of the legal filing puts it:

In order to transmit, perform, reproduce and deliver any sound recording of any musical work via ‘On-Demand Streams’ or ‘Limited Downloads,’ Defendants must first obtain not only the rights for the sound recording itself, but also the rights for the underlying musical composition that is embodied on said musical recording.

Maybe, maybe not–that’s up to the court to decide. But that’s not the insane part. The insane part is that the plaintiffs are alleging that each time one of the defendants made any recording of a covered song available, that’s a copyright violation, and they’re seeking damages of $150,000 per violation (or the amount the defendants earned from streaming those songs, whichever is more). So, for example, the lawsuit claims that Yahoo Music offered Conway Twitty’s recording of “Fifteen Years Ago” on six different greatest hits albums. The plaintiffs allege that constitutes six copyright violations, which would mean damages of $900,000. Overall, the lawsuit names more than 200 songs, and a far greater number of recordings, meaning that the potential liability for each defendant would be tens of billions of dollars–that’s far greater than the total amount of revenues these companies ever earned from any of these services.

Umair Haque

“…Sales of his recordings through Sony’s music unit have generated more than $300 million in royalties for Mr. Jackson since the early 1980′s.”

Want to know why we have a zombieconomy? Because the beancounters killed the incentives to create real value.

Let’s use MJ’s tragic death as a mini case-study. $300 million over, for example, 25 years? That’s $12 million a year.

I’m deliberately leaving out ads, endorsements, concerts, etc., to focus on the the structural problems in one industry: music.

If the world’s biggest pop star only made $12 million a year from his recordings, why would anyone make serious music? Where did the rest of the money go? Why, straight into record labels’ pockets. Did they make better music with it? Nope — they made Britney and Lady GaGa. And that’s how they killed themselves: by underinvesting in quality, to rake in the take.

Wait a second — that sounds familiar. You can add back in the endorsements, etc. now — they only double the figure: to about $25 million.

If the world’s biggest pop star only made $25 million a year in total, something’s very, very wrong. Where’s the rest of the money? Why can’t a resource as scarce as the King of Pop capture more value?

After all, that’s not even mega-rich.

The world’s top hedge fund “managers” regularly pull in hundreds of millions. That’s an order of magnitude difference.

No wonder everyone wants to be a banker, investor, or [insert beancounter here]. There’s no money left in anything else.

That’s the big problem behind the zombieconomy. We don’t reward people for creating, growing, nurturing, or even remixing assets. We just reward them for allocating the same old assets.

That ‘s not an economy: it’s just a game of musical chairs.

Hence, no new finance, healthcare, educational, auto, or, yes, music, industry — for decades.

“…Darkness falls across the land
The midnight hour is close at hand
Creatures crawl in search of blood
To terrorize y’alls neighborhood.”

Indeed. Everytime you look at today’s economic landscape — you should see the Thriller video playing in your head. Because what we’ve built is a zombieconomy, where little net value is created.

And MJ’s death-by-financial-desperation should be a case study in that zombieconomy if ever there was one. Yes, he spent money on absurdly ludicrous stuff. But if top hedge fund managers can do it — why couldn’t the world’s most famous singer?

PS — The ultimate irony? I can’t even link to the Thriller video. It’s unavailable on YouTube in the UK…”due to copyright restrictions”. Lulz.

Pandora Internet Radio –

Dear Pandora Visitor,

We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.

BBC NEWS

Napster understood the internet’s potential for decentralised music distribution, and offered it to consumers in a way that was simple to understand and use.

Many critics have argued that the music industry could have avoided some of the problems it faces today if we had embraced Napster rather than fighting it.

That’s probably true, and I, for one, regret that we weren’t faster in figuring out how to create a sustainable model for music on the internet.
- Geoff Taylor, chief executive of the BPI

Electronic Frontier Foundation

ASCAP (the same folks who went after Girl Scouts for singing around a campfire)
appears to believe that every time your musical ringtone rings in
public, you’re violating copyright law by “publicly performing” it
without a license. At least that’s the import of a brief [2.5mb PDF] it filed in ASCAP’s court battle with mobile phone giant AT&T.

This will doubtless come as a shock to the millions of Americans who
have legitimately purchased musical ringtones, contributing millions to
the music industry’s bottom line. Are we each liable for statutory damages (say, $80,000) if we forget to silence our phones in a restaurant?

Billboard.biz

What’s your reaction to the recent Pirate Bay verdict?
There is a sad irony there that they get a similar verdict and they’re similarly powerless to stop the piracy. For many years, I argued to deaf voices that the industry needed to do some public education campaign about music appreciation. That there wasn’t enough sense that music had value, that it mattered. The record companies themselves weren’t used to being companies that were answerable to the public. Chalk it up to the old flavor of rock and roll, which is “against the man.” Since artists were always against the man, and record labels always represented the man, it didn’t matter that they were giving the artist millions of dollars in advances, they were still the bad guy. Essentially, fans adopted that same anti-record company viewpoint and therefore ripping off the man created some extra joy, not just a convenience factor. All of the good things that the music industry has done over the years, and they have done many – I don’t think any industry has done as much to give back and work in communities and respond to crises – hasn’t really changed that old viewpoint. Now, the only and best the industry can do is focus much more aggressively on partnering with artists to derive revenue from the whole of a musical experience. Artists still need partners. There’s no reason record companies shouldn’t be those partners.

PC Magazine

British cable TV operator Virgin Media is to launch an unlimited music download subscription service through a partnership with the world’s largest music company, Universal.

The music industry has been desperate to boost digital sales in recent years to overcome online piracy, and the agreement comes a day before a British report sets out how the creative and telecoms industries should tackle the problem.

People familiar with the service said it would cost 10-15 pounds ($16.30-$24.50) per month, which could appeal to parents concerned by children accessing illegal sites.

The service, which both sides described as a world first, would allow Virgin Media broadband customers to both listen by streaming and download to keep as many music tracks and albums as they want from Universal’s catalog.

The music will be in the MP3 format, meaning it can be played on the vast majority of music devices, including the iPod and mobile phones.

The service, which would compete with Apple’s iTunes, is set to launch later this year.

Virgin said as part of its cooperation with the music industry it would also work to prevent piracy on its network by educating users and would, as a last resort for persistent offenders, suspend Internet access.

Virgin said no customers would be permanently disconnected.

guardian.co.uk

Dark Night of the Soul, the hotly anticipated new album by Danger Mouse and Sparklehorse, will be “released” as a blank recordable CD with a note encouraging fans to download it from an illegal filesharing network. Although the album can be heard through an authorised internet stream, it will not receive an official physical or digital release, the group have announced, due to an unspecified legal dispute with EMI.

As previously reported, Dark Night of the Soul is the second collaboration between producer Danger Mouse and singer-songwriter Sparklehorse. It features contributions from Iggy Pop, Suzanne Vega and members of Pixies, the Flaming Lips, the Strokes and the Shins.

Unable to purchase the music, fans are encouraged to buy the project’s accompanying book, with photographs by filmmaker David Lynch, which comes with a blank recordable CD-R. “All [CD-Rs] will be clearly labelled: ‘For Legal Reasons, enclosed CD-R contains no music. Use it as you will,’” the website states. The limited-edition book and CD-R cost $50 (£33), or fans can buy a poster and CD-R for just $10 (£6.60).

The reason for the unconventional release is unclear. “Due to an ongoing dispute with EMI, Danger Mouse is unable to release the music for Dark Night of the Soul without fear of being sued by EMI,” the website reads. EMI have released several previous Sparklehorse albums, including the 2006 Danger Mouse collaboration.

For the moment, the only way to hear Dark Night of the Soul is to download it from an illegal filesharing network, or to stream it from the website of US public radio network NPR. While the NPR stream has been active since Friday, it’s unknown how long it will remain online. “We don’t have a definite take-down date,” producer Robin Hilton told Billboard. “It’s up in the air.”

And while it’s pretty clear what Danger Mouse and Sparklehorse intend for people to do with the CD-R – that is, download and burn the album – the artists are keeping coy. As the website states, “Danger Mouse … hopes that people lucky enough to hear the music, by whatever means, are as excited by it as he is.”

Slashdot

“The NYTimes reported in their June 13, 1897 edition that ‘Canadian pirates’ were flooding the country
with spurious editions of the latest copyrighted popular songs. ‘They
use the mails to reach purchasers, so members of the American Music
Publishers Association assert, and as a result the legitimate music
publishing business of the United States has fallen off 50 per cent in
the past twelve months’ while the pirates published 5,000,000 copies of
songs in just one month. The Times added that pirates were publishing
sheet music at 2 cents to 5 cents per copy although the original
compositions sold for 20 to 40 cents per copy. But ‘American publishers
had held a conference’ and a ‘committee had been appointed to fight the
pirates’ by getting the ‘Post Office authorities to stop such mail
matter because it infringes the copyright law.’ Interestingly enough
the pirates of 1897 worked in league with Canadian newspapers that
published lists of songs to be sold, with a post office box address
belonging to the newspaper itself. Half the money went to pay the
newspapers’ advertising while the other half went to the pirates who
sent the music by mail.”“The NYTimes reported in their June 13, 1897 edition that ‘Canadian pirates’ were flooding the country with spurious editions of the latest copyrighted popular songs. ‘They use the mails to reach purchasers, so members of the American Music Publishers Association assert, and as a result the legitimate music publishing business of the United States has fallen off 50 per cent in the past twelve months’ while the pirates published 5,000,000 copies of songs in just one month. The Times added that pirates were publishing sheet music at 2 cents to 5 cents per copy although the original compositions sold for 20 to 40 cents per copy. But ‘American publishers had held a conference’ and a ‘committee had been appointed to fight the pirates’ by getting the ‘Post Office authorities to stop such mail matter because it infringes the copyright law.’ Interestingly enough the pirates of 1897 worked in league with Canadian newspapers that published lists of songs to be sold, with a post office box address belonging to the newspaper itself. Half the money went to pay the newspapers’ advertising while the other half went to the pirates who sent the music by mail.”

Gizmodo

A study from the BI Norwegian School of Management has found that those who download free music from services like BitTorrent are also the biggest legitimate consumers of downloadable music.

In
fact, among all 1,901 Norway-based study participants (all of whom were
over the age of 15), it was found that those who downloaded “free”
music were 10x more likely to download pay music. In other words, music pirates are the music industry’s largest online consumers.

Note: “Free” music obviously implies pirated music, but it also encompasses legitimate free music download services.

The findings also included that, in the 15-20 age range, 50% of
participants had bought a CD in the last six months. So that trusty
format isn’t dead quite yet.

Since we relied on Google’s translation from the original Norwegian,
anyone who speaks the language is encouraged to glean for more
specifics and post them in the comments. [Survey and BMI Thanks Jon!]

wired

Google on Monday launched free downloads of licensed songs in China, while sharing advertising revenue with major music labels in a market rife with online piracy.

Lee Kai-Fu, president of Google in greater China, said one reason Google lagged in the mainland search market was because it did not offer music downloads, the missing piece to its strategy in a market where it trails leader Baidu.com.