Monday, March 30, 2009

Google China Music Service Brightens Future for Major Record Labels

Now that Google has a stake in China's online music service , Baidu, China's leading search engine for revenue and top source for unlicensed music downloads , may be knocked from its throne.

What are the major benefits for record companies and their marketers?

• Advertisers can accurately target specific demographic groups in a state-run media.
• Record companies track what artists and songs are popular in China, which until now has been difficult due to unreliable data.
• Monetization tools for 350,000 songs, including the most popular songs from leading artists.

Prior to Google's entry, Baidu was the preferred source for music file downloads, but Google's service will provide ad-revenue supported access to artits from leading record labels, including Warner Music Group Corp. (NYSE: WMG), Vivendi SA's Universal Music Group, EMI Group Ltd., and Sony  (NYSE: SNE)Corp.'s Sony Music Entertainment.

Kai-Fu Lee, Google's Greater China president, told reporters Monday that music downloads were "the key missing piece" for Google's service in China and that a lack of music search has been "the most common reason" that Chinese users give for preferring another search engine.

According to today's article in the Wall Street Journal, Google is teaming up with Top100.cn, a Chinese Web site in which Google owns a stake. Executives wouldn't say how big that stake is. Lachie Rutherford,president of Warner Music Asia Pacific, said

I can't overstate how important" the new Google service is, which is making its entire global catalog available in China as part of the deal. Until now, the online market in China has been completely un-monetized by the music business.

Rutherford suggested Warner Music would be open to using a free, advertising-supported model like the Google one for online music in other markets, although Google says it currently has no plans to extend the service beyond China.

Posted By Matt O'Hern at 05:18 PM
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