Goldmedia column: Google gives away free music in China

Does piracy pay, and Europeans simply haven’t noticed yet? The Chinese version of Google has offered free music downloads since the end of March -- completely legally. The 35,000 music titles that were initially available should climb to 1.1 million tracks in the next few months. Over 140 music labels are making music from their repertoire available. And amazingly enough, the four major labels, Warner, Universal, EMI and Sony, are participating.

How did Google manage to win approval from the “Big Four” for virtually free music distribution? The answer is simple: the prospect for (advertising) sales. The new service will be financed through classic Google ads on the downloading pages. Google will share the revenues with the respective music labels and a service provider.

The motives for this “marriage of convenience” are multifaceted. According to International Federation of the Phonographic Industry  (IFPI), 99% of all music downloads in China are illegal. Up to now, labels could hardly earn a single Chinese yuan. What’s more, Google hasn’t secured the top spot in China, with only 17% of the search machine market. Baidu.cn is by far the search machine leader. The problem is that for some time, Baidu has offered a special music search service. By simply right clicking on the music title of choice, the user can save the track. Although the service is completely illegal, about 300 million users in China gladly make use of it.

According to Google, 84% of Chinese internet users primarily use search machines to find music. Baidu’s success can be traced back to the music search function. Google’s alliance aims to take away market share from rival Baidu by offering legal, free and convenient music downloads. By signing onto Google’s plan, the music labels hope to finally make money from their music in China.

This shows that it is possible to offer virtually “free”, attractive content in the internet – on the condition that the pressure from piracy is great enough. In light of such dynamics, one might question how much longer European and American willingness to pay 99 cents per track will last.

Authors:
Dr. Klaus Goldhammer (Managing Director Goldmedia GmbH),
Marcel Piopiunik (Consultant Goldmedia GmbH).

Published on German industry magazine Medienbote as well as on the Goldmedia blog.