"Imagine
a post-Napster world in which you can search for whatever song or
album you want and then download it for free from within the results
page. You then own that music, the official version, and can take it
with you wherever you want. That world exists, ladies and gentleman.
It’s called China."
The quote above is from an article about Google's decision to end its free music service in China. Music in China is a very strange business and a very small one. That's primarily because almost no one pays for recorded music in any form (MP3 downloads, CDs, etc.).
Google began its free music service in China 3 years ago in an effort to try to increase its search engine market share (unlike most of the rest of the world, Chinese people don't generally "google" to search for stuff on the Internet - instead, they use a Chinese search engine called Baidu). For years, Baidu provided links to illegally available music files which was one of the reasons it initially became so popular (and limited Google's popularity and growth in China). Although sued by Chinese and foreign record companies, Chinese copyright law apparently doesn't make it illegal to link to infringing material (even when there's evidence of encouraging and helping people to download illegally). Actually, this isn't completely clear since there was an appeal of the case and a few different Chinese court decisions have reached contradictory decisions, but at least for Baidu, it didn't seem to be clearly illegal.
Google, however, decided to offer a legal alternative - offering music downloads for free, but obtaining permission of copyright owners and agreeing to pay them a portion of advertising revenues. This may have seemed like a good idea to Google as well as the music industry and it was a truly novel business model available nowhere other than in China. But it simply didn't work. In a world where people never pay for music, the fact that you're giving music to them for free really isn't a big deal. Google may have thought that making this legal would be a big advantage and, in theory, it should be. But most Chinese people that download music have always done it illegally although they may not understand that there's any such thing as illegal downloading and, if they do, just don't care (as is true of many millions of people all over the world). To my knowledge, no one has ever been sued for illegally downloading music in mainland China so there's little awareness of the issue and no practical penalties. As a result, Google's free music service likely attracted few users and generated very little income for music companies and creators.
To make matters worse for Google, after pressure from Chinese musicians and authors in 2011, Baidu finally decided to mend its (technically probably not illegal) ways by offering music in a more conventionally legal way (essentially copying the Google Music model). Baidu reached agreement with major international record labels to pay copyright owners for downloads and streams of their music through its new music service (Baidu Ting) as well as its general search service. This agreement apparently also ended an appeal over the Baidu court decision excusing it from liability for copyright infringement.
So the end result is that there is still free legal music in China, offered ironically not by the company that pioneered this business model (Google), but the company that pioneered and profited by the illegal one. According to this article, Google Music's closure might provide a significant revenue boost to Baidu. Poor Google just can't get a break here in the Middle Kingdom.
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