Baidu Inc (BIDU.O), China’s largest search engine, has agreed with top music studios to distribute licensed songs through its mp3 search service, ending a legal dispute over accusations the company encouraged piracy.
Baidu signed the deal with One-Stop China, a joint venture by Universal Music (VIV.PA), Warner Music (WMG.N) and Sony Music (6758.T), for its catalogues and new releases that can be streamed or downloaded from Baidu’s servers. Baidu also launched, Ting, a social music platform.
The deal is significant for the recording industry that has seen little profit in China where piracy is endemic and pirated movie DVDs and music recordings are sold for under a dollar.
Music companies gained just $64 million from China in 2010, according to the International Federation of the Phonographic Industry (IFPI), versus $4.2 billion from the U.S. market.
Music studios have long accused Baidu of aiding piracy via its mp3 search that provides links for users to download pirated music. Earlier this year, the U.S. Trade Representative’s office named Baidu as a notorious market for piracy.
“It’s an important step forward for Baidu now to be working with three of the major companies on a licensed model in China,” said Frances Moore, IFPI’s chief executive.
“This looks promising for the development of a legitimate digital music business in a market that has for years been largely dominated by piracy,” Moore said.