Taking the IP High Road: Baidu Faces the Music

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Yesterday I mentioned that Youku is finally getting some credit for cleaning up its IP act, so it’s fair that I bring Baidu into the discussion, particularly since they made an important announcement today.

From Reuters:

Baidu will launch Baidu Ting sometime in May, said Kaiser Kuo, a Baidu spokesman told Reuters on Wednesday. The service will allow users to stream, download, create libraries of licenced music and will have a social-networking aspect.

This is a very big deal and dovetails nicely with yesterday’s post, particularly two trends that are now common with some of the larger Chinese media sites: getting tougher on copyright infringement and making deals with content owners.

Before we get into the MP3 morass, recall that Baidu has been negotiating with Chinese writers recently concerning unauthorized distribution of their works via Baidu Wenku. Talks ultimately broke down between the parties, and subsequently Baidu announced that the infringing material would be taken down as a good faith gesture. Stay tuned for developments on that story.

With respect to MP3 files and copyright infringement, Baidu has a long and troubled history. No need to rehash all the old complaints, but suffice it to say that some measure of the search engine’s success (i.e. web traffic) was due to its music search capabilities, which included links to infringing MP3 files.

I’ve personally been following this story for several years. The twists and turns of the IP litigation has been interesting, and at times puzzling. I wrote about the latest lawsuit Baidu faced from the music industry on this subject a little over a year ago, a case that I expected the search engine to lose — I turned out to be wrong, and I still don’t know why.

At the time, I included a brief summary of some relevant legal milestones, which are useful to this discussion:

  1. January 1, 2006 — China’s Internet regulations dealing with online copyright infringement are passed. This establishes a framework for dealing with these types of cases and adopts a “Notice and Takedown” approach for assessing ISP/search engine liability.
  2. November 2006 — Baidu wins first infringement case filed against it by the music industry. Beijing 1st Intermediate Court does not rule on copyright issue under new law, as the case was filed before the new law took effect (relates to acts that occurred prior to the new law).
  3. December 2007 — Yahoo loses MP3 deep linking case similar to the one filed against Baidu. The two cases are distinguished by timing, as the new Internet regulations were applied under this second litigation. The music industry expects to win a refiled case against Baidu under the new law.
  4. February 2008 — music industry files new case against Baidu et al.
  5. January 2010 — Beijing 1st Intermediate Court again rules in favor of Baidu.

Therefore, to my knowledge Baidu was basically free and clear on this issue as of a year ago. So why did they even bother with the new Baidu Ting?

Well, globalization sure is a strange beast. We live in a world right now where even companies that rely primarily on single domestic markets like China can go abroad and tap into foreign capital markets. I’ve talked about Tudou, Youku, Sohu and others in the past, and Baidu is certainly part of that group, albeit much larger.

One of the dominant themes that has come out of my scribblings on the subject of Chinese listed companies and IP infringement over the past year or so is this: these two things are simply not compatible any more. And therefore ultimately it didn’t matter whether Baidu got a pass from the First Intermediate Court. The music industry was howling, investors were no doubt becoming anxious, and something had to be done.

This is all well and good, and the new Baidu Ting service sounds like exactly what the IP doctor ordered:

Baidu said it reached an agreement with the Music Copyright Society of China (MCSC) to pay fees to MCSC for every song downloaded using Baidu Ting. The licenced music service will be supported by advertising.

The agreement covers publishing rights and Baidu will compensates lyricists and composers through MCSC. The firm is still working toward a more comprehensive agreement that will cover performance rights as well.

FYI, they are also talking to foreign content owners, so expect to hear similar announcements with the big boys in the near future.

Finally, what about the past? Whenever I write about this topic, I invariably get an email or two saying that Baidu (or Youku, or Tudou, etc.) wouldn’t be where they are today without copyright infringement. They see this as a permanent taint that cannot be washed away no matter how many Baidu Ting types of platforms are put into place.

Well, OK. That’s not really a legal question but more of a moral one. Baidu was sued and won, and if they can successfully clean themselves up with respect to MP3 files, then there’s no going backwards on that issue. But for copyright purists who insist on only doing business with lily-white enterprises, you may want to add some companies to your Bad Guy list, like YouTube and eBay. And hey, there aren’t any statutes of limitation on morality, and we shouldn’t limit ourselves to IP, so let’s not buy anything from ThyssenKrupp, Chiquita Brands or Dow Chemical either.

Oops, went off on a tangent there. My point is simply this: let’s be positive about what Baidu, Youku and Taobao are doing and hope others follow suit. Online piracy is so pervasive these days, I find it difficult not to emphasize the victories.

2 responses on “Taking the IP High Road: Baidu Faces the Music

  1. Robert Park

    It’s strange because while I don’t have any moral angst about such online efforts from such questionable ethical starts (maybe a twinge of guilt as I use those services, but not moral angst), I definitely could not say the same about gangs that use money laundering to then get into legitimate businesses. I’m not sure the comparison is too difficult to make.

    1. Stan Post author

      You make a good point, although I’d add to the hypothetical gang that it doesn’t sell drugs or kill people. Other than that, there is an analogy to be made here.

      For me, I’d guess that if such a gang was running a legitimate business, at some point that would be all right with me. I mean, didn’t the Kennedy’s make money in the moonshine biz or something?