I heard a rumour yesterday, while chatting with a few friends. Baidu is going to resolve its disputes with three of the biggest music companies in the world (Sony BMG, Universal Music Group and Warner Music Group). There will be no more illegal downloads of MP3 from its site. It is going to pay for licensing fee for the music, by sharing ad revenue with the music companies.

Baidu has been free-riding on the music companies’ intellectual properties to build its popularity among young internet users in China. In its early days, (2003-04) about 50% of Baidu’s traffic was from offering MP3, most of which with no proper copyright.

My guess is: those days are gone. Now Baidu no longer need to do so. It is the leading search engine with has over 70% of China’s market. A recent check with Alexa showed that MP3 accounted for only about 3.3% of Baidu’s traffic today.

(200Baidu use