EMI launches Chinese online music service

NEW YORK/BEIJING (Reuters) - Chinese Internet search service Baidu.com Inc. said on Tuesday it was launching an advertising-supported online music service in mainland China with EMI Music.

The service will provide a stream of free online music, the company said, but would only include Chinese-language music, which people could listen to but not download.

EMI and Baidu would also continue to explore developing an advertising-supported service for downloading music, the companies said. They did not disclose any financial terms of the deal, which comes after Baidu was ordered by a Beijing court in 2005 to stop directing users to illegal music download sites."The download issue is only a temporary problem. It can't last forever," Shawn Wang, Baidu's chief financial officer told reporters in Beijing. Wang said Baidu was in talks with several other music companies hoping to reach deals similar to the EMI arrangement. Baidu, which is known as China's Google, serves the second-largest Internet population in the world, behind the United States.

It and Google Inc. have had early discussions with some local video Web sites to expand their online video services in China as well, industry sources have previously told Reuters. hina's Internet users could represent a huge untapped market for music companies such as EMI.

While many are active in selling compact discs and other forms of prerecorded music in China, the country is also rife with music, movie and computer software piracy, according to U.S. industry groups. EMI, whose catalogue includes the Beatles, Coldplay and Robbie Williams, ousted its two top music executives on Friday and said it would cut costs after poor holiday season sales prompted a profit warning.

The warning came as the world's third-biggest music company deals with falling market share and the growth in popularity of downloading and streaming music on the Internet. EMI has said its digital music business represented about 9.4 percent of its music division revenue, compared with the industry average of 11 percent.