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Eleven music companies jointly filed a lawsuit against Yahoo! China, owned by Chinese e-commerce giant Alibaba, over its alleged involvement in the illegal downloading and playing of copyrighted music.

 

Led by industry group the International Federation of the Phonographic Industry (IFPI), the corporations, including EMI, Sony BMG Music Entertainment, Warner Music, and Universal Music, are suing Yahoo! China for an estimated 5.5 million yuan in damages.

 

"We expect to eventually win," John Kennedy, IFPI chairman, told Financial Times on Tuesday. "We believe they are involved in infringing upon our members' rights on a major scale."

 

A spokesman for Alibaba told China Daily yesterday that Yahoo! China only provides Web links in its music search results and should not be held responsible for contents of third-party websites.

 

In November, another Chinese search engine, Baidu.com, won a similar lawsuit launched by IFPI. But IFPI has said it is confident the case against Yahoo! China is strong and that it's unwilling to wait until the result of its appeal against the Baidu ruling before proceeding with this new lawsuit.

 

"I think the Baidu ruling will act as a negative precedent if IFPI fails to raise stronger evidence in its new lawsuit," said Yu Guofu, chief lawyer of Sam Partners Law Firm, who explained that such cases are still controversial in China.

 

Liu Bin, an analyst from BDA China, estimated that conflicts between traditional record companies and Internet companies will continue in China over the next few years, resulting in similar lawsuits.

 

"Digital music contributes 20 to 30 percent of the total revenue for Warner Music, Universal Music, Sony BMG Music, and EMI in China every year, much higher than their world average of 10 percent," said Liu. "And for some Chinese record companies, digital music accounted for around 50 percent of the total revenue."

 

The popularity of digital music in China, said Liu, comes from the country's sluggish record sales, which is greatly affected by the prevalence of pirated CDs and a robust demand for mobile music such as ring tones and multimedia messaging services.

 

Liu said a chunk of international record giants' digital revenue in China comes from mobile music and only 10 to 20 percent is from online music, a market believed to have been dented by thousands of music websites providing free music downloading services and search engines like Baidu and Yahoo! China, which compile download links on their sites.

 

"But I don't think record companies will get what they want if they continue to regard Internet companies as their No 1 revenue killer," Liu said. "I think there will be more cooperation than conflict in the future."

 

Signs of cooperation are, in fact, already evident. In January, EMI and Baidu came to an agreement, in which EMI would authorize Baidu to stream its Chinese repertoire on Baidu's music search channel. The two also declared they would look into the possibility of offering free music downloads.

 

(China Daily March 8, 2007)