Just over a year ago, the behemoth Chinese search engine Baidu announced that it would be partnering with major record labels to launch a legitimate music platform.

After spending years under fire for promoting illegal file sharing, the search engine is now providing a ray of hope in China's music market, where piracy and free downloads remain rampant.

Baidu Ting is one of a handful of online platforms currently trying to establish a place for itself in China's music industry.

Piracy started undercutting album sales in the country even before its music industry had gotten off the ground.

While many online services still provide unlicensed downloads, others are working to change the expectations of Chinese consumers and support the growth of the country's music industry.

"In China, users have gotten used to downloading music for free," says Kai Lukoff, founder of the China-focused technology blog TechRice. "Music is still largely free online and it has shaped the habits of music consumers."

Baidu is doing its best to change that. "The way people discover music in China is different from the West: It's more grass-roots, more from the ground up," notes Catherine Leung, head of music and entertainment at Baidu.

Baidu Ting hopes to create a new, advertising-based payment model for music without losing any of its current users. "We believe in the future of a successful music platform because that's what China needs," says Leung. "But, I would say, it's going to be a long road."

To create the platform, Leung and her team looked at the design of a number of popular Western music sites. They were interested less in sales platforms like iTunes and more in websites that provided users additional value - sites that users might continue checking throughout a day. In the end, Baidu decided to adopt a mixed approach. Baidu Ting users can use the site like an online radio, but they can also look at music news, browse new releases and download music.

Baidu has reached deals with a number of record labels and pays on a per-stream and per-download basis. "The end users, however, are not paying for the music," she notes. "Baidu is paying the labels and all revenue comes from advertising."

Even though downloads are still free, Baidu Ting is taking on a competitive market. Leung calls popular reception of the service both hot and cold. "There are still a lot of other music sites that do not play by the rules," she says. "So we find it challenging."

Adapted from China Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. To read the original, please visit: http://bit.ly/LwgVjO