Less than two years after eBay purchased StumbleUpon for $75 million, the recommendation engine is a standalone company once again.
In a blog post, co-founder "gmc" reported that the company is "now a startup again". Gmc, co-founder Geoff Smith, and "several great investors" have taken the comp-any independent again. Terms were not disclosed.
"This change will help StumbleUpon move quickly and stay true to its focus - helping people discover interesting web content," Gmc wrote. "Our goal is to make StumbleUpon the web's largest recommendation engine and we think this is the best way to get us there.
"Thanks to everyone for helping make this happen," Gmc added. "While there will be some internal changes at SU, it will not impact the Stumbling experience and will help us create the best possible product. We are really excited about this change, and hope you are as well."
Originally, eBay said that it had acquired StumbleUpon for the synergies between the two companies. eBay was drawn to StumbleUpon because of the "engaging and unique experience" provided by its toolbar and because of the "similarities in our approaches to the concept of community," Michael Buhr, senior director at eBay, said in 2007. But eBay never quite assimilated StumbleUpon into its overall business model.
eBay has also been heavily scrutinized for its $4.1 billion acquisition of Skype in 2005 which has also been criticized as a deal that never achieved the synergies that executives originally promised.
StumbleUpon, meanwhile, was originally said to also be a takeover target by Yahoo and AOL, among others.
[credit : http://www.pcmag.com/article2/0,2817,2345229,00.asp]
Wednesday, April 15, 2009
Nielsen: Online Video Audience Bounces Back In March
After a fall-off in February, online video viewership last month bounced back in March, according to Nielsen Online's latest VideoCensus report. Total video streams increased almost 9% to 9.7 billion in March, while time per viewer rose 12.6% to 191 minutes. Unique viewers inched up 2% to 130 million.
YouTube accounted for nearly 5.5 billion streams, followed by Hulu, with 348.5 million and Yahoo, with 231.8 million. Fox Interactive Media surged ahead of Nickelodeon Kids and Family Network into fourth place, with 207.5 million streams -- up from 194.3 million in February.
Hulu -- now a solid if distant No. 2 to YouTube in online video -- continued its steady rise, increasing streams about 10% in March and adding about 600,000 unique viewers for a total of 9.5 million.
The March figures are a contrast to February, when total streams fell 15%, unique viewers declined 6%, and time per viewer dipped more than 5% to 169 minutes.
A seasonal surge in the online video audience tied to the NCAA Men's Basketball tournament likely helped boost overall viewership figures in March. CBS said unique visitors to its March Madness on Demand video service increased 60% over last year to 7.5 million, and total video and audio was up 75% to 8.6 million hours.
CBSSports.com alone generated 38.2 million streams last month and 3.3 unique video viewers -- up more than 1,200% and nearly 300%, respectively, from February. CBS also distributed its free March Madness offering across 200 sites including YouTube, Facebook and Yahoo.
Total video streams in March were up almost 40% from a year ago.
[credit : http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=104007]
YouTube accounted for nearly 5.5 billion streams, followed by Hulu, with 348.5 million and Yahoo, with 231.8 million. Fox Interactive Media surged ahead of Nickelodeon Kids and Family Network into fourth place, with 207.5 million streams -- up from 194.3 million in February.
Hulu -- now a solid if distant No. 2 to YouTube in online video -- continued its steady rise, increasing streams about 10% in March and adding about 600,000 unique viewers for a total of 9.5 million.
The March figures are a contrast to February, when total streams fell 15%, unique viewers declined 6%, and time per viewer dipped more than 5% to 169 minutes.
A seasonal surge in the online video audience tied to the NCAA Men's Basketball tournament likely helped boost overall viewership figures in March. CBS said unique visitors to its March Madness on Demand video service increased 60% over last year to 7.5 million, and total video and audio was up 75% to 8.6 million hours.
CBSSports.com alone generated 38.2 million streams last month and 3.3 unique video viewers -- up more than 1,200% and nearly 300%, respectively, from February. CBS also distributed its free March Madness offering across 200 sites including YouTube, Facebook and Yahoo.
Total video streams in March were up almost 40% from a year ago.
[credit : http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=104007]
Monday, April 13, 2009
Universal Music, YouTube forge partnership
U2 lead singer Bono, well known for his ONE campaign against poverty, has turned his focus to a charity case closer to home: the ailing music industry.
The rocker is credited with bringing together Universal Music Group, the world's biggest music company, and YouTube, Google Inc.'s online video site, for talks that on Thursday resulted in a partnership to launch a music video service featuring professionally produced content from the label's big-name acts.
YouTube will create a dedicated channel on its site, to be called Vevo, where users can watch music videos from Taylor Swift, Kanye West, Weezer and other Universal artists. Later this year, Universal and YouTube will debut a separate online music video site, Vevo.com, where viewers can watch music videos from Universal's library. YouTube will provide the underlying technology, Universal will furnish the content, and the partners will split the advertising revenue.
"We have been searching for a way to work with the rights holders, which really does drive more -- let's be blunt -- more revenue," said Google Chief Executive Eric Schmidt.
Music videos have posed a vexing dilemma for YouTube. These short-form videos are among the most watched clips on the site, with a hot new track from an artist like Soulja Boy attracting millions of views. But the advertising revenue has not been enough to make YouTube's partnerships with the labels profitable, even though it monetizes hundreds of millions of views a day. Indeed, Warner Music Group said it pulled its music videos off YouTube in December in a licensing dispute over the value of its content.
Universal Music Chairman and CEO Doug Morris proposed an approach modeled on the success of the Hulu video site, a joint venture of News Corp. and NBC Universal that, after a little more than a year, is attracting 34 million monthly viewers with the lure of Hollywood movies and episodes of popular TV shows.
Morris outlined a similar concept for music videos, in which YouTube and Universal would bring together all the professionally produced content into the online equivalent of MTV. The venture would redistribute the music videos online in a bid to grab an audience large enough to attract advertisers. Morris said he was speaking with other major labels about participating in Vevo.
Bono played the role of digital ambassador, prodding his label, Universal, and YouTube to explore a partnership.
Morris recounted how, over dinner in Paris, Bono suggested he meet with Google's chief executive. Schmidt, meanwhile, said he received an e-mail from Bono urging him to meet Morris. That spurred a trip to New York, where Schmidt said he was struck by the Universal executive's ideas for new advertising and sponsorship models.
"I came back here in California [thinking]: Why don't we think about a new approach?" Schmidt said. "That then kicked off Doug's vision."
Record labels are eager to explore new revenue sources to help offset free-falling CD sales. Album sales this year are down 45% from 2000, according to Nielsen SoundScan. A recent Forrester Research report projects that disc sales will continue to decline at an annual rate of about 9% over the next five years as retailers reduce the shelf space allotted to CDs and music fans shift their purchases online.
"The options for record labels, in terms of business models, have really dwindled," said Paul Verna, an entertainment industry analyst with researcher EMarketer. "When you look at the steep decline of physical [sales], look at the digital formats that seemed to show promise to make up for the losses in physical. Most of these are really falling short of expectations."
Universal Music has long espoused the commercial potential of music videos, which as recently as three or four years ago were deemed largely promotional in nature and written off as a loss. In 2008,Morrissaid, the music company generated tens of millions in revenue from its music videos.
"This is the next step in taking the video, which is more important than just an audio stream, to the next level of monetizing it," Morris said.
Analyst Verna isn't sure music videos will bring the financial windfall Morris and YouTube hope.
"Clearly, there's some monetization potential," Verna said. "I'm not sure how much it is, or how significant a focus it is for the labels. Clearly, they're trying to make it work."
[read more : http://www.latimes.com/entertainment/news/la-fi-ct-youtube10-2009apr10,0,7026280.story]
The rocker is credited with bringing together Universal Music Group, the world's biggest music company, and YouTube, Google Inc.'s online video site, for talks that on Thursday resulted in a partnership to launch a music video service featuring professionally produced content from the label's big-name acts.
YouTube will create a dedicated channel on its site, to be called Vevo, where users can watch music videos from Taylor Swift, Kanye West, Weezer and other Universal artists. Later this year, Universal and YouTube will debut a separate online music video site, Vevo.com, where viewers can watch music videos from Universal's library. YouTube will provide the underlying technology, Universal will furnish the content, and the partners will split the advertising revenue.
"We have been searching for a way to work with the rights holders, which really does drive more -- let's be blunt -- more revenue," said Google Chief Executive Eric Schmidt.
Music videos have posed a vexing dilemma for YouTube. These short-form videos are among the most watched clips on the site, with a hot new track from an artist like Soulja Boy attracting millions of views. But the advertising revenue has not been enough to make YouTube's partnerships with the labels profitable, even though it monetizes hundreds of millions of views a day. Indeed, Warner Music Group said it pulled its music videos off YouTube in December in a licensing dispute over the value of its content.
Universal Music Chairman and CEO Doug Morris proposed an approach modeled on the success of the Hulu video site, a joint venture of News Corp. and NBC Universal that, after a little more than a year, is attracting 34 million monthly viewers with the lure of Hollywood movies and episodes of popular TV shows.
Morris outlined a similar concept for music videos, in which YouTube and Universal would bring together all the professionally produced content into the online equivalent of MTV. The venture would redistribute the music videos online in a bid to grab an audience large enough to attract advertisers. Morris said he was speaking with other major labels about participating in Vevo.
Bono played the role of digital ambassador, prodding his label, Universal, and YouTube to explore a partnership.
Morris recounted how, over dinner in Paris, Bono suggested he meet with Google's chief executive. Schmidt, meanwhile, said he received an e-mail from Bono urging him to meet Morris. That spurred a trip to New York, where Schmidt said he was struck by the Universal executive's ideas for new advertising and sponsorship models.
"I came back here in California [thinking]: Why don't we think about a new approach?" Schmidt said. "That then kicked off Doug's vision."
Record labels are eager to explore new revenue sources to help offset free-falling CD sales. Album sales this year are down 45% from 2000, according to Nielsen SoundScan. A recent Forrester Research report projects that disc sales will continue to decline at an annual rate of about 9% over the next five years as retailers reduce the shelf space allotted to CDs and music fans shift their purchases online.
"The options for record labels, in terms of business models, have really dwindled," said Paul Verna, an entertainment industry analyst with researcher EMarketer. "When you look at the steep decline of physical [sales], look at the digital formats that seemed to show promise to make up for the losses in physical. Most of these are really falling short of expectations."
Universal Music has long espoused the commercial potential of music videos, which as recently as three or four years ago were deemed largely promotional in nature and written off as a loss. In 2008,Morrissaid, the music company generated tens of millions in revenue from its music videos.
"This is the next step in taking the video, which is more important than just an audio stream, to the next level of monetizing it," Morris said.
Analyst Verna isn't sure music videos will bring the financial windfall Morris and YouTube hope.
"Clearly, there's some monetization potential," Verna said. "I'm not sure how much it is, or how significant a focus it is for the labels. Clearly, they're trying to make it work."
[read more : http://www.latimes.com/entertainment/news/la-fi-ct-youtube10-2009apr10,0,7026280.story]
Video Surges On Newspaper Sites
Newspapers across the country may be scaling back to survive, but online video appears to be one area where they are expanding aggressively. An analysis of 187 U.S. newspaper Web sites by Web video provider Brightcove shows a surge in their video-related activity last year.
The number of videos uploaded by each newspaper to the Brightcove platform, for example, grew from an average of 186 per month to 638 in 2008. The overall total of uploads increased 1,500%.
On the consumer side, video streams are growing 35% per quarter, nearly tripling to 42.7 million during the fourth quarter of 2008 compared to the year-earlier period. Total video player "loads," or page views containing video, increased 700% -- suggesting that newspaper sites are putting video on more pages.
While Brightcove does not provide ad revenue figures, the company says nearly all of its newspaper partners are monetizing video content with advertising. The main ad format is the 30-second pre-roll video with 300 x 250 companion banner.
A growing number of newspapers are also relying on third-party ad networks to help sell and optimize their video inventory, according to Brightcove. The Boston-based company attributes the rapid growth to lower production costs, higher-quality video and the gradual consumer shift from print and broadcast media to online outlets.
"While the data and trends point to many positive signs, the question remains whether newspaper publishers will be able to ramp their digital initiatives and evolve their operations in time to save their businesses and ensure a growth position when they come out on the other side of the current recession," wrote Brightcove Communications Director Josh Hawkins in a post on the company blog Tuesday.
The company says it works with more than 30 major newspaper groups in the U.S., Europe and Asia including Cox Newspapers, Freedom Communications, Hearst Communications and Media News Group.
[read more : http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=103665]
The number of videos uploaded by each newspaper to the Brightcove platform, for example, grew from an average of 186 per month to 638 in 2008. The overall total of uploads increased 1,500%.
On the consumer side, video streams are growing 35% per quarter, nearly tripling to 42.7 million during the fourth quarter of 2008 compared to the year-earlier period. Total video player "loads," or page views containing video, increased 700% -- suggesting that newspaper sites are putting video on more pages.
While Brightcove does not provide ad revenue figures, the company says nearly all of its newspaper partners are monetizing video content with advertising. The main ad format is the 30-second pre-roll video with 300 x 250 companion banner.
A growing number of newspapers are also relying on third-party ad networks to help sell and optimize their video inventory, according to Brightcove. The Boston-based company attributes the rapid growth to lower production costs, higher-quality video and the gradual consumer shift from print and broadcast media to online outlets.
"While the data and trends point to many positive signs, the question remains whether newspaper publishers will be able to ramp their digital initiatives and evolve their operations in time to save their businesses and ensure a growth position when they come out on the other side of the current recession," wrote Brightcove Communications Director Josh Hawkins in a post on the company blog Tuesday.
The company says it works with more than 30 major newspaper groups in the U.S., Europe and Asia including Cox Newspapers, Freedom Communications, Hearst Communications and Media News Group.
[read more : http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=103665]
Twitter’s Bestest Search Friend? Google and Microsoft Engage in Yet Another Pick-Me Face-Off
In this digital era’s version of “Spy Vs. Spy,” Microsoft and Google find themselves in yet another sharp-elbowed battle to be the one to strike some kind of commercial search deal or product partnership with Twitter, many sources with knowledge of the situation said, as they also jockey for position to evaluate the potential of the much-hyped microblogging start-up.
After last week’s explosive rumor that Google was in “late-stage” talks to acquire Twitter, which BoomTown reported was wildly premature, I set out to try to sort out exactly what was going on.
As I found out, there was a lot–mostly much talking related to possible product and distribution partnerships, centered around Google or Microsoft, especially around a deal to become the one to exclusively deliver search or other similar services to Twitter properties.
The reason for the interest? Many think Twitter’s real-time search of its 140-character “tweets” posted by users on the service will become the next great battlefield in search. Google currently dominates the general search market, with third-place Microsoft struggling to get more share.
But how to do that is in flux, as past efforts at various third-party search arrangements have had mixed success for both Google and Microsoft. Both companies and also Twitter are trying to figure out new ways to do such deals.
On top of that, it is also unclear if Twitter wants to strike a deal purely to get a payment from either Microsoft or Google, as others have done. Twitter management has indicated that they are much more interested in growth and distribution over a revenue focus.
Twitter Co-founder Biz Stone said as much on the start-up’s Web site recently, as well as in many media interviews, noting that it will begin experimenting with its own business ideas this year.
In other words, the talks Twitter is having with both Google and Microsoft could also lead exactly nowhere too.
Along with the commercial talks, both Microsoft (MSFT) and Google (GOOG) are also trying to figure out if Twitter is simply one of the many shooting stars that are far more typical in Silicon Valley or if it is sea-change start-up worth pursuing and paying up big-time to acquire.
“As impressive as what Twitter has done, we are all overexcited,” said one source. “And so it’s hard to figure out the right thing to do with all the pressure to do something.”
Thus, while an offer for Twitter from Microsoft, Google or a plethora of other players–from News Corp. (NWS) to Yahoo (YHOO) to Cisco (CSCO) to Time Warner (TWX) online unit AOL to big telcos–could come at any time, said many sources, only a huge price would lead to an acquisition, especially since the growth of the service has been accelerating more rapidly in recent months than has been reported publicly.
This all makes for dicey times at Twitter, which sits at the center of all this noise, trying to build a company, while also being fully cognizant that trying to engineer a massive buyout could be its best outcome.
Further complicating the situation: The fact that Twitter co-founder and CEO Evan Williams–who has already sold one company, Blogger, to Google and eventually left after a lackluster experience, a common one of many entrepreneurs who sell out early to large companies–is less interested in selling out than in growing the company.
But without the kind of control of the company’s fate–which allowed Facebook founder and CEO Mark Zuckerberg to effectively block similar buyout pressures early in its history–Twitter’s founders also might not get the last word in the event of an unusually attractive offer.
While a $500 million stock-and-cash one from Facebook last fall was turned away by Twitter due to worry about the social-networking site’s market valuation, the massing interest is overwhelming and forcing it to make some clear decisions about it path.
“When you are in a situation like Twitter is in, you have to wonder if this is the high-water mark and it is time to sell out or if you are underestimating yourself badly by even considering that,” said one Silicon Valley entrepreneur who has been in a similar spot in the past. “It can be very hard to think straight.”
Indeed, all the attention is both distracting and slightly surreal for its top execs and small 30-person staff in San Francisco, said many sources close to the situation, especially the mass of media that resulted due to that now-discounted rumor that Twitter was poised to be sold off for a giant pile of money.
In fact, Twitter has its hands full enough scaling its recent surge in growth and keeping the service humming along (it has had tech snafus in the past).
But for Google and Microsoft, this geopolitical one-upsmanship by the Internet’s two most important companies is quite familiar, and they have not hesitated to jump into the Twitter tempest.
fire-drill
If that sounds a lot like the two-month fire drill in 2007 that resulted when Microsoft and Google competed to see who could sidle up closest to then-belle-of-the-Silicon-Valley-ball Facebook, you are exactly right.
After much huffing and puffing back and forth and this way and that way, it resulted in a Microsoft “win,” which gave it the distinct honor of forking over $240 million to own 1.6 percent of Facebook at an astonishing $15 billion valuation.
Even as Facebook has grown quickly in size since then–to 200 million users, as announced yesterday–its valuation has dropped to $3 billion to $5 billion.
Microsoft had previously struck an search ad deal in the U.S. with Facebook in which it paid a guaranteed revenue to Facebook and later also did a deal to do some of the search on the site.
Such kinds of deals have become common for both Google and Microsoft in recent years. Google struck one with News Corp. social-networking site MySpace, as well as with AOL (which will also soon come up for renewal).
And Microsoft grabbed the right to pay Digg a guaranteed fee in another online ad deal. And the pair also fought more recently over a mobile search distribution deal with the wireless unit of Verizon (VZ).
And so it goes now with Twitter.
No partnership deal has been made as yet, of course, since such a thing would say a lot about Twitter’s future, since the prospect of marriage overhangs such a choice, which is also–in essence, a declaration of allegiance in the cold war between Google and Microsoft.
If that also sounds like a plot of a James Bond movie, with geeks armed with algorithms instead of gadgety weaponry, you’re also exactly right.
[read more : http://kara.allthingsd.com/20090409/who-will-be-twitters-bestest-search-friend-google-and-microsoft-engage-in-yet-another-pick-me-face-off]
After last week’s explosive rumor that Google was in “late-stage” talks to acquire Twitter, which BoomTown reported was wildly premature, I set out to try to sort out exactly what was going on.
As I found out, there was a lot–mostly much talking related to possible product and distribution partnerships, centered around Google or Microsoft, especially around a deal to become the one to exclusively deliver search or other similar services to Twitter properties.
The reason for the interest? Many think Twitter’s real-time search of its 140-character “tweets” posted by users on the service will become the next great battlefield in search. Google currently dominates the general search market, with third-place Microsoft struggling to get more share.
But how to do that is in flux, as past efforts at various third-party search arrangements have had mixed success for both Google and Microsoft. Both companies and also Twitter are trying to figure out new ways to do such deals.
On top of that, it is also unclear if Twitter wants to strike a deal purely to get a payment from either Microsoft or Google, as others have done. Twitter management has indicated that they are much more interested in growth and distribution over a revenue focus.
Twitter Co-founder Biz Stone said as much on the start-up’s Web site recently, as well as in many media interviews, noting that it will begin experimenting with its own business ideas this year.
In other words, the talks Twitter is having with both Google and Microsoft could also lead exactly nowhere too.
Along with the commercial talks, both Microsoft (MSFT) and Google (GOOG) are also trying to figure out if Twitter is simply one of the many shooting stars that are far more typical in Silicon Valley or if it is sea-change start-up worth pursuing and paying up big-time to acquire.
“As impressive as what Twitter has done, we are all overexcited,” said one source. “And so it’s hard to figure out the right thing to do with all the pressure to do something.”
Thus, while an offer for Twitter from Microsoft, Google or a plethora of other players–from News Corp. (NWS) to Yahoo (YHOO) to Cisco (CSCO) to Time Warner (TWX) online unit AOL to big telcos–could come at any time, said many sources, only a huge price would lead to an acquisition, especially since the growth of the service has been accelerating more rapidly in recent months than has been reported publicly.
This all makes for dicey times at Twitter, which sits at the center of all this noise, trying to build a company, while also being fully cognizant that trying to engineer a massive buyout could be its best outcome.
Further complicating the situation: The fact that Twitter co-founder and CEO Evan Williams–who has already sold one company, Blogger, to Google and eventually left after a lackluster experience, a common one of many entrepreneurs who sell out early to large companies–is less interested in selling out than in growing the company.
But without the kind of control of the company’s fate–which allowed Facebook founder and CEO Mark Zuckerberg to effectively block similar buyout pressures early in its history–Twitter’s founders also might not get the last word in the event of an unusually attractive offer.
While a $500 million stock-and-cash one from Facebook last fall was turned away by Twitter due to worry about the social-networking site’s market valuation, the massing interest is overwhelming and forcing it to make some clear decisions about it path.
“When you are in a situation like Twitter is in, you have to wonder if this is the high-water mark and it is time to sell out or if you are underestimating yourself badly by even considering that,” said one Silicon Valley entrepreneur who has been in a similar spot in the past. “It can be very hard to think straight.”
Indeed, all the attention is both distracting and slightly surreal for its top execs and small 30-person staff in San Francisco, said many sources close to the situation, especially the mass of media that resulted due to that now-discounted rumor that Twitter was poised to be sold off for a giant pile of money.
In fact, Twitter has its hands full enough scaling its recent surge in growth and keeping the service humming along (it has had tech snafus in the past).
But for Google and Microsoft, this geopolitical one-upsmanship by the Internet’s two most important companies is quite familiar, and they have not hesitated to jump into the Twitter tempest.
fire-drill
If that sounds a lot like the two-month fire drill in 2007 that resulted when Microsoft and Google competed to see who could sidle up closest to then-belle-of-the-Silicon-Valley-ball Facebook, you are exactly right.
After much huffing and puffing back and forth and this way and that way, it resulted in a Microsoft “win,” which gave it the distinct honor of forking over $240 million to own 1.6 percent of Facebook at an astonishing $15 billion valuation.
Even as Facebook has grown quickly in size since then–to 200 million users, as announced yesterday–its valuation has dropped to $3 billion to $5 billion.
Microsoft had previously struck an search ad deal in the U.S. with Facebook in which it paid a guaranteed revenue to Facebook and later also did a deal to do some of the search on the site.
Such kinds of deals have become common for both Google and Microsoft in recent years. Google struck one with News Corp. social-networking site MySpace, as well as with AOL (which will also soon come up for renewal).
And Microsoft grabbed the right to pay Digg a guaranteed fee in another online ad deal. And the pair also fought more recently over a mobile search distribution deal with the wireless unit of Verizon (VZ).
And so it goes now with Twitter.
No partnership deal has been made as yet, of course, since such a thing would say a lot about Twitter’s future, since the prospect of marriage overhangs such a choice, which is also–in essence, a declaration of allegiance in the cold war between Google and Microsoft.
If that also sounds like a plot of a James Bond movie, with geeks armed with algorithms instead of gadgety weaponry, you’re also exactly right.
[read more : http://kara.allthingsd.com/20090409/who-will-be-twitters-bestest-search-friend-google-and-microsoft-engage-in-yet-another-pick-me-face-off]
Thursday, April 9, 2009
Google and Music Labels Bet on Downloads in China
SHANGHAI — Can global music companies make money by giving away songs in China, where piracy is rampant?
They certainly hope so. Last Monday, the world’s biggest record labels, including EMI, the Warner Music Group and Vivendi’s Universal Music, said they would seek to profit here by working with Google and offering free downloads of music to anyone inside China.
Google, which has no plans to offer the service elsewhere, hopes to build traffic and win new advertisers by allowing the Chinese to search for free music on its site.
Record labels say that instead of earning money from each download, they will share advertising revenue with Google’s partner in the deal, a Chinese company called Top100.cn.
The partnership, analysts say, could help determine the future of how valuable content is distributed in China, which has already overtaken the United States as the world’s biggest Internet market.
Until now, China has been a hotbed of online piracy and free downloads of music, film and even television shows.
According to the International Federation of Phonographic Industries, which represents the global record makers, 99 percent of the music downloaded in China violates copyrights.
Lawsuits by major music labels and promises by the Chinese government to crack down on Internet piracy have failed to deter the practices.
But now, the music industry says that, at least in China, it can live with giving away music.
“The level of online advertising in China is quite mature, so we’re willing to try this out,” said Sandy Monteiro, a senior vice president at the Universal Music Group.
The deal creates a powerful tandem — the world’s biggest online search and advertising engine, paired with powerhouses from the music industry —aiming to take on China’s leading search engine, Baidu, whose Web traffic has grown partly because of its links to free, unlicensed music.
Global record labels have sued Baidu, trying to force the company to stop linking to unlicensed sites. But Baidu, which declined to be interviewed for this article, has said it is simply a search engine and does not engage in piracy.
With its popular searches, Baidu has managed to keep far ahead of Google in China, with a search market share approaching 65 percent.
But analysts say Google could be significantly aided by the new music partnership.
“It’s a smart move for Google,” said Ma Xiushan, deputy director general of the China Intellectual Property Society in Beijing. “Google has realized the point: they have to open the access for downloading so that they can compete with Chinese competitors and attract more users.”
Google executives say they acted because a music search function was one of the few elements they did not have in China.
According to government figures, about 84 percent of China’s nearly 300 million Internet users download music over the Web, and most of it is used for cellphone ring tones.
Google hopes that by offering free, high-quality music — giving consumers fewer worries about viruses or damaged tracks — it can cut into Baidu’s lead.
For the music industry, which believes it has lost hundreds of millions of dollars to online piracy, the deal promises to deliver a steady stream of revenue and could also put pressure on Baidu and other Chinese Internet companies to distribute legitimate tracks or risk being locked out of future deals.
Not everyone believes it will work.
“Google’s move is just burning money to compete with Baidu’s dominance,” said Guo Chunlong, founder of yobo.com, a music and entertainment Web site. “Sharing ad revenues with music companies — this business model is not sustainable. How many page views could generate the money both Google and the music companies expect?”
Music executives dispute that. But they say the China deal is not a model for the rest of the world. They say different regions call for different approaches — some that charge for downloads, some that stream music for a single subscription price and some that are supported by advertising.
In China, they decided an advertising-supported model was best.
“China was a curious place,” said Mr. Monteiro at Universal Music. “It was the one market we couldn’t crack. And then Google approached us about this model.”
Erik Zhang, one of the founders of Top100.cn, said advertising-supported free downloads were just the first of several stages in the proposed deal.
The partners say they could broaden offerings to include paid V.I.P. memberships, free concert tickets or backstage passes and other benefits.
But one thing is clear: Google and its partners want to limit this experiment to China.
For instance, the site — which will eventually offer about 1.1 million tracks — is in Chinese, and only Internet addresses based in China can download free music. Could China’s clever pirates download this music free and then swap it or sell it in other parts of the world, possibly undermining the system?
Last week, for example, a user downloaded a music track in China and easily shipped it to a friend in London.
Music producers said customers might try this, but they are trying to put up legal and technical hurdles to such ploys.
“We’ll definitely need to watch it,” Mr. Monteiro, of Universal Music, said.
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