Yahoo China Vs. Global Music Industry

Posted by: Brian Bremner on July 5, 2006

The Yahoo China syndrome continues. First, the U.S. mega-portal gets a thrashing by U.S. lawmakers and human rights groups for supplying email data to Beijing authorities that led to the arrest, conviction and 10-year imprisonment of mainland journalist Shi Tao. Now, it has the global music industry on its back. On July 4, the International Federation of the Phonographic Industry (IFPI) announced plans to file a lawsuit against Yahoo China for linking to mp3 sites that download pirated versions of copyrighted songs. Here is the IFPI statement on the matter.

Yahoo China is a unit of a partnership between Chinese e-commerce specialist Alibaba.com and Yahoo Inc. The U.S. Internet outfit spent $1 billion last year for a 40% stake in Alibaba.com. IFPI last year went after China’s biggest search engine purveyor, Baidu.com, for the same sort of behavior and sees the mainland as a key battleground in its worldwide legal assault against musical piracy.

The sale of illicitly obtained music around the world is valued at $4.6 billion or about the same size as legitimate music markets in the U.K., Netherlands and Spain combined, the trade group says. And China is the mother of all copyright infringement markets, with an estimated 85% of all music bought domestically pirated in one form or another. Of course, you can’t blame piracy entirely for the stall in global music sales last year. (My own pet theory centers on the 2005 comeback attempt by ’60-era crooner Neil Diamond.) Still, the recording industry does have good reason for jumping on Yahoo China. It will be an interesting case to watch in a China not known for protecting intellectual property rights.

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Bloomberg Businessweek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies.

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