Music is hosted on China's Top100.cn, a Chinese-based music site. The downloads will be financed by advertising, with revenue split between Google, the music companies, and Top100.cn.

Heading Off Piracy?

It's estimated that 90 percent of Internet users in China download pirated music with the help of search engines. Some worldwide record labels such as Vivendi have significant stakes in Chinese recording artists, and many see the new Google service as a way to help protect that intellectual property. Pirated music is costing labels millions of dollars in lost revenue in China, where piracy is most rampant.

Apple's iTunes Store is open and doing business in China, but it has little market share compared to the number of pirated music files on the Chinese Internet. In addition, the Top 100.cn site may initially carry just a small fraction of current popular Chinese music files, crippling its chances of becoming a number-one destination for Chinese music lovers.

It's unclear how many artists and labels are part of the Google-Top100.cn music rollout. Reports confirm that Universal is onboard, but there has been no word from Sony, EMI or Vivendi. Google could not be reached for comment. If the selection is not deep enough, some critics suspect it will have little chance of preventing illegal music downloads.

Heading Off Competition as Well?

Some observers are speculating that Google's move into the China music scene is more about gaining search-engine market share than MP3 downloads. While Google may dominate the search-engine field in the U.S. and Western Europe, its Chinese rival Baidu has captured 60 percent of China's market, according to a Beijing analyst group. Google has an estimated 25 percent of the Chinese search market.

Other reports indicate China will soon surpass the U.S. in the number of Internet users, making it a significant market that has so far eluded Google dominance. Baidu has attempted to become a Web-within-the-Web for Chinese users, mimicking other Internet giants such as Wikipedia with its own Baidupedia and social-networking applications to rival Facebook and MySpace.

Baidu is estimated to achieve seven percent of its search traffic on music downloads. For this reason a number of music labels, including Sony, filed a lawsuit with the International Federation of the Phonographic Industry against Baidu in early June, alleging the company does little to prevent music piracy. The suit also alleges that of the millions of MP3s illegally downloaded in China, 70 percent originated with a Baidu search.