According to Google's Lee Kai-Fu, Google needs a competitive music download service in order to compete with Baidu.com, the leading search engine in China.

It is important to note that a lot of Google's competitors in China, including Baidu, Sohu, and Yahoo, have recently been sued by the music industry in China because of their MP3 search engines which often link to illegal copies. Indeed, according to the International Federation of the Phonographic Industry, the record industry's international lobbying group, 99% of all music files distributed in China are pirated (in 2005, by the way, the piracy level in China was 'only' 85%). Baidu's MP3 search engine is responsible for about 7% of the traffic to its service.

While Google has clearly been able to work out deals with the music industry in China, it is currently locked in a number of battles with the music industry in Europe and the United States, and we don't expect that Google will offer a similar service anywhere else in the world anytime soon.

It will be interesting to see if Google manages to steal away users from Baidu thanks to this new offering. If anything, users have shown to be quite resistant when it comes to changing their search habits, and while Google's MP3 catalog is interesting enough by itself, it remains to be seen if it can be competitive against the other MP3 search engines in China.