Baidu, China’s biggest search company, was identified by the US Trade Representative as one of the most notorious Internet markets for hosting pirated content. In a bid to fight piracy and win back its reputation, the company has announced a revamped MP3 service that is set to be released in May. A Beijing-based analyst firm’s president, Lubbe Wang, expects this transition to initially impact Baidu negatively — a whopping loss of half of its users for the music service.

The new MP3 service will no longer link to pirated music and will abide by the regulations set by the Music Copyright Society of China for the payment of music royalties to benefit the music industry at large. The MP3 service will undergo a complete transformation to provide both paid and free content services, the report says.

The platform will be open to the music rights holders so that they can share their own music and reap the benefits. Afterdawn reports that the money only covers the songwriters in the downloads while record companies won’t receive any. Baidu spokesman Kaiser Kuo said:

“We will also provide the [Music Copyright Society of China] playback and download data, so that they will be able to have some idea of what’s actually being downloaded.”

Baidu has been the focus of a lot of anti-piracy groups for years. Some experts claim the MP3 service, due to its tolerance to piracy, was responsible for bringing Baidu to the top in China, which now holds 75.5 percent of the country’s search market.

Baidu is trying to change the music service to get out of copyright trouble and to explore new ways to profit. Lubbe identified three major aspects needed to implement this well:

  • A standard to be paid to the songwriters
  • Charge fees that are fair and reasonable for consumers
  • A quick and easy payment method

The analyst also noted that Baidu can expect to lose 50% of its MP3 user base during the early transition. This effort, however, is seen as a potential model platform for the other service networks of Baidu.

The Music Copyright Society of China has been trying to push Baidu to protect copyright holders, even taking legal action against the company, said Liu Ping, the vice general secretary for the group. But it wasn’t until late last year that Baidu and the society began working an agreement to protect copyright holders.

Is Baidu attempting to pull off a China clone of iTunes soon? Stay tuned.

Headline image via Liu Jin/AFP/Getty