A Beijing high court ruled in favour of Baidu, rejecting allegations that it had allowed the illegal downloading and sharing of music, and ending a copyright lawsuit that spanned more than two years between the mainland's leading search engine and four global music giants.
'This ruling means that paid music downloads - a business model like that of Apple's iTunes - is dead in China. Even the Asian market will suffer because many people in Asia listen to Chinese songs and can download most Chinese songs for free from Baidu.com,' said IDC China senior analyst Jacky Huang.
Baidu.com offers an MP3 search service through which entering the name of a song returns dozens of links from which users can download the song to their computers.
Seven companies, including giants such as EMI, Sony BMG, Warner Music and Universal Music and their local subsidiaries, sued Baidu.com in 2005 claiming its website allowed illegal downloads of their music. A total of 137 songs were involved and total compensation of 1.67 million yuan was sought.
A Beijing court found Baidu not guilty in November 2006. The music companies appealed, but the People's High Court of Beijing said in its final ruling on Sunday that Baidu's service did not constitute a copyright infringement.
Mr Huang said the ruling was also likely to have an impact on Apple's sales in the mainland and Asia.