Official reaction to the IFPI MP3 ruling

China.org.cn is an official government publication. As
per them:

" The real reason of Yahoo! China's failure was not
because the website provides illegal MP3 downloading
links but because it did not immediately delete these
links after the record companies voiced their complaints
against its IPR infringement acts. This was against the
principles set up by the authorities."

So search engines have to delete links after music
companies complain of specific illegal ones, but
search companies are not required to police the
links proactively. Will gradually erode the dominance
of pirated music, without a major disruption to existing
traffic.

The full china.org article

MP3 traffic on Baidu steadily down in Q2 2007

With the recent ruling on MP3 copyright issues,
how blocking illegal downloads affects
Baidu has become important. As of Q2 2007, MP3
traffic was about 22% of overall traffic for
Baidu, as per iResearch (the company doesn't
release official stats). Alexa has the number
much lower at 8%, but isn't a reliable source
for China. Note MP3 traffic is going down not
just as a fraction of total traffic, but in
absolute terms as well.

The company has multiple choices now - fight it
out in the courts if sued again, and pay a paltry
fine the first time, if found guilty, and at the
same time strike licencing deals with music labels
pushing them into an ad-driven model. They already
have deals with EMI and Rock Music. Since these
cases take at least a year to get anywhere, most
likely nothing drastic is going to change now. The
company will probably reduce its MP3 dependence to
single digit percentage by the time the issue heats
up again.

iResearch stats

Baidu launches patent search.

Baidu is partnering with the government patent agency
to provide full patent search. The Chinese government
is encouraging new patents, which means patent search
volume will increase significantly as the country
progresses.

Baidu 's patent search

IFPI loses music piracy case against Baidu...

A 2 year old lawsuit finally set to rest. Two
labels - EMI and Golden Label - have withdrawn
from the suit. Another major Chinese label - Rock -
has partnered with Baidu on an ad-driven model,
to replace the pay-for-download model.
Baidu wins lawsuit, but Yahoo loses.

Analyst position summary at 2007 end

Here is what the major analysts have to say about Baidu:

Citi (Jason Breuschke): Buy ($420-odd target)
RBC Capital Markets : Hold ($420-odd target)
Susquehanna Financial (Ming Zhao): Buy (no target)
JP Morgan (Dick Wei): Buy ($400 target)
Piper Jaffray (Gene Munster): Buy
Bear Stearns: Buy (withdrew target numbers)

Goldman Sachs (Anthony Noto): Neutral ($310-odd target)
Maintained this for over 2 years.

Credit Suisse (Wallace Cheung): Underperform
Maintained this for over 2 years.

Morgan Stanley (Richard Ji): No opinion for way too long.
Recent bullish note on the Huawei joint research lab, but
no comments on the stock per-se for at least a year.

Summary report from "First Call" for 2008 and 2009
estimates:
First Call report on Baidu

China 2010 Online Advertising Alliance Revenue (mostly Baidu Union) to Hit CNY1bn

BEIJING, Dec 21, 2007 (SinoCast via COMTEX)

The Chinese online advertising alliance sector is estimated to
gain revenue of CNY 1.06 billion in 2010, soaring 61.2% from
CNY 660 million in 2006, according to a latest report by
Beijing-based iResearch Consulting Group.

The revenue would amount to CNY 1.06 billion in 2007,
accounting for 10.5% of that of the country's online advertising
industry. The figure was 10.8% in 2006 and is anticipated to
rise to 11.6% in 2008. Thanks to the advent of the 2008 Beijing
Olympic Games, the sector is expected to show a speedy
growth in the following years, said the Beijing company.

Currently, the advertising alliance of Baidu.com Inc. (BIDU)
and the AdSense advertising platform of Google, Inc. (GOOG)
rank top among the domestic online advertising alliances by
members. Some medium-sized advertising alliances grab a
piece of the market by unique positioning.

Among all the advertising alliances, sponsored search
alliances have a best performance, gaining revenue of
CNY 760 in 2007 which accounts for 70% of the total.

Baidu & Huawei joint research lab

Baidu CFO estimates traffic will grow at 3x pace for the next
few years. Trying out new technologies to scale at that speed.

http://www.china.org.cn/english/business/236098.htm