Lost amidst the news of MSFT's bid for YHOO last week was the WSJ article detailing Google's plans for a music play in China entailing a tie-up with Universal Music and other indie labels.  SonyBMG and Warner are also rumored to be in.  They are pioneering a model in which Chinese users will be able to get access to free MP3s from searches, to be monetized with advertising and split between the labels and Google.  The joint venture partner would be top100.cn, which already sells licensed music downloads.

This is a 'cant-beat-em-join-em' strategy.  The labels recognize that unlicensed trading and consumption is the norm in China and so they don't have much to cannibalize by trying such a model.  Yes, they risk cheapening the perceived value of their product, but come on, that train left the station a long time ago in China.  For Google, as the article points out, it is a way for them to try to steal share from Baidu, which has allowed unlicensed links to MP3s.