Yahoo to close its music service for China

IDG News Service - Yahoo's music service for China will close in January, after once being accused of supporting music piracy.

The music service posted a notice on its site, thanking users for their support, and stating that it was adjusting its product strategy. The music service will shut down on Jan. 20.

Chinese e-commerce giant Alibaba Group, which runs Yahoo's China operations as part of a $1 billion deal with the U.S. company back in 2005, declined to elaborate on the music service's closure.

The service, which offers third-party links to searched songs, previously garnered criticism for allegedly supporting pirated music downloads . In 2007, the International Federation of the Phonographic IndustryA sued Yahoo's China operations for copyright infringement. A Beijing court later ruled against Yahoo and fined it about $27,000 in damages.

China's online music industry has since changed. The country's largest search engine, Baidu had also been criticized for offering links to pirated songs. But last year, the company signed licensing deals with major record labels, and also launched a new site offering free legal music downloads to users.

Yahoo's China site has also never been able to gain a major following in the country, said Duncan Clark, chairman of technology consultancy BDA China. "It's basically irrelevant," he said. After Yahoo's deal to hand over its China operations to Alibaba Group, the U.S. company has since become a passive investor in the market, he added.

"They never really cracked the market, and nobody has really," Clark said, pointing to how U.S. Internet companies have failed to attain the same success in China as they have in their home country.

Online music services in China have also become less important to draw traffic, said Mark Natkin, managing director for Beijing-based Marbridge Consulting. In addition, little money is made from them, because of widespread piracy, both online and offline, in China.

"Before the big boom in social networking and microblogging, before online video, in terms of online entertainment there was just less and music was the bigger draw," he said.

In September, Google also closed its music service for China to focus its resources on other products. Google's music service offered free licensed music downloads, but support for the service gradually dwindled following the company's partial withdrawal from the Chinese market in 2010.