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Chinese search engines are being sued after ignoring copyright laws on music downloads. This isnt new or surprising news because China is a bit of a free-for-all when it comes to copyright issues.

According to the International Federation of the Phonographic Industry (IFPI), an association representing the recording industry worldwide, over 99 percent of all music files distributed in China is pirated. And of course, most movies and software in China are pirated too. While this is business as usual, and the record companies are trying to reign things in.

First, the biggest search engine in China Baidu, is being sued by three music industry giants. Theyll be up against Universal Music, Sony BMG Music Entertainment (Hong Kong), and Warner Music Hong Kong. They companies are asking a court in Beijing to order Baidu to remove all links to their music.

The same companies, along with Gold Label Entertainment are suing another search engine called Sogou for the same reason. Yahoo China was already sued and lost but they havent complied with the ruling made this past December. IFPI estimates the size of the music market in China for legitimate music market is $76 million. Thats less than 1 percent of global recorded music sales.

What about Google China - the second most popular search engine in China? They are taking the moral high road to China and a longer term approach. Instead of getting ahead with pirated music, they are working on offering music legally.

Google is planning partnerships with music companies. Today The Wall Street Journal reported that they are teaming up with three large music companies and other small music ones to offer free downloads. The service is expected to start soon " in the next few weeks.

Google is playing catchup in China but CEO Eric Schmidt says they will surpass Baidu which has about 60% of the market. Last April, he boldly predicted, Our investment is working and we will eventually be the leader.

Disclosure: I own Baidu stock, thanks to the high price of Google and because its the first company in China to trade on NASDAQ.

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