Yahoo closes music search in China

Yahoo China closed its music search service Sunday, as it continues to lose ground in the Chinese search engine and news portal markets.

Yahoo China made the move on the heels of Google Inc's shutdown of its China-only music search service in December.

"Due to a modification of our product strategy, Yahoo's music service was shut down on January 20, 2013, and no further service will be offered," Yahoo China said in a message displayed on the former Yahoo Music website.

Yahoo China, which is wholly owned by China's biggest corporate e-commerce provider Alibaba Group, does the majority of its Chinese business in the search engine and news portal arenas.

However, the company's share of the search engine market has been slipping over the past three years.

Yahoo China is currently the country's second largest search engine by market share, with its share sliding from 29.5 percent in the first quarter of 2010 to 14.6 percent in the third quarter of 2012, according to data released by Beijing-based Internet research firm iResearch.

Baidu, China's largest search engine, held 80.3 percent of the total market share in the third quarter of 2012, up from 67.8 percent in the first quarter of 2010, the data showed.

Yahoo China's popularity as a news portal has also been weakening, currently trailing other portals like Sina and Sohu in the domestic market.

"Because the online music service brings high costs with relatively low returns under current business conditions in China, it is reasonable for Yahoo China to give up this product when its overall business performance is declining," You Tianyu, an industry analyst with iResearch, told the Global Times Sunday.

Compared with some developed countries including the US, China's online music services are less developed because pirated music is rampant and only a few users are willing to pay for online music, Jian Wei, director of the working committee on music albums at the China Audio & Video Association, told the Global Times Sunday.

After over a decade of development, there are still no official guidelines on cooperation between music service websites and music copyright owners. But Jian said "a guideline on profit sharing between websites and copyright owners will be released by the association in the first half of 2013."

Among the popular online music service providers, QQ Music owned by Tencent Holdings performs best in the business of paid music, "even though it is still difficult for the firm to balance income with expenditure when it comes to music service," You said.

You also noted that the future development prospects of Yahoo China are uncertain until its holding company Alibaba Group confirms when or whether it will finish its initial public offering (IPO).

Market rumors that Alibaba Group might seek a listing surfaced after its CEO Jack Ma Yun wrote in an e-mail sent to employees Tuesday that he will step down as CEO in May.