Baidu and its competitors part II: Sina

by Hong Bo aka Keso.

This was supposed to be the third post of the series, but since Sina Music Box, the digital music platform jointly produced by Sina and the five big record companies, is now online, I would like to make it the second.

During one of our dinners a while ago, Chen Tong (Executive Vice President and Chief Editor of Sina - translator) asked several waiters of the restaurant which websites do they usually visit, all three of them mentioned Baidu, one mentioned Sohu, and nobody mentioned Sina. They have the unanimous purpose of visiting Baidu: To download music. This is a piece of evidence of how influential Baidu's MP3 search function is. Right on the spot, Chen disclosed to us that his secret weapon is coming out of the factory soon, and when the day comes, he said, users are gonna have free access to hundreds of thousands of songs online, without being vulnerable on the issue of piracy.

The problem is that piracy has never seemed to be an issue in China. Endless lawsuits against Baidu are filed by record companies and copyright owners, who eventually realize that it's mission impossible to crack it down, and the more sensible option is to sit down and talk to Baidu. Just like China Mobile (the biggest mobile carrier in China - translator) controls the channel of paid services, Baidu controls the users of digital music. Chinese Internet users don't bother to ask whether the music they download is legal or not, they just choose whichever channel that is free (as in free lunch), it can't get simpler than that.

By providing legal music download, Sina Music Box will make itself adored by the record companies (Sina's stock went up for 4.18% the day the news broke out), but it will hardly appeal to the users. Try searching for Lao Lang 老狼's new album with the keywords '老狼' and '北京的冬天', shockingly, you'll end up with zero result from Sina Music Box. In Baidu, however, you'll get 271 results. Whom do you think that users would choose?

Sina Music Box is merely the company's latest attempt to regain its dominant position on the battlefield of Chinese Internet. Just like many of its previous moves, this one is lame enough to foreshadow the internet portal's inevitable fall. Sina defined the model of Chinese online journalism with two distinctive features: large volume and rapidness. Because of these two features, it has been the public enemy of traditional media, whose hope of competing against Sina on the internet was shattered when they realized that they were merely working _for_ Sina, who has been feeding on the news stories they produce. Caijing Magazine has muttered some complain against Sina on behalf of the desperate traditional media. Sina, however, gradually came to the realization that they are also merely working for someone else. As the online distributor of information, the news supermarket model of Sina is on its way to be replaced by the sorter of online information, namely search engines. Here comes Baidu.

Despite its highly valuable news search function, Baidu has never been a real news website, which is to say that Sina still maintains its nine-year-old leading position in the business. With Baidu's being granted the news reporting license, however, changes are blowing in the wind.

I don't think Baidu will be doing civilian journalism. The model of OhMyNews is definitely not viable in China, especially when you eye for media's agenda-setting privilege and the huge profit of advertisement. The Achilles' heel of Sina is its fragile relation with traditional media, and this is what Baidu can take advantage of. By licensing its content, traditional media get almost nothing from Sina except for the one-hundred-thousand or so licensing fee and the brand exposure which may or may not be noticed by the readers. And their own online presence are severely limited by the sheer dominance of Sina's news supermarket.

As a distribution centre of page view, search engines can bring a lot of important readers and users to traditional media's own websites, and this is something that Sina is not capable of with its current model. What are the most valuable pages of Sina? Take a look at the ones with the highest density of ads and you'll see: it's the news centre and the front pages of respective sections. These are the only pages that the still-imaginary Baidu news website needs to maintain, as content-hungry readers will be effectively channeled to the websites of individual newspapers and magazines.

Different from the love-and-hate relation that Sina maintains with traditional media, Baidu should see that it has potentially the same interest with them. Apart from sharing page view, Baidu can also serve as the ad agency for traditional media's websites and share ad revenue with them. The conventional wisdom that traditional media would inevitably fail when they try to expand to the internet is not necessarily true.

Now that traditional media is collectively experimenting with online model, which do they prefer? Sina or Baidu? There might be one day when most of the traditional media sign an exclusive licensing agreement with Baidu, and that would be the end of the Sina news model.

I believe that Chen Tong has foreseen the day long time ago, that's why he has signed multiple years of licensing agreement with many important media. Come to think of it now, it's indeed difficult to imagine that those media willingly accepted and drank this bottle of poison from Sina. But eventually, openness is going to beat closeness, and self-interest is going to be defeated by mutual-interest, this is not only a trend, this is business.