According to the Wall Street Journal, Google will be launching a free, licensed music download service in China. China is a fast growing internet hub of the world and it is probabaly the only place where Google is not the market leader in search. In China, Baidu rules the internet search and services market and Google knows that it needs to invest some resources in order to stay in the game.
The online pirated music market is a huge one in China and Baidu has been accused to be providing links to the pirated music. Thus, Baidu users find it very easy to find music through its search engine. To counter this, Google thinks that if it can give users licensed music downloads for free, people would start using Google's services instead of Baidu.
As WSJ notes the stats, "A significant part of Baidu's success has been its music search service, which draws a sizable chunk of traffic -- at least 7% of its total -- to the site by facilitating easy access to free music. Baidu makes money by selling ads directly on its music pages."
Google plans to bring 3 global music companies in its forte to fight Baidu. Vivendi SA's Universal Music is a confirmed partner in this quest to provide free music. EMI Group Ltd. and Sony BMG Music Entertainment are also in talks and will also try to come to the Chinese market with Google. Google hasn't confirmed any of this, but it seems evident that Google will have to do something similar to fight Baidu. Google's Eric Schmidt had said during the China visit last year that Google was late in entering the Chinese market and hence it is the only place where Google is not the leader in internet search.
I completely agree that Google should be trying to get into the Chinese market, but without localized services its going to be tough for any company to enter markets like China. China still has most of its web in the Chinese language and the government also has policies that are different from other markets in the world. India on the other hand in the near future, will also be another hub of the internet world. But a market like India, where most web users understand and primarily use English as the language of communication, it is easy to target and get into. Also, Google is already the internet giant in India. But there is lot of room for more competition from Microsoft, Yahoo, Zapak (Reliance) and other companies to take a pie of the Indian internet market.