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Will Baidu's (BIDU) Chinese Music Business Model Spread?

Chinese search leader Baidu (BIDU) has formed a partnership with the largest Chinese record label to stream music online. For free. Advertising will run on the pages where the music is accessed.

Money will be paid to artists from the advertising revenue pot.

The idea, while not entirely novel, is being put into place by the most powerful internet company in China. If it works well, the question is whether it will move to other place, especially the US.

“Free” music could put a dent in Apple’s (AAPL) strangle hold on digital music and help companies like RealNetworks (RNWK) which have hundreds of millions of digital players downloaded on PCs. The extent to which this music can be transferred to MP3 players is not clear yet, but iTunes might get some competition.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com.

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