Baidu Inc, China's top search engine, will launch a licensed music search service in May, in a move to legitimize its current music search that critics say enables music piracy.

Baidu will launch Baidu Ting sometime in May, said Kaiser Kuo, a Baidu spokesman told Reuters on Wednesday. The service will allow users to stream, download, create libraries of licenced music and will have a social-networking aspect.

Music piracy in China has cost record labels hundreds of millions in profits. Most of the music available through Baidu's current Mp3 search service is copyright infringing.

Our members want to partner with and invest in China's digital revolution, but they cannot do so while the music service run by the dominant Internet company, Baidu, facilitates infringement of the rights of artists and creators online, said International Federation of the Phonographic Industry, a body representing record companies globally, in a letter to the Financial Times last month.

Baidu is the dominant search provider in China with more than 70 percent of the market by revenue.

Last week, Baidu said it reached an agreement with the Music Copyright Society of China (MCSC) to pay fees to MCSC for every song downloaded using Baidu Ting. The licenced music service will be supported by advertising.

The agreement covers publishing rights and Baidu will compensates lyricists and composers through MCSC. The firm is still working toward a more comprehensive agreement that will cover performance rights as well.

Baidu is also in talks with major international record companies such as Sony Music Entertainment, Universal Music Group and Warner Music Group for a similar agreement.

Baidu already has an agreement with EMI Group through the current agreement with MCSC, Kuo said.

We hope for an outcome in the near future, Kuo said.

Baidu has been involved in court skirmishes with international record labels over its Mp3 search service that allows users to search for and download copyright infringing music.

In January last year, a Beijing court cleared Baidu of copyright suits and said the search engine did not break any laws.

Earlier in the year, the United States Trade Representative office spotlighted Baidu as a notorious market for piracy.

Baidu also recently removed hundreds of thousands of infringing material from its Baidu Library product after a group of Chinese authors accused the search engine of not respecting copyright laws.

Google Inc launched a legitimate music search service in China in 2008 but after a quarrel with Beijing last year over censorship and hacking, Google moved its music search to its Hong Kong website.

(Editing by Jacqueline Wong)

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