Google, Baidu race to set up online library in China

Web search leader Google and its top rival in China are racing to build out their online library services as they battle for a slice of the world's second-largest Internet market.

Baidu has already secured a strategic partnership with Peking University Library in Beijing, one of Asia's largest academic libraries, in preparation for the launch of its online book service, publishing and Internet sources familiar with the situation told Reuters on Thursday.

"Baidu has already secured good relations with many local universities and libraries," said a Chinese publishing source familiar with the situation.

"For example, Baidu has signed a strategic partnership with Peking University Library," he said, adding that the deal gives Peking University, China's most prestigious academy, the chance to move part of its book resources into cyberspace.

Google is also co-operating with almost 20 local publishing houses for the newly launched Chinese version of its Book Search service, spokeswoman Jin Cui said.

China already has home-grown online book search firms, such as translates as "read" in Chinese--but analysts said they should not pose a significant threat to Google and Baidu--which together command three-quarters of the country's online market.

"There are two main questions--monetization and copyright," said Florian Pihs, Beijing-based analyst at Analysys International.

According to publishing industry veterans, companies seeking to launch online book services typically first set up a website, then line up publishers and authors to promote books.

Once publishers agree to provide content to the likes of Google and Baidu, readers pay to read online versions of the books. Revenue is then shared between the companies operating the book-sharing website and the content providers.

If successful, the venture could help Google and Baidu tap new profit streams. Online advertising is still an important source of revenue for the two Web search giants.

Google's drive to digitize major libraries has not been without mishap. Authors' and publishers' groups--who say the web pages may tempt readers to stop buying printed works--are suing the company to block scanning of copyrighted library books.

Google said it only plans to publish the full texts of out-of-copyright books in the public domain.

Google and Baidu are broadening their services in China, the world's second-largest Internet market after the United States with around 137 million web users. Baidu recently won approval to do its own reporting rather than simply show news search results, while Google is promoting a Chinese-language map search service and online word processing programs. Both hope to partner with or buy local video sites.

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