Houston Internet Company Will Bring MP3s to China

Houston's InterWeb Design has signed a joint venture agreement to bring MP3 audio to China. The three-way agreement, finalized in late February with a Chinese investment company and the Chinese government, will establish the first government-approved MP3 site in China.

Beijing Artists Online L.L.C. will launch an English-language Chinese MP3 music site similar to the popular MP3.com within 60 days, with a Chinese-language site to follow in about 120 days. The agreement stipulates that every Chinese song posted on the new site be approved by the country's Ministry of Culture, despite the government's "open-door policy" toward MP3 players and the downloading of music over the Internet. The site design by InterWeb will enable Chinese censors to "administrate the site quickly and efficiently," according to a BusinessWire report.

The venture will promote Chinese music in China and elsewhere. The site will allow the Chinese government to support and promote its indigenous music industry with a financially sustainable distribution network for its artists. Artists will be free to build and update their own websites and upload their songs and graphics at no cost, but Ministry of Culture officials will ultimately decide which are acceptable for posting on the Internet. Those who pass muster will be able to see download statistics and page views.

"Our service will be uniquely positioned to become the first major governmentally approved and owned MP3 site," said InterWeb CEO Harry White. "We believe that the market opportunity is huge. Currently, China has only approximately 10 million Internet users, but according to the Yankee Group, Asian Internet usage is expected to reach nearly 374 million people by 2005. This, combined with China's rapid economic growth, will create an ideal marketplace for the MP3 site, as well as our other products and technologies."

There are also 21 million Chinese Internet users outside China. "We should be announcing additional joint ventures with China in the very near future,'' White added. The site is being touted as a private commercial enterprise despite the Chinese government's participation, but none of the publicity about the venture spells out how artists will get paid.