RTOB: BAIDU Thesis + Music Downloads

Random
Thoughts
Of
Brilliance

Does My Long Term investability thesis behind China's #1 Internet SEARCH market share leader (60% of the Chinese market), BAIDU -

("The Google of China"......EXCEPT that RELATIVE to Google:
1.) BIDU is Younger --> BIDU is a whopping 2 years younger than Google. BIDU was founded in 2000 vs Google which was founded in 1998. (OK that officially turned out to be a lot weaker of an argument than I originally thought it would be...GOOG's a mature beast, HOW the heck were they able to grow into a $140 Billion business in only 10 years!?!)

2.) BIDU Possesses a MarketCap 1/14 the SIZE --> As hinted above, Google's current market capitalization/valuation is $140 BILLION as of today's $447/share closing price. Bidu's valuation is less than $10 billion reflecting today's closing $288 price tag.

3.) BIDU has its own Uniquely LARGE, local market that possesses its own UNIQUE market operating dynamics (CHINA) --> Referring to my REFerence post on the World's largest populations, China has 1.3 BILLION citizens vs. the U.S.'s 300 million...said differently, China has 400% or 4 times more the amount of potential web consumers than the United States. Clearly the addressable internet web search market is larger in China vs. the Google-dominated United States.
And OK sure, I'll cede you the point that the U.S. is much more affluent and the architecture + dynamics of their "Internet industry" is much more further along than communist China's RUSTY web enabling infrastructure. GUESS WHAT THOUGH? In the grand scheme of things that little tidbit of undeveloped web infra doesn't really mean anything to my thesis because I believe the INTERNET is here to STAY with us in some fashion or form for the rest of our lives as a REAL medium (like television, radio, etc.). The economic efficiencies of the Internet are just too powerful to allow the medium to go bust. ULTIMATELY, that notion means that the other less advanced 'web infra-structured' countries ultimately have to catch up if they want to compete in an increasingly GLOBALIZING world...and they will..just a matter of time (thinking + recent ideas like Google's press for free nationwide wireless Internet access makes this DREAM closer to becoming reality)...AND all part of my Master BROADER B.R.I.C. + ROW industrial revolution process investing thesis.

And
4.) BIDU is still in its Earnings Growth PRIME and is growing profits + sales FASTER than Google--> Compare the most recent quarterly and annual Net Income (profits) + Revenue (sales) GROWTH RATES of both companies' using financial/news recap data provided by Google/Yahoo Finance.)

- Have CRACKS (keep up) if the Chinese government makes it IMPOSSIBLE for Baidu to continue profiting (via user clicks + site visits) from its convenient + UNAUTHORIZED distribution of free (albeit COPYRIGHTED) music ?

The below linked Henry Blodget (tech sector market commentator) article FORCED me to PONDER this as Blodget states, Baidu " attracts users in a significant part by facilitating easy access to free music".

http://www.alleyinsider.com/2008/4/google_we_re_going_to_crush_baidu_in_china_we_think_

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Need to figure out What % of BAIDU's Total Internet Search Traffic is linked to users simply accessing free, copyrighted music...If this ends up being a relatively large % then this could put a potential caveat on my current BAIDU investability thesis...Does Google (GOOG) also offer easy access to copyrighted music in China...and if so, to what extent is GOOG's total Chinese Internet search traffic tied to this?

1.) If Google is not currently involved in this somewhat taboo biz (taboo to me because as a full-fledged CAPITALIST I believe strongly in the notion that all copyrighted material should be protected...in my opinion, there's arguably no greater stimulus for fostering economic creativity + solutions than protecting 'owner' rights)
AND
2.) the Chinese government does indeed eventually limit BIDU in its unauthorized distribution of proprietary content (in this example 'music'...which could also be a 'slippery slope' by the way given China's internationally infamous issues re bootlegging of products including music, movies, video games, software, etc.), then Can Google gain incremental share vs. BAIDU in the Chinese Internet search market?

*With respect to my own above posted questions/concerns, China's RICH + LONG STANDING history of BOOTLEGGING proprietary content (music, software, video games, technology..) should NOT be ignored.

Perhaps this is no more than a 'PHANTOM/Fake' concern given that this issue might just illustrate a fundamental and CORE difference between how two societies (China and the U.S...one whom identifies itself as communist and the other whom identifies itself as capitalist) view + respect the individual rights of owners/citizens !

Full Disclosure: I own shares of BIDU and GOOG.