EMI is trying to turn defeat into victory in China with the launch of a new advertising driven music service with Chinese search engine heavyweight, Baidu.com. EMI acting in concert with the rest of the majors recently lost a a copyright infringement suit against Baidu.com in China brought in an attempt to stop Baidu's practice of deep linking to pirated music files.

Now, in a stunning about face, EMI will share revenue with Baidu for a new streaming music service, and has agreed to drop its part of the appeal against the earlier ruling for Baidu. Further Baidu will not cease its practice of deep linking to pirated music tracks. The decision by EMI is a gesture of defeat in China, a reflection that the majors have failed to cut down on piracy through the use of heavy handed litigation.

Whether or not this has any wider implications for court actions launched by the majors in the US and Europe against file downloaders remains to be seen, but maybe someone up high has started to weigh up the cost of litigation and impact the poor publicity against their actual losses due to Internet piracy.