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The Wall Street Journal picked up a rumor that Google is preparing for a counterstrike against Baidu by offering music downloads:

[Google] is in the late planning stages of a joint venture with a Chinese online music company that would permit it to provide free – licensed – music downloads in China.

The service, which is likely to offer access to tunes from three global music companies as well as dozens of smaller players, could start in the next several weeks barring any last-minute hiccups.

While Google’s music is supposed to be licensed, the WSJ says Baidu’s downloads on the other hand are “controversial and legally risky” (sounds like Google’s YouTube, which also stores lots of music videos). The WSJ goes on to write:

The proposed venture goes directly after Baidu’s music search audience, by offering high-quality music files embedded with a digital “watermark” that lets record labels track how often their songs are downloaded. The idea: Better-quality files will draw users away from unlicensed downloads, and give labels and search companies valuable data needed to make money from advertising, say people familiar with the plans.

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