All Things Digital

According to the International Federation of the Phonographic Industry, 99 percent of all digital music distributed via the Internet in China is pirated. But that doesn’t mean it can’t be monetized, as Google hopes to prove. Today the company launched a new music search service that allows Internet users in China to legally download music–for free. Developed in partnership with Chinese music company Top100.cn, the service will be supported by advertising revenue, to be split between the two companies and participating music labels. If successful, the new service will be a boon to the recording industry, which has been frustrated to the point of aneurism by China’s piracy issues.

Obviously, it will be a boon to Google (GOOG) as well. The company’s arch rival in China, Baidu.com has long dominated the country’s search market, thanks in large part to the access it offers to free, unlicensed music downloads–access with which the global recording industry has repeatedly taken issue. Today, Baidu controls about 65 percent of China’s Internet search market. Google controls just 26 percent. But that might change very quickly if Google’s free, legal, music industry-supported service wins over users.

Seven hundred dollars. What a nice, big, round number that is. Nicer still if you happen to be a Google shareholder. Because this morning Google’s stock passed the $700 milestone for the first time, hitting $707.

Astonishing. Since mid-September, Google’s market cap has increased more than 30%, reaching $220.68 billion. Which, as Silicon Alley Insider’s Henry Blodget notes, makes it the fifth most valuable company in the U.S. How long until it’s the fourth? Or the first? How long until GOOG is trading at $2,000 a share?

Perhaps not that long at all. Dinosaur Research’s David Garrity put a fresh $985 target on the company this morning, figuring 48 times 2008 earnings. His justification? The mobile ad market. “To the extent that advertising media distribution channels are being transformed by emerging technologies with the possibility that mobile advertising may ultimately become more significant than the current broadcast channel in spending terms,” Garrity writes, “GOOG, in effectively penetrating the walled garden that wireless communications services have been until now, is securing a strategic technology provider role that will allow it to meaningfully shape the progression of development in the space.”