Qiyi Explores Charging Fees as Users Reach 150 Million

Qiyi.com Inc., the online video venture majority owned by China’s largest Internet search engine, Baidu Inc., said it’s exploring charging users for some content.

The site reached 150 million users in March after a year in operation and will next look to expand in the mobile video market, Vice President Yuan Bin told an Internet conference in Beijing today. He reiterated the company’s desire to sell shares to the public, without specifying a market or timeframe.

“The future of the online video industry is to have two models: customer paid, and advertising paid by companies,” Yuan said. “We are now exploring the paid-by-customer model.”

Baidu Chief Executive Officer Robin Li is diversifying from the search-engine business after overcoming a challenge from Google Inc. (GOOG), which lost market share in China after a censorship dispute with regulators last year. Li said in February that Qiyi may seek a listing, without giving a timeframe.

Qiyi recently started offering monthly plans that allow paying members to view premium content such as newly released feature films, Ren Guanjun, a marketing executive at the company, said by telephone today. Qiyi will continue to offer free content, he said.

The number of paying customers is still “quite small,” Yuan said, without supplying details. The company is benefiting from its connection to Baidu, which controls about 80 percent of the search market in China and can help drive users to the Qiyi site, Yuan said.

Baidu owns 61 percent of Qiyi.com. For accounting purposes, it is deemed not to have control over Qiyi due to rights provided to a convertible redeemable preferred shareholder, the company said in its annual report in March.

Providence Equity Partners, an investor in Hulu LLC, last year said it would provide $50 million of funding to Baidu’s video website. Hulu, based in Los Angeles, offers video content from owners including General Electric Co.’s NBC Universal, News Corp.’s Fox, and Walt Disney Co.’s ABC.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net