The Two Generations’ Pursuit of Copyright

Issue 30 By Zhou Yi, China IP,[Copyright]

In 2006, Li Zheng graduated from university and worked in the marketing department of a video sharing website. Just like many other people, he was very optimistic about the future of the industry, mainly owing to the good potential of web 2.0 and the soon-to-be-issued 3G licenses. 

One thing made Li Zheng different from many other gold diggers in this video sharing industry:  he was so devoted to and enthusiastic about his first job. Unfortunately, one and a half years later, he was forced to leave the company. “We couldn’t produce a successful profit model. The company was closed down, so I had to leave.” said Li Zheng.

People may be surprised by his everyday job during those one and a half years: negotiating copyright cooperation agreements and trying all means to obtain original video resources from content providers (CP).

Li Zheng’s efforts

Li Zheng said, “Actually, original video resources are very important to video sites. A video site pools a mass of excellent videos. Works uploaded by netizens may only account for one tenth of all videos, and the quality is not guaranteed. Video resources, such as TV shows and MTVs are in the hands of copyright owners. So we have to negotiate with them and buy videos from them to fill up the site.” He also teased that “At that time, we needed to decorate our site with a lot of original content to ‘jerk around’ investors.”   

The marketing department that Li Zheng worked for had two major duties: marketing, just like the marketing department of other companies; and to facilitate copyright cooperation with CPs. The latter was also Li Zheng’s main task. 

This 20-year-old boy was hunting for CPs every day. Once he found his “prey,” he reported it to his superior to find a way to cooperate with the CPs.    

Li Zheng had a sort of lucky start. Through certain social relationships, he was put in touch with Emperor Entertainment Group Limited (EEG) and started his first cooperation agreement with them. He recalled, “The cooperation agreement was quite simple. We created a theme page all about the MVs of its stars.  In return, we were given the one-year broadcasting rights of these MVs.”

After that, Li Zheng found more and more CPs with whom to cooperate, including record companies, film and television groups. In his words, their cooperation relationship was a simple buyer-seller relationship. Price set, deal closed. Simple as it is, he felt a great deal of pressure. His acquisition work turned out to be as tough as sales, because the site behind him would not pay for the products. As a result, “cooperation” became the main approach to get copyright content. 

Li Zheng then described the modes of cooperation: “There are several modes – net revenue splitting, pre-payment splitting, and full payment. Net revenue splitting means that the site pays CPs according to the click rate of the videos provided by them. This mode is usually adopted by such Video On Demand (VOD) sites as VNET. Video-sharing sites don’t use it. Pre-payment splitting is an agreement to pay a certain amount in advance, then to split the revenue based on the click rate. However, CPs can hardly earn any money from these two modes, because the click rate can be faked – which was probably one of the hidden rules in this industry at that time.”    

“Full payment is profitable for CPs, but it is the last choice for sites. This is because on one hand, those sites feel that they are just in the beginning stages. They can’t afford to ’scatter money.’ On the other hand, videos are too expensive for them. Therefore, ’full-payment cooperation rarely happens. Anyway, if you are lucky you can find one among the thousands of cooperators,” Li Zheng said and smiled.   

Although not in this industry, Li Zheng is still quite concerned about this problem. He thinks that the root of the awkward situation for video-sharing sites is that they haven’t found their own profit model. If they can’t make a profit, they can’t afford copyright. Without copyright, they can’t make further profits. This is a vicious circle. If the profit model problem is not settled, video-sharing sites can only survive by burning money.  

But this opinion is challenged by Li Yuelin, a good friend of Li Zheng’s, who is the manager of the media cooperation department for the Ku6 video sharing site. 

Li Yuelin calls Li Zheng an “outsider,” since he quit the business. She thinks that this “no profit model = no purchasing power” viewpoint is Li Zheng’s self-righteous opinion. “Unprofitability doesn’t mean no money. The same is true now. In my opinion, people wouldn’t buy a copyright simply because they were bound by social conventions. From a business angle, other sites are dealing with piracy, why should we waste money for legal copies? We don’t make a profit either. But we decide to pay, and we have our budget. This is all based on our theory of ‘to show films and TV shows by media’” She said.    

Li Yuelin also lost herself when she first entered this industry one year ago.

Li Yuelin’s bewilderment

Before working for Ku6, Li Yuelin was doing marketing work for Sohu. By chance, she was offered a position in Ku6 that matched her perfectly. The duty of this position was to seek copyright cooperation agreements for videos on the site.
This was a totally new field for her. She backed off at the beginning. After receiving the invitation in March 2008, she joined the company five months later. “At that time, I thought that the copyright problem for video sites could never be solved. Or, we could also say, China’s copyright problem, and the Internet’s copyright problem could never be solved. Then what could I do? And it seemed that no one was even concerned about copyright in this field.” This summed up her bewilderment at that time. She also teased “If I could solve it, I would become a God.”

But after she took this job, she was very hard at it. With her boss’ coaching, she steadily got things rolling. There were three people in her department, and she was in charge of copyright cooperation.

Compared to Li Zheng, Li Yuelin had a more clearly defined scope of work: to buy films and TV shows and to cooperate with TV stations.

“The first responsibility is to buy videos with copyright permission from producers and CPs; and the second one is to publicize their products in exchange for their videos” explained Li Yuelin.

In October 2008, after some acclimation and consideration, she began her official “talk” with video providers.

Li Yuelin told this journalist, “Cooperation with TV stations is rather difficult. It depends on whether the station needs publicity. They usually don’t like their programs to be seen on demand on websites. And surely there are TV stations willing to cooperate with sites to enlarge their influence. When we buy films and TV shows, we sometimes buy many productions at a time, and sometimes we only buy ‘hot’ videos.”

For different films and TV shows, the cooperation style is different. Films, especially hot ones, are not affordable for video-sharing sites. Therefore, the “film” here usually refers to “trailers.” The site gets the original trailer from the film producer or CP, and warms it up before the formal presentation.

When buying these video products, Li Yuelin is more concerned about their copyrights. “We don’t pay for pirated copies,” she said. Before she buys a product, she will ask for assistance from the legal affairs department to straighten out the complicated copyright chain. She will also check the issuance license and network distribution license of the videos, until the copyright issue is clear and beyond any doubt.   

Li Yuelin also admitted that they had not purchased too many films or TV shows in 2008. “We were in a fumbling stage last year. We dared not risk too much money. But this year, things are on the right track. We bought My Chief & My Regiment and Lurk the very first time they were presented.”   

We know how to do it

The right track for 2009 mentioned by Li Yuelin is “to show films and TV shows by media.” Actually, Li Zheng had the similar understanding three years ago. It was possibly after the exposure to copyright problems in 2007 and 2008 that video-sharing sites began to put it on the table, and think about another way out for video-sharing sites and the Web 2.0 concept. “Of course, we not only make movies and TV shows. Ku6’s UGA and video sharing are also our focus,” she said.

Li Yuelin told this journalist, “After last year’s experiment and after careful reconsideration of our previous ideas about the site, we don’t think for video-sharing sites, the Web 2.0 and video sharing concept can be effectively carried out. Original videos must have some special points to attract netizens. If we don’t spend money to satisfy them, we will lose them. This is the crucial point, and that’s why we insist on buying original videos. We don’t care whether there is any profit model, or whether it is profitable. Only popular website can make PV into profit. Otherwise, website will be ignored and forgotten by netizens. We will try our best to meet our netizens’ demand and show our own style.” 

To this end, Li Yuelin prepared the whole year’s purchasing plan at the beginning of 2009, as well identifying the tasks for every month and every season. The plan has also reserved some space for new hot films and TV shows. “To reach the PV tasks, the editors in film and TV show department have to make every endeavor to promote the new hot films and TV shows, also, make excellent plans. Just like TV stations, we all chase audience rating. Now, the problem is not what to do and how to do, but what to show, how to show and when to show. Video websites also have to realize their theater concept and want to make more netizens watch good TV shows and attract them. You can’t imagine the working pressure. The boss keeps asking you where the next month’s video resources are, what the page view (PV) you check is, how much cost per click (CPC) is… It seems that my work is to keep talking and talking.” Li Yuelin said with a sort of bitter smile.

Besides the quantity requirements, quality is another thing that Li Yuelin must take care of. She said, “We have an evaluation sheet on video purchasing. It is detailed for every video. Videos are classified by purchasing value, which is the reference standard for us to decide whether to buy it or not, and decide whether it is worth the money. We just managed to break even in 2008. Now we are expecting a money-earning 2009. So we have to make sure every penny is worth it.”

Although Li Yuelin’s main duty is the same as Li Zheng’s, she has a clearer job description and more regular working procedures. But she also admits that they can never shake off piracy completely.  

Li Yuelin said, “The first time I learned that my company was prosecuted for copyright infringement, I was not anxious at all. On the contrary, I felt it was quite normal. Since large portal sites are also entangled with lawsuits, how can we video-sharing sites avoid it? As you know, during the peak period, there were about 80,000 videos uploaded each day. There must be fake ones among them. When prosecuted, we usually take a positive attitude and have an open mind, and so do our opposing parties. As we are video sharing website of UGA\UGC model, we are taking risks for netizens. We have positive measures, for example, we will do some pre-warning work before the new hot films’ approaching for one or two weeks. Since we are providing videos to netizens, we would rather use the money to buy copyrighted videos, rather than handle lawsuits.”   

In addition to litigation, Li Yuelin has another job – to give copyright warnings. This is the application of the “safe harbor rule” for video-sharing sites. After she receives a complaining letter from TV stations or CPs protesting certain videos in Ku6 that have a copyright problem, she will forward it to the technology department. The latter will then inform the monitoring department. After spotting the link, the monitoring department will shield or delete the video. During the interview, Li Yuelin received a call requesting a video deletion. She said, “We are always cooperative. If the complaints are based on facts, we will contact them and try to cooperate with them. Sometimes these complaints are just small tricks played by a copyright salesman, in order to cooperate with us.”

Talking about future work, after one year of experience in this industry, Li Yuelin is still very optimistic and full of expectations. Compare with the “outsider” Li Zheng, although she thinks some practical issues still exist, such as the “edge ball” problem of foreign films and TV shows, she has set a clear target and knows exactly how to go toward it.

“The copyright cooperation modes for video-sharing sites are changing all the time. Maybe in the next few months, there will be more cooperation modes and cooperators. For me, I want to do some event marketing work to make my job more profitable.” The great confidence from Li Yuelin’s words is evident. 

(Translated by Hu Xiaoying)


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