“Copyright: An Industry-wide Challenge”

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

China IP: Copyright of video websites, especially sites for video sharing, is a special focus of attention this year. As one of the forerunners in this field, when did Tudou.com begin to realize this copyright problem existed?

Huang: Speaking about the video site copyright problem, it has to be put in a larger context, that is, the copyright problem with the Internet business in general. The Internet has been around in China for ten years, and has developed very fast, but its nature makes copyright a difficult question. Things on the Web are easily copied and rapidly disseminated, unlike traditional publishing businesses where the copyright is delineated straightforwardly. So any articles or music on the Web would have a problem with copyright.

Tudou.com appeared as a video sharing website in 2005, and copyright was not a problem during that initial stage. But we began to feel the pressure in 2007, when copyright lawsuits appeared, and we began to realize the importance of the issue.

China IP: What was the cause of this change?

Huang: We lacked copyright awareness in 2005. Another reason is that at that time Tudou was simply a video sharing website, where Net users uploaded and watched a large number of videos for their own amusement. However, three things changed in 2007. First, as the number of videos increased, a lot of films and TV dramas with unclear copyright appeared. Second, users’ interests shifted from entertainment videos to these films and dramas, and they can watch them on the Net at any time. But the most important change was the increased proportion of online video viewers among Web users: from 10-20 percent of Web users in 2005 to 60-70 percent in 2007.

Therefore, in 2007, videos with copyright problems began to increase, and the larger number of viewers also brought with them many challenges.

China IP: Since 2007, Tudou has been involved in many lawsuits, including one filed by the “Anti-Piracy Union” earlier this year. What do you think of these lawsuits?

Huang: There are two sides. On the one hand, copyright is indeed a question facing the whole video industry. In 2009, in particular, it has been a challenge to transform the online video industry. So we will respond actively. On the other hand, we feel that copyright holders have traditional views of us, thinking we clash with them in channels and profits. Actually, I hope people can regard video sites open-mindedly and try various ways to cooperate. We must also respond actively to the question of pirated videos, such as by using copyright notification tools.
China IP: Facing doubts from copyright holders, video sharing websites have been using the “safe harbor” doctrine as a defense. Is it an excuse?

Huang: Actually, the “safe harbor” doctrine is our reaction, in reality. For us, we lack the capability and legal position to verify copyrights because there are numerous videos uploaded on our site and the first thing we need to do is to determine whether they are pornographic or sensitive. It is simply impossible for any video site of our scale to screen all of the videos, especially when trying to verify their copyrights. For many videos, their copyright issues are complicated. Perhaps their copyright holders view this as a common sense issue, but for us it is very hard. Actually, we are a play platform because we make simple checks and provide services to our site users. On the other hand, we will cooperate with copyright holders. If they oppose a video we will delete it as soon as possible. 

China IP: Could you elaborate on how you cooperate with copyright holders?
Huang: An important aspect of our copyright work is early-warning and protection. In simple words, as long as the copyright holder suspects there is infringement on our site, we will immediately delete the video. Of course, we do this with some partners, such as the American Animation Association. This year we developed the “Tudou copyright notification system,” an online tool that enables automatic communication between our site and our partners. It is currently being used by five or six partners. Since it is impossible for us to screen all of the videos, we can only reduce piracy in this way.

China IP: What is the other aspect of your copyright work?

Huang: It is the introduction and recommendation of licensed videos. We launched an HD channel last September, which features high-definition films and TV dramas with copyright permission.

China IP: Does this new HD channel mean Tudou has abandoned its idea of video sharing?

Huang: I don’t think it clashes with our original idea of video sharing; it is simply a change in our content strategy. The needs of our user are diverse. Films and TV dramas are an important part and also the focus of many copyright disputes. So this is a change we made to both meet users’ needs and avoid copyright problems.

In addition to purchasing copyright permission, we have also created self-made videos and foster authors of this kind. We may even invest in producing some videos of our own. I believe that all of this comes in line with the idea of sharing videos online.

China IP: How do you obtain licensed films and TV dramas?

Huang: We cooperate with many copyright holders, including agencies, production companies and TV stations, because they possess a large amount of copy written video resources. During six months of last year, we purchased nearly 15,000 videos from these sources, including some popular films and TV dramas.

China IP: How much do you spend a year on purchasing? Is that enough for the huge amount of videos on the site?

Huang: Last year we spent around 10-million-yuan on purchasing such content.  It is still a small sum, especially for some popular films. So we must make choices in what to buy, and try to cater to a young audience, which is a special feature of the Web population.

China IP: Has your HD channel lived up to its expectations when you spend so much to obtain authentic videos?

Huang: It has surpassed our expectations. In terms of the number, videos on our HD channel only represent 1/1000 of all videos on Tudou. However, the number of current daily viewers of these HD videos is around 3 million, and the number of viewers for each video exceeds the average of any single video on the site. I think this is partly because licensed videos are quality videos.

China IP: Have video websites become profitable yet? Will the high copyright fees be a threat to their money supplies?

Huang: Indeed, so far video websites have not been profitable, and they all survive on capital investments. The only difference is the sum. For example, Tudou raised 57 million US dollars last year. Money spent on copyrights will increase costs and cause a problem for capital investment sources. Especially in 2009, I think it will be a winter period for video sites, but we have our own way to respond.

China IP: How will you respond to this problem?

Huang: We plan to tap new resources of revenue supplies and reduce consumption. To reduce consumption is to cut costs. The major cost of a video website is the server, or bandwidth. We will try our best in this regard, and so far we have cut costs by 40%. Of course, there are other ways to cut costs. Tapping new revenue sources is also a fundamental way to increase profits. Since 2008, advertising has become our main focus, and our advertising income has stabilized and started to increase. Some of our advertising products have achieved a high repeat order rate. But our advertising income appeared only in recent years and we are cautiously optimistic about it.

China IP: Many video sites, including Tudou, have put a lot of effort and money this year into obtaining a licensed copy of My Chief, My Regiment, a popular TV drama, but ran into difficulties due to copyright problems with the drama itself. What are your thoughts on this?

Huang: The fact that My Chief, My Regiment triggered a fight between video sites for its online premier is actually a good turning point, and difficulties during that process demonstrate just some of the uncertainties we are seeing in the transformation of the industry. Video websites and TV drama shows have, at the same time, been regarded by mainstream film producers as an important channel for viewing programming. For young audiences, a video site like Tudou is a good supplement to TV. After that, we also introduced two other hot dramas — My Youthfulness and Life is Nothing but Time — to continue our input and marketing of copy written videos.

China IP: What do you think of the survival and development of video sites in 2009?

Huang: This is a key year. For us the most important goal is cost management and fast profit, otherwise the trade will be in danger when money has been “burned out”. But, I am confident.

(Translated by Li Heng)

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