Ku6.com Chooses Genuineness-- An Interview with Hao Zhizhong, Senior Vice President of Ku6.com

By Zhou Yi, China IP,[Copyright]

  On the Chinese New Year’s Eve of January 22, 2010, Ku6.com held an unexpected press conference. At the press conference, which was entitled, “No Genuine, No Future,” Ku6.com announced that it would delete all domestic movies and TV dramas on its website that were without a copyright, and will spend 200 million Yuan on the purchase of copyrighted videos. At the conference, executives of Ku6.com also revealed that after continual efforts over the past few months, they have bought 70% of the hottest TV plays for 2010.
  In fact, Ku6.com had made the choice much earlier than the press conference. In December 2009, Ku6.com formally launched the legalization process and started the work by removing uncopyrighted foreign video resources. 
  From the end of 2009 to the beginning of this year, the change of Ku6.com may seem unexpected but is, in fact, reasonable. Such a change also has many interesting implications: How should other video-sharing sites, such as Youku.com and Tudou.com, react? Will it be lucky or unfortunate for Ku6.com to take the lead? Will Ku6.com join the anti-piracy camp or will it become a unique figure with its background in the Shanda Interactive Entertainment Limited (SNDA)?
  Hao Zhizhong is the Senior Vice President of Ku6.com. He has been in charge of the copyright cooperation issue since he joined the company in 2006. He told the China IP reporter that although the company had engaged in some copyright cooperation before 2008, he still had a very vague understanding of network copyright. His ideas about network copyright law did not change until 2009. At present, he and his colleagues are actively practicing the strategy of promoting genuine videos.
  China IP: Could you be more specific about the procedures for deleting pirated videos from Ku6.com?
  Hao Zhizhong: We began to delete the uncopyrighted videos in December 2009 in order to achieve completely genuine content on our site. This process will mainly consist of two phases. The first phase was from December 2009 to January 8, 2010. During this month we cleaned up all of the overseas video resources without copyright, totaling 5,000 episodes. The second phase started on January 22. We have to remove all of the domestic uncopyrighted resources before April, especially movies and teleplays. We expect that all of our video resources will be genuine in April.
  China IP: Why does it take so long for domestic videos?
  Hao Zhizhong: First of all, domestic videos take up a large proportion of our content. We have more than 50,000 videos in our database. Secondly, we have to identify all of the domestic films and teleplays, which can only be completed by hand. At present, more than 100 professionals are working on it non-stop. In addition to the examination of the existing domestic videos, we also have to check the newly updated material at the same time. Therefore, it will take more time to delete the domestically uncopyrighted videos.
  China IP: Does the network activity flow decline sharply after the removal of a large number of uncopyrighted videos? Will this decline affect the advertising revenue?
  Hao Zhizhong: Firstly, the flow had some fluctuations last December according to our current data. However, the decline was slight because the flow brought by foreign TV dramas was much less than that of domestic teleplays. In January the flow began to increase and the accumulated flow during the three-day holiday of the New Year hit a record high over the past three years. After that, the network flow kept growing. I think there are several reasons behind this: First of all, we made great efforts to introduce the hottest teleplays, which pulled up the flow and filled the blank caused by the removal of the uncopyrighted movies and TV dramas. Secondly, the removal of the pirated videos played a positive role in promoting publicity and our market voice, which also brought in an added amount of network flow. Finally, our move was supported by many of the copyright holders and users.
  With regards to the impact on advertising revenue, I think that since our overall flow has not decreased, there is no obvious affect so far. Furthermore, from a theoretical perspective, previous experience tells us that there is not a direct proportional relationship between flow and advertising revenue. Currently the value of a video website has not yet been determined because the content market and copyright status are in chaos. There once was a misunderstanding that flow and advertising were closely linked to each other. In fact, from the current point of view, having a large amount of flow is only conducive to selling flow-based and effect-based ads, but is of no use for brand advertising. Advertisers will not vote for content which has no value. Therefore, only those websites with high-flow and excellent content are favored by advertisers, which was also the motive for us to implement a genuine content strategy.
  China IP: There was once a view that the piracy was much like a drug for video-sharing sites and it would be difficult to get rid of it. What’s your opinion on this?
  Hao Zhizhong: I don’t think it is so serious because it is a matter of right and wrong and the real issue is in understanding the problem. In 2006, we began copying the pattern of YouTube, that is, video-sharing mode. So we thought of ourselves as a platform provider and felt we would not be involved in copyright disputes. But in 2008 the site was sued for piracy and we realized that a video sharing site can not escape from the copyright issues. From the beginning in 2009, Ku6.com started to consider copyright issues and to take the initiative to solve the problem. Pirated video is different from a drug. Drugs may cause addiction and physical dependence. However, as long as we gain a clear understanding of pirated videos, it’s very easy to solve the problem. We are a good example.
  China IP: How will you fill up the gap caused by deleting uncopyrighted content?
  Hao Zhizhong: Ku6.com will spend a great deal on purchasing copyrighted videos. In particular, since the full operation in January, we have already purchased the copyright for 70% of the most popular movies and teleplays of 2010. I believe this will meet the needs of most of our users. In addition, we will invest 100 million Yuan into the purchase of other video resources. For example, we will cooperate with TV stations and make investments in shooting original videos. I think these actions will help us better meet the needs of our users. For the foreign TV dramas, our main problem is the channel. Not long ago, Ku6 and Sohu co-founded the Copyright Fund to solve this problem. Both of the two sides invested USD five million in the Copyright Fund. With this fund, we can negotiate with several major film companies as well as the Motion Picture Association to discuss the introduction of foreign TV dramas. Though the work has proceeded smoothly so far, there are still some difficulties in addition to the access issue. On one hand, our funds are insufficient, so we hope that more websites can join us. On the other hand, foreign companies are still worried about China’s Internet environment, which gradually needs to improve.
  China IP: The current investment is rather huge for Ku6.com. How can you make a profit?
  Hao Zhizhong: We have been thinking about and practicing our own profit model and exploring various charging models. However, we don’t think it will be our focus this year. This year, we will concentrate on regulating the copyrights and content market. Last year, the State Administration of Radio, Film and Television (SARFT) shut down many BT sites to stop the infringing acts of individual users. This year, the department will take action against infringements by companies. Why is it important to regulate this market? Because without a standard content market, it is impossible to establish the charging model, let alone complete the advertising model. So, this year we will focus on investing and regulating the content market and establishing an advertising model. We will also make some preparations for the charging model.
  China IP: Do you think the genuine model of Ku6.com can be copied to other video-sharing sites? Is it unique?
  Hao Zhizhong: It can be copied completely on two conditions. The first is that one must have a clear understanding of genuine videos and the second is to have a good operational capacity and strength, which means corresponding programs should be supplemented to meet the needs of users after the pirated videos are deleted.
  China IP: Before announcing the genuine strategy, Ku6.com merged with Hurray Solutions under the SNDA. Does this merger give you more capital to implement the genuine strategy than other video-sharing websites that depend on venture capital?
  Hao Zhizhong: Cooperation with the SNDA has given us an advantage because it provides us with an excellent platform and cooperative resources. For example, the SNDA has a channel for charging online games, a music company and a film company, which is a source for videos. Hurray Solutions also operates a wireless business, which will become a guarantee for developing 3G services in the future. Of course, Hurray Solutions is a listed company, which also means that we have sufficient financial support. Therefore, currently Ku6.com is the most competitive company in the video industry.
  China IP: Will the copyright competition between video sites become fiercer in the future? What’s your view on the result of competition?
  Hao Zhizhong: The competition will definitely become fiercer because the war has already begun. I think that this will lead to a small-range of competition between several big video sites, that is, there will be only 4 to 5 main “players” in the video industry in the future. Video resources are scarce, while the video industry is a high-input and high-return industry. Therefore, content is key to this industry, which dictates that there will only be a small number of flagship websites.
  China IP: What’s your view on the future pattern of this industry?
  Hao Zhizhong: I think that portals such as Tencent, Sohu, Baidu and Sina will definitely be our main competitors in the future. They all have strong accumulation in users and capital, and visualization is an inevitable step.
  China IP: Compared to them, what is the advantage of Ku6.com?
  Hao Zhizhong: Ku6’s major advantage lies in its cutting-edge technology and the previous accumulation in content and users. Most important of all, people have gotten used to the different experiences and morphologies between Ku6.com and portal sites. Users have the inertia to view videos at Ku6.com and go to portals for pictures and texts.
  China IP: What’s the difference between Ku6’s genuine strategy and the genuine approaches taken by Sohu.com and Joy.cn?
  Hao Zhizhong: Sohu.com and Joy.cn set up an anti-piracy alliance last year, which is very influential. However, their purpose is to fight against the piracy of video-sharing websites, which does not bring any big change within the industry. Ku6.com, as a video-sharing website, stands out in its strategy to solve the copyright problem. The meaning is quite different. We want a thorough reform in copyright operation and achieve a win-win outcome in the industry.

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