Tudou, which had been scolded for insufficient censorship (namely, of porn) and faced either threats or rumors of a government shutdown as recently as last month, is looking a little healthier this week.
Tudou, the largest video-sharing Web site in China, finally officially announced its $57 million series D financing at a $150 million valuation, which is the largest round of funding ever for a Chinese Internet company. (This takes) Tudou's total fund-raising to $85 million over the past three years. (In previous rounds of funding), Tudou raised $500,000, $8.5 million, and $19 million respectively.
This is not likely a low-risk investment. Not only are Internet companies hard to predict, but the video sector in China is heavily regulated and subject to shutdown orders on a moment's notice from authorities.
There are real incentives for the government to keep these companies going, however: they grow the economy, they represent Chinese successes, and they circulate a lot of material that is in no way illicit. But I see one more bump in their future.
Tudou is still a bastion of copyright infringement. Entire TV series, just as before the recent crackdown, are available on the site. If authorities get serious about their intellectual-property efforts, or just want to make a public gesture in that direction, Tudou will need to be ready to quickly remove a vast amount of material from its site and institute controls more like, say, YouTube.
Baidu.com, the top Chinese search engine, gets lots of its traffic from a service that tracks and links to MP3s, most of which are illegally posted. Now a Chinese music industry group is suing the site over alleged copyright violation.
The AP reports:
Music Copyright Society official Qu Jingming said in a statement posted on the society's Web site Friday that Baidu.com provided "music listening, broadcasting and downloading services in various forms on its Web site without approval, and through unfettered piracy, earning huge advertising revenue on its huge number of hits."
The copyright society said its lawsuit, filed in a Beijing court in January, claims Baidu used 50 songs illegally and demands compensation. The alleged piracy forced legitimate online-music providers to shut down, the industry group said.
This comes at a time when Google, which is hoping to catch up to Baidu in the Chinese market, is working with record companies to provide legal links to music for searchers.
Internet-based copyright infringement is pretty much the only way people can keep track of TV and movies from abroad in Beijing. It's hard to even find legal DVDs, and if there aren't even illegal DVDs to buy, it's often trivially easy to find entire movies on Youku or Tudou.
Yesterday, a Chinese public-security ministry official asked for international help in copyright enforcement, noting that many infringers use Web sites hosted outside Chinese jurisdiction.
"Copyright infringements, by their very nature, are international crimes. To effectively curb such activities, (we) need enhanced international cooperation on law enforcement," said Gao Feng, the official.
I don't doubt that international borders are a challenge for Chinese enforcers, but they certainly could do more here. The illegal streaming versions of movies and TV series from Chinese video sites are even fueling viewers in the United States, where DVDs are no minor investment. The only sacrifices for viewers are the need to wait for buffering and some loss in resolution.
Until legal DVDs or iTunes-like download or rental services are available to the Chinese market, however, I can't imagine that people will stop watching the free or cheap pirated versions.
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