Sunday, January 25, 2009

China's P2P Revolution?

I came across this article which discusses the recent success of some Chinese peer-to-peer (P2P)file-sharing services. In the U.S. successful lawsuits by the music and film industries have limited the ability of companies to profit from operating P2P services whose existence is based on encouraging illegal "sharing" of copyrighted music and movies. On the other hand, some Chinese P2P companies are attracting venture capital and advertising income. Although China's laws on copyright are similar to those of the U.S., penalties or damage awards are usually very low. Consequently, P2P companies can take the risk of being sued and, even if they lose, treat any resulting damage awards as a cost of doing business.

The article also mentions that, to avoid censorship problems with the Chinese government, some of the sites control the content offered (concentrating on "safe TV content") rather than operate as a mere platform for users to share files. Also, from the author's description of some of the sites (e.g., QQ Live & Tudou) they sound much more like video streaming sites (similar to rather than P2P services.

The author apparently views all of this as a great thing, ending with the statement: "Hopefully the Chinese will be able to prove that this method of TV distribution is viable, is profitable and is in the interest of both the rights holders and consumers."

Screenshot of
Tudou video sharing site. Tudou was found liable in one lawsuit against it and ordered to pay RMB 50,000 (U.S. $7100) in May, 2008 (see this article). Apparently (after the lawsuit?)Tudou started partnering with some content companies to offer content legally in return for sharing advertising revenue.

I don't think there's any doubt that P2P is a viable method of distribution for TV shows and other content and, when done illegally as described, certainly quite profitable to the companies facilitating the illegal conduct. If this can be done in a legal manner with content owners (and authors) getting a share of the profits, that'd be a much more equitable arrangement. However, if they can get away with illegal distribution and profit to a greater extent by doing so (by avoiding payment to content owners), there doesn't seem to be much incentive for legal P2P distribution. The article doesn't mention whether any Chinese P2P companies have tried to negotiate deals with content owners, but I why would they if they can make much more money operating illegally without serious adverse consequences even if they are sued? Even though damage awards tend to be very low for copyright infringement in China, it seems the only way to force business to start operating legally is to sue them (just as it has been in the U.S. and elsewhere).

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