Surprise: Sohu leads the copyright attack on Youku

The Chinese online video space has long been dominated by a number of local youtube clones, among which is a leader. Like so many other web spaces, the international players have not been able to beat their local Chinese clones, mostly due to cultural differences (and therefore quality of localization) and often policy issues (government interference, in the case of Google). In the online video space, the local players have also been much more lenient with copyright infringement. Usually these sites just turn a blind eye (for example I just did a quick search and found episodes of Prison Break on Sina’s video site, the Chinese crowd-sourced bootlegged version with Chinese subtitles), while for PR purposes they may claim to have sophisticated systems to take down infringing material as soon as possible.

Well, headlines today are certainly a surprise (at least for me – I haven’t been following this space closely). Sohu, who has just led the formation of a “Online Video Anti-piracy Coalition” (my translation) with some other web partners, has decided to sue 50-100MM RMB (about 8-15MM USD) for copyright infringement. A quick google search shows that lawsuits in this space have been heating up – earlier this year H.Y. Brothers, the leading local private film studio, sued a bunch of Internet properties (including Sohu and Youku); and before that Youku had also sued competitor Tudou.

While it’s clearly obvious that these lawsuits are tactics to pursue vested interests, I feel they are helping to push the industry towards a more mature stage where laws and regulations are properly enforced. One reason businesses like Netflix and Hulu don’t exist in China is because the cost of piracy is so low. Of course, Chinese consumers are spoilt in the sense that they have become accustomed to the fact that almost all forms of home media entertainment are free or very cheap (thanks to piracy), so any movement to enforce adequate copyright laws will be met with consumer resistance. But it should be clear that real businesses shouldn’t be founded in the hope that they will thrive due to the piracy environment – free may be a business model, but piracy isn’t.