Tudou, Youku: China’s New Piracy Police　　土豆和优酷：中国打击盗版的民间警察

By newsdoug on December 19, 2011

Video sites: China's new piracy police force? An entertaining tiff has broken out between China’s top 2 video sharing sites, with Tudou (Nasdaq: TUDO), the country’s second largest player, accusing top player Youku (NYSE: YOKU) of copyright violations, prompting Youku to counter with its own similar allegations. (Tudou lawsuit article; Youku lawsuit article) The series of actions are interesting less from a monetary perspective, but more because they show that China’s private sector may finally step in and become a much more effective policeman for protection of copyrights than Beijing has been, despite years of effort by the government to curb the problem. Let’s look at the actual news first, which saw Tudou complain to regulators that Youku ignored its repeated requests to take down episodes of a popular Taiwanese TV talk show that Tudou said it held the exclusive mainland Chinese rights for. Youku responded with its own accusations that Tudou was showing more than 60 TV programs which Youku holds the rights to. In addition to complaining to authorities, both companies are threatening legal action against each other. Of course, most people know China’s courts have proven an ineffectual avenue for resolving this kind of dispute, as decisions can take months or longer, and penalties are usually so small that they provide little or no deterrent effect. That said, the interesting thing here is that Youku and Tudou, as the industry’s top 2 players with big resources at their disposal, could potentially emerge as the kind of private sector policemen that China sorely needs to clamp down on piracy. For example, smaller Web firms that depend on trading of pirated movies and TV shows to bring traffic to their sites, might think twice if they are worried that big names like Youku, Tudou and Sohu (Nasdaq: SOHU) might take legal action against them or complain to regulators who have the power to shut them down. All of this can only be good news for the program makers themselves, like the big Hollywood studios and domestic names like Huayi Brothers (Shenzhen: 300027), which will be able to not only make bigger profits in China, but also be able to focus more on building their China distribution while leaving the business of clamping down on piracy to private sector players who also get hurt by copyright violators.

Bottom line: A spat between China’s top 2 video sites shows that such sites could emerge as a powerful private sector force to help stamp out video piracy in the country.

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