Digital Media in Asia Blog

According to China Tech News, the Internet Society of China has announced it’s establishing a Broadband P2P Application Promotion Alliance to “encourage[] the development of intellectual property containing P2P network application core technologies, and … regulate the technology’s application and promotion based on intellectual property rights. It will also bridge the government’s supervisory role in this area.” The article goes on to say that “ISC plans to help regulate Chinese companies’ activities to ensure that illegal activities are not spawned by P2P in China.”

This is an interesting move, and the fact that it comes immediately on the heels of stepped-up US pressure concerning intellectual property protection is surely not a coincidence. The ISC, which is made up of the biggest Chinese media and internet players and governed by the Ministry of Information Industry, is sending a message that it means to get serious about cleaning up Internet piracy by regulating P2P. The move also parallels the Chinese government’s recent efforts to regulate blogs, as efforts to tighten control over online behavior increase.

It appears the ISC (and thus the government) envisions reigning in and controlling the unrulier, open aspects of P2P technology while promoting its development in officially sanctioned ways to further P2P’s “commercial application in China.” While I’m sure China would love to be a leader in the development (and patenting) of P2P technologies, it’s difficult to know just how effectively P2P systems–which have historically developed freely (though at times in response to stricter copyright enforcement)–can develop under ostensibly tight government supervision and in what will probably be proprietary formats.

Another question is, how might China’s regulation of P2P technology–assuming it is able to regulate it effectively–impact the technology elsewhere in the world? The article intimates that the government’s intention now is to regulate only Chinese companies’ use of P2P. But it does not seem like a quantum leap to imagine the government claiming jurisdiction to regulate any P2P network that crosses its borders. To what extent will China redefine P2P on its terms, for the world, with soft censorship baked into the next generation of P2P technology (to borrow a phrase from Rebecca MacKinnon)?

Though this announcement seems innocuous enough (and perhaps it is more harmless than I fear), I cannot help but feel it smacks of further official tightening of control over the Web in the name of IPR protection and economic/social development. Could this be another step toward a more subservient Web, envisioned by Prof. Tim Wu, who argues: “China’s long-term vision is clear: an Internet that feels free and acts as an engine of economic progress yet in no way threatens the Communist Party’s monopoly on power. With every passing day the Chinese Internet reflects that vision more closely. It portends a future for the Web that we’re only beginning to understand—one in which powerful countries refashion the global network to suit themselves.”

The CEO of Singapore-based Soundbuzz, Asia’s largest digital online and mobile music retailer, says they are preparing to launch the service in Mainland China, where online and physical piracy is ubiquitous. According to Soundbuzz’s CEO, the challenge is formidable but there’s reason to be hopeful a legitimate music download service will catch on in China. “The Chinese spend on mobile music, gaming, matchmaking, and all sorts of online services. The culture of paying for products there is not as alien as people would have us believe.”

The article goes on to observe,

Asia is going to continue to play the central role in the development of the nascent digital music industry. “The new business models in Asia are dramatically different from those in the West.” The US$4 billion Ringtone business is being replaced by “Truetones”, “Mastertones” and “ring-back tones”, all Asian developments. “Interaction with music is changing dramatically. Even ten years ago, the primary aim of music was to entertain. Now with digital music, a lot of music utilization is for expression. Asia is leading that.”

“If pirating grows, it may not be the end of music world”–that’s the headline of Kevin Maney’s Cyberspeak column in USA Today, May 3, 2005. He uses China as an example of a country where a failing copyright system, which engenders piracy, could also be engendering the prototype 21st century music business model.

In China, the reality for artists is that CDs are essentially promotional tools, not revenue generators, since the vast majority of CDs sold there are illegitimate. Part of what they lose through CD sales is made up through monetizing the fame they gain through piracy, which amounts to free advertising for them.

Maney suggests that this might provide clues to the future of the music business in the US and elsewhere in the Internet age, which has created new piracy issues, but also offers opportunities for artists and consumers. The Internet puts tremendous distribution power in the hands of artists, which can be a valuable promotional tool. How would artists earn income in a system where recordings are promotion, and songs are freely (or inexpensively) traded on the Internet? If the Chinese example is any indication, it would largely come through corporate sponsorship and live performances, but I predict other sources of revenue are likely, as well. There are reasons to be wary of such a model, but it certainly has attractive possibilities, like more equal distribution of revenue among artists, more money going directly to artists (rather than record companies), and less record company influence over what makes it on the market.

Granted, this is not breaking news. But since this blog and the Digital Media in Asia Project at the Berkman Center seek to explore how the Internet is impacting the development of the media and entertainment industries in Asia, I think Maney’s article provides food for thought and discussion. Most importantly, it’s an example of how what happens in Asian entertainment/media markets is relevant to what is happening in the US, UK, EU and elsewhere.

A fun personal aside: I worked with Rock Records, the former label of Yu Quan (the band Maney mentions in the article), to help develop the band early on in its career… Now they’re among the top bands in China. Not saying I had anything to do with it. I will aver, however, that I definitely had nothing to do with their Journey-meets-the-Backstreet Boys sound!

An Internet company  Baidu.com) and a mobile provider (Hurray! Ltd.) in China have joined forces to release a music single that will only be playable on mobile phones. The song will be available for download from the Internet, but has only been released as a rigntone. The song, by Chinese artist Chen Hao, apparently will not be released on CD or transferable to PCs (or, presumably, playable on MP3 players), and is ostensibly protected from piracy through proprietary Digital Rights Management software embedded in the song.

“‘The single will be released and promoted on the Internet and mobile network instead of via traditional CDs so as to avoid piracy problems,’ Du Hua, spokesperson from Hurray! told Interfax Monday. ‘The large user base of Internet and mobile phones in China will also help to better promote the song across the country.’”

Baidu is a major Chinese search engine which has come under fire in recent months for providing netizens with links to unauthorized content. This is (as the article notes) clearly an attempt by Baidu to clean up its image, since copyright owners view Baidu as a contributory infringer, and this reputation has not done wonders for its flagging US stock price. Notably, Hurray! believes these kinds of mobile phone/internet company partnerships are where the Chinese music industry is headed: “‘The cooperation on music downloads between mobile value-added services providers and Internet search engine operators should be a new business model in China, to settle the online copyright problem,’ said Du.

This provides another in a growing list of examples of how the difficult copyright enforcement environment in China is causing media/entertainment companies to seek new business models and employ innovative Digital Rights Management schemes as they attempt to generate revenue from digital content. It will be interesting to watch, but it’s difficult to imagine a model like this will have long-term viability without giving users more flexible options for enjoying their content. (Hard to imagine people will be satisfied only listening to their mobile phone ring.) In any event, if the song proves popular, it seems unlikely they’ll be able to prevent people from finding a way to make illegal copies and distributing them.

This is the official blog of the Digital Media in Asia Project at Harvard Law School’s Berkman Center for Internet & Society. The Digital Media in Asia Project is an initiative started in October 2005 to bring together students, academics, and interested parties to research and discuss the evolving interplay between law, technology and business issues as they relate to the creation and dissemination of digital content in Asia. We are especially interested in the challenges and opportunities the Internet presents for media/entertainment industries in Asia, and how law and the Internet are shaping old and new media and entertainment business models.

We anticipate posting frequently with original commentary as well as links to relevant news items and commentary.

Please feel free to contact Eric Priest with comments or news items at epriest AT law.harvard.edu.

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