6 Bidding on the Rights to Stream: The Industry, Copyright, and New Cultural Flows

The video industry's initial dependence on piracy and its later disarticulation from it are integral parts of its formation and transformation. Early online video culture described in chapter 5 had a short-lived existence in the mid-2000s. Contrary to venture capitalists' expectations, video-sharing websites soon found it difficult to monetize the vast traffic brought about by user-generated content, traffic Tudou founder Gary Wang would scornfully dismiss as "industrial waste" in September 2008.
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Under growing pressure to make profits, the industry adopted an aggressive content strategy based largely on buying the rights to popular intellectual properties, first from domestic companies and later from foreign content providers including the Hollywood majors. Meanwhile, both domestic and foreign piracy, which once contributed to the strong user base for early online video websites, were now considered to impact the development of the industry negatively, not only because advertisers were reluctant to place ads alongside pirated content, but also because of the backlash against streaming websites from intellectual property rights owners. Initial antipiracy efforts made by a few entrepreneurial companies that owned intellectual property rights escalated into an industry-wide campaign against piracy, which forced online video companies to provide only legal content and helped to advance the copyright regime on the Chinese internet.