The Chinese government last week announced new regulations on the ownership of online video sites and their content, threatening to hobble one of the hottest web-based sectors in the Asian country.
The regulations—issued jointly by the State Administration of Radio, Film, and Television and the Ministry of Information Industry, go into effect January 31. They will require all online video and audio service providers to be majority state-owned and posses a comprehensive censoring program, according to a summary of the regulations posted on the web site of Beijing-based Marbridge Consulting.
“It is motivated by a fear of uncontrolled information flow for the public,” UC Berkeley journalism professor Xiao Qiang said.
There are now at least 120 Chinese online video-sharing sites, according to the blog China Web 2.0 Review. Some observers believe there are several hundred more.
The leading ones—56, Youku, and Tudou—are privately held, receive millions of unique visitors per month, and have attracted high-profile venture capital firms.
Youku, for example, is backed by Silicon Valley-based Sutter Hill Ventures, and had a $25 million third round of venture funding in November. Investors see the promise of ad revenue as more Chinese go online and use video sites.
It’s still unclear the effect the new regulations could have on the ownership and operation of these companies. 56 and Youku were not able to respond to queries in time for publication.
Stanford law professor Allen Weiner expects the Chinese government to enforce the regulations. He said the government has already proven its willingness to block web sites it deems inappropriate and has arrested violators of its censorship laws.
Foreign-owned sites that are popular in China, such as Google’s YouTube, presumably would be affected, too.
YouTube said in a statement: “China’s new regulations for online video could be a cause for concern. We believe that the Chinese government fully recognizes the enormous value of online video and will not enforce the regulations in a way that could deprive the Chinese people of its benefits.”
Mr. Weiner said foreign companies operating in China will have to comply with national laws.
The regulations forbid a vague and broad spectrum of content to be posted. This includes content that damages China’s unity, ethnic solidarity, culture, or traditions.
Companies are required to maintain a comprehensive monitoring program, delete illegal content as soon as it is found, and report the details to the authorities. Companies found in violation will have their Internet access shut down and be subject to fines, and investors and business operators will be forbidden from the sector for five years.
But Mr. Qiang said these rules largely already existed—the only difference now being that they were made explicit for online video and audio and that the burden of monitoring now falls on the companies.