The Global Outpost

September 4, 2009

China’s Potential Crackdown on Music Piracy

Filed under: Music Industry — Mathew D @ 4:04 am

 

Bad

China’s Ministry of Culture has issued a new online music policy that will regulate online music content and potentially reduce the level of music piracy.

Pali Research has already warned that this policy will significantly affect search engine Baidu as they believe that 80% of Baidu’s traffic is from music search. And with a majority of links being provided by Baidu being to illegal music content, Pali researcher Tian Hou stated that,

“If Baidu has to cut off the links to illegitimate music content, than we believe traffic to its websites could decrease.”

The Ministry of Culture clearly stated that in reference to Search Engines, the provision of music links requires not only an “Online Cultural Business” license but also the approval for disseminating music products which have been audited by the Ministry of Culture and given subsequent approval.

At a press conference on 3rd Sep, a Ministry of Culture official stated,

“Baidu’s MP3 service is illegal but by the year end, all music search services will have to be legalized.”

Pali Research cited an official who gave an interview to the media clearly stating that Baidu and Sohu owned search engine Sogou can only provide search music links from legitimate music companies.

The main aspects of the new policy will be as follows:

  1. Every company distributing or disseminating music – free or otherwise – will have to obtain a licence to operate as an “Online Cultural Business.”
    • Only those business entities which have gotten the exclusive license of Digital Network Dissemination Rights are qualified for online music operating activities which include online music production, release, dissemination (including the provision of links to music content products) and importing.
  2. All online music disseminated must be approved by the Ministry of Culture, and in cases of B2B distribution, recipient companies will also have to be specified.
    • All existing imported online music products which are disseminated in China without the appropriate audit approvals should be submitted to the Ministry of Culture by Dec 31st, 2009.
    • Music products will be approved via the MoC’s online system in 20 days, with an option for a fast-tracked 3 day approval for urgent cases
    • Online music is defined as music products that are transmitted by information networks such as the internet, mobile communication networks, fixed communication networks via digital formats, including not only the usual definitions of music but also other forms of digital music products including music videos, Flash and others which are provided with video frames accompanied by the performance of music
  3. In reference to Search Engines, the “Dissemination and Provision of Music Product links” is an online music business behavior which can only be carried out by “Online Cultural Businesses” which have been established with the approval of the Ministry of Culture and are disseminating music products which have been audited by the Ministry of Culture and given subsequent approval
  4. The authorization period for the import of online music should be more than one year and on an exclusive basis in China and the contract/ agreement will be titled the Right of Digital Network Dissemination for music products.
    • This contract/ agreement can only be enforced when its contents get approved by the Ministry of Culture. Online music products from HK, Macau and Taiwan are also subject to these audit regulations.
  5. The Ministry of Culture will monitor and investigate business entities which carry out illegal online music operations or provide unlicensed online music products

A full transcript of the Ministry of Culture’s policy press release can be read here

Some reports like that on Wall Street Journal focused more heavily on the typical censorship aspect but I did seek to put it in practical perspective when I was interviewed for the article,

“If you look at the cost-benefit analysis, there is a bit of time required to do this, but if the benefit is that those who are doing it the right way get to have a fair shot at the market, it’s probably worth doing.”

In summary, there will certainly be the following significant implications

  • Search engines will be liable for all music links and ensure that these are legitimate links
  • Companies seeking to deal in music products and services in China will have to obtain the appropriate license from the Ministry of Culture
  • Foreign companies seeking to have their music distributed in China will have to appoint a distribution company on an exclusive basis for at least a year or more – and provide the music and lyrics (which has to be translated into Chinese) for submission and approval from the Ministry of Culture.
  • The Ministry of Culture will monitor and investigate business entities which carry out illegal online music operations or provide unlicensed online music products.

13 Comments »

  1. If the government does indeed crack down on this, it could have the same shake-up effect it had on the online video sector in China. We’ll just have to wait and see

    Comment by Glenn — September 5, 2009 @ 2:28 pm

  2. Whilst the WSJ mentioned the censorship, the Chinese government must realize the broad ranging implications for all search engines and beyond which will stifle business if not simply cause business not to enter the Chinese market.

    I wonder if that would mean podcasters can’t operate. Here’s the reasoning - most podcasts include music of some sort, an intro or an outro and some actively feature upcoming artists (with permission) and podsafe artists. Yet practically ever podcast aggregator or hosting site has a search engine (by necessity for discovery) and all podcasters sites have one as well.

    After all how broad is the definition of search engine. Internet wide, domain wide, site wide?

    Comment by Paul OFlaherty — September 5, 2009 @ 4:26 pm

  3. It’s unlikely that anything is going to change. Baidu is like a cockroach that will survived with its dirty habits no matter whatever.

    Comment by Li YH — September 5, 2009 @ 7:31 pm

  4. Paul,
    You’ve probably not working in China. Podcasters????? Does anyone in China even care, not least the authorities. Podcasting doesn’t figure in China.

    And you ask the definition of a search engine. Even Google tweaked their results to restrict porn searches on the behest of the authorities. Everything out there can be made to kowtow…..get real, get to China.

    Are there really businesses that don’t want to enter China if there’s money to be made? America’s Wall Street funds a significant portion of Chinese music piracy via dirty VC money, but then again, Wall Street isn’t exactly the beacon of moral righteousness is it?

    Comment by China hand — September 5, 2009 @ 7:48 pm

  5. This is good news. They should ban that Westlife and Britney crap!

    Comment by Jarvis — September 7, 2009 @ 3:52 am

  6. I wonder if this has been influenced by the recent WTO action against China. Or maybe they simply realise that search engines like Baidu just mess up the Ministry’s ability to control anything. Who knows!

    Comment by Observer — September 7, 2009 @ 8:34 am

  7. […] D / The Global Outpost: China’s Potential Crackdown on Music Piracy  —  China’s Ministry of Culture has issued a new online music policy that […]

    Pingback by tech: China’s Potential Crackdown on Music Piracy (Mathew D/The Global Outpost) | tech3bite — September 8, 2009 @ 7:49 am

  8. I think this is good news. It will be a little bit of a burden to provide all lyrics but if it can help get rid of the piracy, then music distributors stand to benefit greatly. Smart business people will do what the Ministry requires and then go about doing business. Its not THAT different from America; just a different category of regulation. Just my opinion.

    Comment by Jayson — September 8, 2009 @ 4:53 pm

  9. No matter what, if some companies are complying, it is likely that the government will not allow other companies like Baidu to blatantly flout the regulations. So as Jayson mentioned it will be a burden but if enforcement happens to the degree it happened in the video sector, then it could work

    Comment by Glenn — September 10, 2009 @ 9:11 am

  10. […] For more detailed analysis, see HERE. […]

    Pingback by The Censors close in | China Music Radar — September 10, 2009 @ 9:51 am

  11. […] Last month, China’s music community struggled to digest Beijing’s latest installment of music censorship protocol. As reported by an entire constellation of international and domestic media outlets, beginning on December 31st, all music-disseminating outfits in China must submit song lyrics, translated into Chinese, to the Ministry of Culture in order to gain permission to upload music to the internet. Basically, it’s like the climax of Indiana Jones’ Last Crusade where, in order to save his father, he must retrieve the Holy Grail by navigating an antiquated gauntlet meant to weed out those of impure intent. Except in this case, the Holy Grail comes in the form of a license to operate as an “Online Cultural Business”, and those who seek it (online music providers) may suffer financial, rather than physical, hardship. (For a more detailed explanation of these regulations, see HERE). […]

    Pingback by Some more thoughts on the digital distribution of music in China | China Music Radar — November 9, 2009 @ 5:32 am

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