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US Report: 99% of Music Downloads in China Are Pirated, Video Sites a Concern Too

Steven Millward

The Office of the United States Trade Representative (USTR) has released a report highlighting areas of concern where intellectual property rights - or, loosely, copyright - infringements “unfairly disadvantage U.S. rights holders in China” and around the world. It slams illegal IP abuse in many forms in China, from pirated digital downloads to fake toys and trade secrets.

One eye-catching claim made by the report is that “illegal downloads account for an estimated 99 percent of all music downloads in China.” It adds:

[T]otal music revenue (which includes both legitimate physical and digital sales) in China for 2010 was only US$64.3 million. This compares to almost $4.2 billion in the U.S., US$178.4 million in South Korea and US$68.9 million in Thailand — a country with less than five percent of China’s population and with roughly the same per capita GDP. If Chinese sales were equivalent to Thailand’s on a per capita basis, music sales would be almost US$1.4 billion.

But the USTR doesn’t back-up that figure with a source or even named examples. The report then turns to movies, TV shows, and sports broadcasts, and “urges the Chinese Government to focus on these streaming sites” that are featuring pirated content. 18 “popular video sites” are singled out by name “for allegedly providing a wide variety of pirated material” and suggests that the National Copyright Administration of China (NCAC) review them for “shutdown when appropriate”. They are:

UUsee, Sina, Letv, Youku, Sohu, Baidu,,, PPStream, verycd, Tudou,,, Xunlei, Baofeng, Funshion, PPTV, and

Note that the USTR almost certainly means just the Sina Video portal, not the whole of Sina (NASDAQ:SINA - News). Also, Baidu’s (NASDAQ:BIDU - News) mention could refer to its video search engine, or its Hulu-like Qiyi service. The USTR failed to specify. Most of the other sites will be familiar to regular readers, and comprise pretty much all the most popular streaming media sites in the country.

License to Kill Stream

While it can be difficult to buy a genuine physical music CD or movie DVD in China, and websites do still hold a lot of pirated content, the Chinese internet is actually a ray of IP hope. There are numerous popular sources of licensed TV shows, films, and music from around the world on video-streaming sites such as those from Youku (NYSE:YOKU - News), Tudou, (NASDAQ:TUDO - News), Sohu (NASDAQ:SOHU - News), and Baidu (NASDAQ:BIDU - News). Just last week, three of China’s major web companies teamed up to buy TV and movie rights without causing a bidding war. Youku has been partnering with Hollywood studios and US TV networks; and Baidu got itself removed from the US piracy watch-list last December after signing a landmark music rights deal that has formed the licensed downloads and streaming available on its Baidu Ting service.

The report does hail last year’s Baidu music deal as a positive example of engagement and progress. There’s also a mention for three e-commerce sites: Alibaba’s Taobao, Tencent’s Paipai, and eBay as well, noting that they “worked with authorities in an apparent effort to improve their IPR enforcement practices.”

Around the globe, thirteen nations are on the IP priority watch list in this new report for 2012: Algeria, Argentina, Canada, Chile, China, India, Indonesia, Israel, Pakistan, Russia, Thailand, Ukraine, and Venezuela.

The USTR also highlights the darker and more dangerous side of counterfeiting, where fake toys, pharmaceuticals, or semi-conductors (all very real problems) can cause injury or death. Grab the 53-page PDF from the USTR page below.

[Source: Office of the U.S. Trade Representative Special 301 report for 2012]