Proprietary control in cyberspace: three moments of copyright growth in China

Abstract

Drawing on critical research on the political economy of the media and intellectual property rights (IPR), this research examines copyright growth in China’s digital media. It sees copyright development as the creation of private cultural property, an ongoing process and part of China’s media marketization and the globalization of IPR. It focuses on three critical moments in the creation of digital copyright: the invention of ground rules by state organs, a bottom-up challenge to copyright control, and the correlated development between law and business agendas. It argues that digital copyright is part of China’s market-oriented reform, West-looking legal transplantation, elite-driven policymaking, and business-friendly Internet governance. The law and its implementation manifest the ascendance of proprietary cultural control in Chinese cyberspace, which needs to be assessed historically and critically.

Keywords

China copyright digital media intellectual property Internet law

Introduction

Accounts of copyright in China often focus on unauthorized replications of copyrighted materials on the retail market, and a number of scholarly publications show pressing concerns with compliance and enforcement problems (e.g. Alford, 1995; Dimitrov, 2009; Mertha, 2005). This research, however, takes a different approach. Drawing on critical research on the political economy of the media and intellectual property rights (IPR), it examines copyright growth in China’s digital media. It sees copyright development as the creation of private cultural property, an ongoing process and part of China’s media marketization and the globalization of IPR. As Garnham (1990) points out, copyright is one of multiple mechanisms to impose private control over media production so as to create a market out of an otherwise free-to-share sphere of culture. The ascendance of copyright and other IPR in the processes of cultural and information commodification is not predestined but shaped under specific historical conditions (Schiller, 2007). Based on their arguments, this research focuses on contingent historical conditions that shape the law in contemporary China and critically analyzes the features and characteristics of the copyright system.

This article examines three critical moments in the creation of copyright in China’s digital media and argues that the rise of proprietary control is a noteworthy development that calls for critical evaluation. The three moments of copyright growth are under-researched, historical instances that shaped and manifested the law and its impacts. The first is the leap to establish copyright in cyberspace. In the West, the emergence of digital media had once suggested a lesser (if not irrelevant) role of copyright. However, collaboration between the government and the industry prevailed and copyright ‘colonized’ the cyberspace (Litman, 2001). The parallel experience in China is both similar and different. The second moment is a spontaneous, bottom-up challenge to copyright control on the Chinese Internet. The social and political contexts that shaped the law bring light to copyright’s impact on cultural practices under specific domestic and international circumstances. The third moment is correlated legal developments and business agendas. In its brief history, copyright regulation in China has more than once transformed in correlation with changing needs and interests of major Internet companies. It is a significantly under-researched topic that sheds a different light on the role of the Chinese state in the enforcement of the law.

This research contributes to a critical examination of copyright law and practice, which is ‘rooted in claims to communication rights derived from democratic theories of communication’ (Hardy, 2014: 177). As proprietary cultural control, copyright’s growth is in essence the building of new relationships of cultural production and labor. The creation of a new legal mechanism that pivots on proprietorship generates significant tension and resistance, which have received scholarly attention from different liberal and critical perspectives in the West (e.g. Bettig, 1996; Boyle, 2008; Lessig, 2004; Netanel, 2008; Vaidhyanathan, 2001). However, except for a small number of (nonetheless insightful) publications from cultural studies perspectives (e.g. Pang, 2012; Wong, 2013; Yang, 2015) or legal analysis (e.g. Hua, 2013; Xie, 2007, 2008), there are not many critical analyses of copyright in relation to China. Taking a historical approach and with a focus on the proprietary attributes of intellectual property, this research examines copyright growth as tensions and conflicts of market expansion. It is not a comprehensive history but aims to stimulate discussion on intellectual property and digital media in China by highlighting critical junctions in the development of the law.

Elite-driven law development and influence from abroad

China had established a copyright system largely in line with Western standards before digital media’s explosive growth (Ganea, 2005). Digital copyright law developed only later and along with the growth of the Internet. Not very different from elsewhere, in China the expansion of copyright to the online environment was first confronted with two fundamental questions. First, are digital forms of literary or other works copyrightable, or should they be? Second, who has what kind of control over the distribution of digital works (if protected) on the Internet? Chinese law today has answers for both questions, but how these answers were formulated was noteworthy. While in the US context, the expansion of ‘traditional’ copyright to digital media took place by way of corporate turf wars and government-industry collaborations (Litman, 2001), in China the process was spearheaded by legal professionals in judicial organs and governmental agencies. With little public participation or deliberation, the law shows significant influence from abroad and a determined stance to protect property rights.

The development of digital copyright in China started at a very early time of Internet growth. The Supreme People’s Court (SPC), using its power to issue ‘interpretations’ or ‘opinions’ to clarify or add details to statutes, created China’s first comprehensive set of rules of digital copyright: The Interpretation of Several Issues of Law Application in the Adjudication of Computer Network Copyright Disputes (Judicial Interpretation 2000, 2001). At the time (November 2000), however, China had a proportionately very small online population. In July 2000 and 4 months before Judicial Interpretation 2000, Chinese Internet users amounted to less than 17 million (China Internet Network Information Center (CNNIC), 2000), roughly 1% of China’s population. In comparison, 1 year before the Digital Millennium Copyright Act (DMCA) was enacted in the United States in 1998, one out of five Americans used the Internet (U.S. Census Bureau, 1999: 9). Nevertheless, Chinese law developed rapidly in protection of ownership interests. Judicial Interpretation 2000 swiftly provided answers to the copyrightability of digital works and the control over Internet distribution after both were contested in high-profile court cases.

The copyrightability of digital works met a major challenge in 2000. In Rongshu.com v. Shehui Press (2000), a website sued a brick-and-mortar publisher for publishing several articles from its site. This was the first lawsuit that contested the copyrightability of literary works published in cyberspace. The defendant argued, among other things, that digital works were not any of the protected works under Copyright Law 1990, effective at the time of the litigation (Rongshu.com v. Shehui Press, 2000). Art. 3 of Copyright Law 1990 lists different works that fall under copyright protection, but does not mention digital media. Although it includes an open-end section to offer protection for ‘[o]ther works as stipulated by laws and regulations’ (Copyright Law 1990, 1990: art. 3), at the time of the lawsuit there were no laws and regulations that protected digital works.

Nonetheless, the court showed that it was more than ready (if not impatient) to create a new type of works under copyright protection. It was no small matter because the Chinese legal system requires judges to follow statutes instead of creating new laws. Still, regarding the defendant’s argument, the Beijing No. 1 Intermediate People’s Court responded by one short paragraph:

This court maintains that digital technology changes the manner that works are transmitted, but does not change the works themselves. When published on-line, the works do not change. Only the media to which the works attach change from paper to the network. Therefore, the use of works on the Internet is still protected and regulated by the Copyright Law. The defendant argues that digital works on the Internet are not protected by China’s Copyright Law, and to download and to use works on-line do not need to obtain permission. This argument has no legal basis. (Rongshu.com v. Shehui Press, 2000)

In a matter-of-fact manner, this short paragraph sees no difference between print media and the Internet under copyright law. However, this was precisely what the defendant disagreed with, but the court apparently did not find it necessary or desirable to spend too much time pondering the issue. Indeed, the court’s opinion spends more time explaining each and every other disputed issue than the copyrightability of digital works (Rongshu.com v. Shehui Press, 2000).

The court’s confidence probably derived from an internal meeting at the SPC, which took place 1 week earlier on 22 November 2000. At the meeting, the Adjudication Committee of the SPC passed (but promulgated it only weeks later) Judicial Interpretation 2000, which provided comprehensive protection for copyright in cyberspace. In an all-inclusive manner, Judicial Interpretation 2000 states,

Works protected by the Copyright Law include their digital forms. Any output of intellectual creation in the online environment that do not fall under the scope of Art. 3 of the Copyright Law, but have literary, artistic, or scientific novelty and originality and can be reproduced in tangible forms, shall be protected by the People’s Court. (Judicial Interpretation 2000, 2001: art. 2, para. 1)

Merit of the law notwithstanding, the determination and the protective stance of the SPC are noteworthy. This was a time when 99% of Chinese population had no access to the Internet. Discussion on digital copyright issues was limited to small circles of legal professionals. The SPC, sitting at the top of the judicial system, took the initiative to invent a set of rules through a meeting among its top-ranking members. By explicitly offering protection for works ‘that do not fall under the scope of Art. 3 of the Copyright Law’ (Judicial Interpretation 2000, 2001: art. 2, para. 1), the SPC in effect changed the law in spite of its limited power to only clarify and elaborate on statutes.

The control over Internet distribution of copyrighted works was also defined in a pro-control manner with the judiciary in the vanguard. Again the law did not initially offer any protection for online distribution of works. Section 5, Article 10 of Copyright Law 1990 stipulates that copyright owners have the right to use works (or to authorize others to use) in a number of ways, which does not include transmission through the Internet. In Wang Meng v. Shiji Hulian (1999), known as China’s first digital copyright lawsuit, appellant Shiji Hulian (a website) argued that Internet transmission was not protected under existing law, and that to extend copyright to the Internet by way of judicial decisions would inappropriately enlarge owner control. However, the court disagreed. Noting the challenge posed by new technology, the Beijing No.1 Intermediate People’s Court (same court in Rongshu.com v. Shehui Press) argued that the purpose of copyright is to protect exclusive control over works in all media and technological environments (Wang Meng v. Shiji Hulian, 1999). One year later, the all-inclusive Judicial Interpretation 2000 confirmed the protective stance. It stretched the law and stated,

To distribute works through the Internet is a way to use copyrighted works and is protected under the law. Copyright owner has the right to use or to authorize others to use works in this manner, and to be remunenated for such use. (Judicial Interpretation 2000, 2001: art. 2, para. 2)

The Chinese way to overcome obstacles to extend copyright to cyberspace is indicative of the features of the law. At an early stage of Internet growth, China’s digital copyright law was invented and imposed top-down. Facing challenges from new technology, China’s judicial elites reacted by interpreting copyright as an exclusive control that automatically prevails in any and all modes of communications. Meanwhile, they drew extensively from Western laws and practices, which is not all surprising given that contemporary China’s first-generation intellectual property specialists had all been under extensive Western training and influence (Han, 2014). Regarding copyright in the digital environment, many legal professionals in China viewed the DMCA in the United States as a praiseworthy achievement and model legislation. For example, former Chief Justice of the SPC’s Intellectual Property Tribunal, Jiang Zhipei, proudly called Judicial Interpretation 2000 ‘China’s DMCA’ (Jiang, 2003).

Researchers have criticized Western influence in China’s digital copyright law for hindering public access and information dissemination (Hua, 2013; Xie, 2007, 2008). Meanwhile, it must also be noted that Western influence in Chinese law was channeled through a small number of political and legal elites and against the context of the Market Reform. First, China’s ‘[l]egal reform has primarily consisted of looking for oversea models’ (Liebman, 2011: 176), ‘and the desire to bring China in line with international practices is a major factor behind the legal reforms’ (Liebman, 2011: 186). Second, the Market Reform has been essentially a project conceived at the top and imposed from above (Meisner, 1999). Third, as part of China’s neoliberal turn (Harvey, 2005), the state’s policy establishes and reinforces private and proprietary control in a number of social and economic sectors. The cultural sector is treated as an industry (Keane, 2004) and ‘efforts are devoted … to the implementation of a new economic logic and vocabulary’ (Pang, 2012: 95). West-ward legal transformation, top-down imposed reform schemes, and state policy devoted to the creation of market and private property jointly gave rise to a pro-control copyright system on the Chinese Internet. In a few years after the invention of the Judicial Interpretation of 2000, Chinese Internet users began to feel the force of copyright control and to revolt.

Owner control and public outcry on the Chinese Internet

If China’s leap to create copyright in cyberspace did not invoke much public reaction at the turn of the century, things changed quickly in a few years’ time and along with the rapid growth of Internet users. By the end of 2005, China’s Internet users had grown more than six times from 2000 and reached 111 million (CNNIC, 2006). In big cities like Beijing and Shanghai, more than a quarter of the population was online (CNNIC, 2006). This was when a short video online triggered a massive protest against the copyright regime.

At the beginning of 2006, an amateur video producer in Shanghai produced a 20-minute video titled A Bloody Case Caused by a Mantou (Yige Mantou Yinfa de Xue’an, widely known as Mantou). It used clips from blockbuster movie Wuji and edited them to retell the ‘epic’ story in a mocking tone. The parodical video quickly went viral on the Chinese Internet. In 10 days after 6 January 2006, search results for Mantou increased from 1600 to 978,000 on Baidu.com, the leading Chinese-language search engine (Zhang, 2006). Infuriated, the director of the movie threatened to sue. Internet users, however, rallied in support of the video. Mantou continued to be viewed, shared, and applauded on the Chinese Internet. Numerous online postings vehemently criticized the film director and called people to support the video maker in the pending lawsuit. The incident made news headline across the country. A number of well-known figures in the film industry and in academia publicly voiced their opinions, sometimes in sharp disagreements. In the face of the public outcry, the film director silently dropped the case and the threat to sue never materialized (Han, 2011).

This controversy offers an important opportunity to examine the features of China’s copyright law as well as the dynamics of bottom-up resistance against intellectual property. Absent a formal judicial decision, extensive public debate and scholarly research nevertheless conducted a thorough examination of the law. The findings are both counterintuitive and unsurprising. They are counterintuitive because they suggest that Chinese copyright law offers more protection to copyright owners than their Western counterparts. They are unsurprising because the law does not support bottom-up interrogation of dominant discourses and power.

The video was a sharp and witty critique of the movie. It argued that the government-backed, transnationally funded movie was a poorly told, senseless story. Since the video used many clips from the film, the copyright status of such use quickly came under scrutiny after the film director threatened to sue (Li, 2010). The only possible way to justify such use is through fair use in Chinese law. Thus, the controversy became a major test of fair use on the Chinese Internet.

Fair use in copyright is an important check on proprietary control. It is a ‘safety valve’ and a built-in mechanism that balances private control and public access, copyright and free speech (Goldstein, 2003; Vaidhyanathan, 2001). When owner control expands, fair use needs to expand accordingly (Litman, 2015). Shrinking fair use will only serve ownership interests at the cost of creative and expressive interests (Tushnet, 2015). In Chinese law, the scope of copyright control is defined by following the European model of ‘Open Rights, Closed Exemptions’ (Liang, 2009: 698), in which copyright privileges are broadly and flexibly defined (‘Open Rights’) and limitations on copyright control are fixed and inflexible (‘Closed Exemptions’). Copyright Law 2001 lists 16 rights for copyright owners, followed by a catch-all clause that protects ‘other rights that should be enjoyed by the copyright owner’ (Copyright Law 2001, 2001: art. 10). On fair use, the law lists 12 specific fair uses without an open-end section that allows flexible interpretation to expand fair use to other circumstances (Copyright Law 2001, 2001: art. 22). Digital parody does not fit into any of the 12 categories of fair use and does not fare well under the stringent system. As a legal scholar (though favored the video) puts it, even law students ‘with minimal legal knowledge (shaowei youdian falv changshi)’ can see that Mantou would be sure to lose the lawsuit (Liu, 2010b: 64).

Legal professionals and researchers in support of the video during the so-called ‘battle to defend “Mantou” (mantou baoweizhan)’ (Liu, 2010b: 64) almost all sought support from Western laws and practices. Ji (2006) studied US Copyright Act and Supreme Court cases and pointed out that Mantou could be protected under the American system. Han and Xu (2006) analyzed provisions in US and European copyright laws and argued that parodies were generally fair use. In a later publication in the United States, Rogoyski and Basin (2009) concurred that the video would be protected under US law as parody, but Chinese law neither protected parody nor allowed any flexibility to interpret the law to that effect. Contrary to general wisdom, these research shows that China’s copyright regime is more protective of proprietary interests than their Western counterparts. Considering the transformation of the law overtime, this is a deliberate legislative choice instead of an incidental stipulation: Copyright Law 2001 actually narrowed down the scope of fair use from Copyright Law 1990 (Priest, 2006), showing a legislative intent to tighten it up.

Meanwhile, however, this is not really unexpected against the larger context of Chinese law and politics. The fair use challenge to proprietary copyright control is rooted in political and social resistance. In the US context, speech freedom considerations play an important role in defending fair use (Samuelson, 2015). Parody as a mockery art form often involves elements of resistance against the original’s notoriety and influence, and Campbell v. Acuff-Rose Music Inc. (1994) must be read in the context of 2 Live Crew’s ‘insubordination’ and ‘defiance’ as part of a long tradition of ‘speaking back to power’ (Said, 2015: 587). China’s political and legal systems, however, are not well known for encouraging challenges to authority and power. On the contrary, digital parodies’ derisive tone has always been treated with hostility by political authorities for their potential to nurture popular defiance and to mobilize resistance (Meng, 2011). Under heavy-handed censorship, senseless humors and media spoofs often serve as camouflage for political expressions (Han, 2011). Thus, there were not many incentives for either lawmakers or judges to show much sympathy and flexibility toward the funny and defiant video.

The pro-control bias in the law needs to be situated in global and political economic contexts that condition IPR growth in China. Internationally, the intellectual property system was driven by private, corporate interests that pushed for rigorous protection of their proprietary interests (Sell, 2003). While Baker (2002) has pointedly argued that intellectual property should be treated as a human rights issue rather than a trade issue, the United States Trade Representative (USTR) has spearheaded bilateral pressure to protect American business interests overseas and has resulted in a ‘narrow, self-interested approach in dealing with the Chinese intellectual property problem’ (Leung, 2006–2007: 162). Within Chinese borders, the political, economic, and social status quo sets the context for top-down imposed laws that accommodate little bottom-up input. Leaning toward ownership interest, China’s digital copyright law manifests the impact of both the global IPR regime that governs culture as commodity and China’s legal transformation that lacks democratic participation.

In spite of the law, the public outcry over the film director’s aggressive threat played a key role to protect the video. Under IPR logic, what happened between the movie and the video was a copyright problem. For cultural critics, however, it was ‘conflict between entertainment industrial moguls (yuleye da’e) and Internet grassroots (hulianwang caogen)’ (Zhu, 2006: 29). Driven by widespread frustration with China’s movie industry, popular support for Mantou was an expression of a cultural logic that challenged the top-down imposed market mechanism (Han, 2011). Six years after the SPC invented China’s digital copyright system, Internet users began to feel the law’s impact and Mantou was a major rebellion. Popular support for the video maker created considerable negative publicity for the film director and cast a dubious light on the pending copyright lawsuit. Facing the public outcry, governmental officials began to play ball-kicking. In one instance, the National Copyright Administration of China’s (NCAC) spokesperson refused to comment on Mantou’s copyright problem and only said it was up to the court to decide (Bai, 2006). Had the case gone to court, it would probably have resulted in a clash between the pro-control law and popular opinion, forcing the Chinese state to take a stance. The way that the Mantou controversy ended, however, did not help to check owner control in copyright but delivered a warning to the rapidly growing online population in China.

Correlation between copyright growth and business interests

While Internet users that rally online have not been able to produce tangible changes, the law’s development has shown repeated correlations with business interests in its short history. The Judicial Interpretation of 2000, which laid the foundation for copyright regulation in Chinese cyberspace, had a stipulation that ran counter to its DMCA model but well served nascent Chinese Internet companies. In the 2010s, law enforcement significantly tightened up when Internet music and video sectors consolidated under a small number of private businesses. Instead of developing in an even-paced, linear fashion, the law transformed in response to different phases of China’s Internet industrial growth.

At the turn of the century, Chinese Internet industries were at an early stage of development. Leading players today like Baidu and Alibaba were still newborns (established in 2000 and 1999, respectively). Dominating the industrial landscape were the so-called Internet portals like Sina.com, which attracted Internet traffic through large amounts of news and information on their websites. The majority of these contents were republications from traditional media or other online sources, and the copyright status of such republications was a critical issue for the nascent industry. If the law had required websites to obtain permissions prior to republication, it could have been a very large obstacle to their growth. On one hand, Internet portals like Sina.com attracted attention as news aggregators. They (re)published massive information fast, especially for breaking news stories. It was virtually impossible for them to negotiate permission from traditional news sources case-by-case. On the other hand, they were nascent businesses emerged outside of the state media structure. They did not have either market leverage or governmental backup to negotiate favorable blanket licenses vis-à-vis powerful state media and news organizations.

Meanwhile, they could not afford to ignore the law. Key funding support for nascent Chinese Internet businesses came from oversea investments, and leading companies all aimed to (and later succeeded) be listed in oversea stock exchanges, for example, NASDAQ. To be public companies, they needed to disclose their corporate information and demonstrated that their business models were viable in their home markets. They could not afford to have the Chinese authorities declare their business practices, notably massive reprinting, to be illegal (regardless of enforcement). Thus, companies like Sina at the turn of the century had strong incentives to push for a favorable copyright environment.

The Judicial Interpretation of 2000 met their needs well. While extending copyright to cyberspace, Article 3 of the Interpretation specifically provided a compulsory license for online republications. Under the law, portals like Sina.com could reprint as much as they wanted without seeking permission from copyright holders. If the rights holder objected, all the website needed to do was to make a payment (ruguo zhuijiu le, yao zhifu baochou) (Jiang, 2003). This was a huge green light for the nascent web portals and significantly hurt traditional news sources. For one thing, it is difficult to track down massive numbers of republished news stories online. For another, the compulsory license gave traditional news media very little negotiation leverage. As a matter of fact, ‘most Internet news services select material from Chinese newspapers as they see fit, and payment for such reuse is typically symbolic or entirely absent’ (Zhong, 2006). In 2005 and 2006, Chinese newspapers revolted. Jiefang Daily, a leading national newspaper, attempted to organize a national ‘Content Alliance (neirong lianmeng)’ to fight Internet media over republication fees (Ye, 2006). Subsequently, the SPC changed the Judicial Interpretation twice in 2006 and eventually removed Article 3 and the compulsory license. However, by this time, ‘websites had become more powerful (shili tigao) and had more leverage (tanpan diwei zengqiang)’ vis-à-vis traditional media (Ye, 2006).

In the 2010s, China’s digital copyright system made another change in correlation with business agendas. In spite of constant lawmaking efforts, copyright enforcement in China’s digital sectors has not come on a par with expectations of many observers. In online video streaming and music sectors in the mid-2010s, however, elevated enforcement endeavors took place in tandem with the rise of market monopolies.

China’s music industry witnessed a rapid growth in the early 2010s. An annual industrial report in 2014, sponsored by the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), calls the music industry ‘an important engine that propels cultural industrial growth’ and the year 2013 ‘a critical moment of conversion to digital models’ (Zhongguo Jingji Wang, 2014). According to the report, the industry total in 2013 amounted to 271,656 billion yuan and digital music sectors (including both wireless and online) reached 44.07 billion yuan, a steady increase from 33.56 billion yuan in 2010 (Zhongguo Jingji Wang, 2014). Meanwhile, however, unauthorized distribution of musical works on the Internet persisted.

A turning point came in 2015. The NCAC-coordinated annual Internet copyright enforcement campaign, coded ‘Sword Action (jianwang xingdong)’, targeted online music in 2015 (Dou, 2016). On 9 July, the NCAC issued ‘Notice to Internet Music Service Providers on Ceasing Distribution of Unauthorized Musical Works’. Dubbed as the ‘strongest governmental order in history’, it warned of severe legal consequences for unauthorized distribution of music (Li, 2015: 5). On 15 July, the NCAC held a conference that brought major Internet music distributors and recording companies together to discuss digital music copyright. By the end of July, 16 online music providers took down more than 2.2 million unauthorized music pieces from their sites (Dou, 2016). Both official media and industrial consulting companies reported that the NCAC order had been very effective (iResearch, 2015b; Li, 2015).

Against a long history of widespread distribution of unauthorized music online, this round of governmental endeavor came at the precise moment of market concentration. In recent few years, Chinese media and Internet businesses have been actively buying music copyrights and building up repertoires at low prices only possible in a weak copyright environment (Xiao, 2016). In 2014–2015, the market came under the dominance of three copyright-rich companies: China Music Corp. (CMC), QQ Music (owned by Tencent), and Alibaba (International Federation of the Phonographic Industry (IFPI), n.d.; iResearch, 2015b). In 2016, the big three became the big two, when Tencent bought CMC to merge with its QQ Music. The deal resulted in Tencent controlling more than 60% of all available music rights in China and a ‘whitewashing of a once tentatively competitive marketplace’ (Macfarlane and Osawa, 2016). Elevated law enforcement in mid-2015 thus correlated well with leading businesses’ agenda to dominate the music copyright market.

China’s online video sector also witnessed concurrent law enforcement and market concentration. The industrial sector started its decade-long dramatic growth in 2005 (Hu, 2014). Later on, the State Administration of Radio, Film and Television (SARFT) and the Ministry of Information Industry jointly issued the Internet Audiovisual Programming Services Management Rules (2007), which created a license system with significant emphasis on copyright. It quickly resulted in a ‘shakeout’ in the industry, in which only large private companies survived along with state media (Zhao and Keane, 2013). By 2012, the number of private Internet video services had drastically decreased to a little more than 10, compared to several hundred in the heyday of Chinese video websites (Hu, 2014). The 2012 merger of the two largest video websites, Youku and Tudou, resulted in ‘improvement in the industry structure’ and reinforced the transformation of the online video sector into a ‘Land of the large’ (Flannery, 2012). In the next few years, the size of the industry had impressive growth. The third quarter of 2015 saw 31.9% growth in China’s online video industry from the previous quarter, reaching 11.53 billion yuan and continuing on a steady, upward path (iResearch, 2015a). Meanwhile, copyright enforcement has been consistent and effective. The cost to purchase programming from the market has become so high that all leading websites have started to invest in in-house productions (iResearch, 2015a). In 2015, Alibaba bought out Youku Tudou, China’s largest online entertainment company (created by the 2012 merger), marking the dominance of the online video sector by a leading player in the Internet industry (Shan, 2015).

It needs to be noted that high levels of law enforcement in copyright are not a natural, matter-of-fact development in China’s Internet sectors. For a long time, Chinese entertainment businesses have prospered in a weak copyright environment. It has cast doubts on the cornerstone role of copyright in commercial media growth and given rise to discussions on ‘the next-generation monetization model for online content’ in a ‘post scarcity, post-copyright’ world (Priest, 2016: 1079). Chinese entertainment businesses tended to profit through non-copyright-reliant activities like subscription-based online gaming, aggressive DVD pricing, and bundling recording distribution with irreplaceable consumer experiences like live performance (Montgomery, 2009; Priest, 2006). Some researchers assess it critically (Liu, 2010a), but some others comment positively on the situation (Montgomery, 2009; Montgomery and Potts, 2008). In addition, it has been pointed out that today’s creative industries no longer depend on copyright expansion (Cunningham, 2012; Flew, 2015). A ‘stronger’ copyright system in Chinese cyberspace is a deliberate choice rather than a neutral, inevitable next-step.

Copyright as proprietary control facilitates concentration and benefits monopoly businesses (Bettig, 1996). In the case of Chinese digital media, copyright growth and market concentration play out in a mutually constitutive manner. On one hand, law enforcement helps large corporate owners to drive out competition and consolidate resources in China’s ‘hyper IPR environment’ (Suttmeier and Yao, 2011: 20). On the other hand, concentrated control facilitates large businesses’ aggressive pursuit of copyright protection through the court as well as administrative enforcements, which are often connected with corruption and tend to yield faster turnarounds and favorable findings for rights holders (Li, 2014). In 2015, there were 66,690 new copyright lawsuits across China, a 12.1% increase from 2014 (State Intellectual Property Office, 2016: 7). Meanwhile, copyright administrative organs investigated 383 Internet infringement cases, imposed 4.5 million yuan in fines, and shut down 113 infringing websites (State Intellectual Property Office, 2016: 13).

A lingering issue is the role of private Internet businesses in shaping China’s copyright law and policy: To what extent can private interests influence law and decision-making in China, and are favorable legal developments the outcomes of their lobbying? However, there are perhaps no clear-cut answers to these questions. On one hand, executives of Chinese Internet companies are known to have intensive interactions with SPC personnel in the early days of digital copyright development (Personal communication with a legal professional, 2001), but such activities are seldom (if ever) documented in publicly available sources. On the other hand, facilitating market-oriented growth in Internet sectors has been a persistent policy of the Chinese state. Instead of seeing private lobbying as a forceful intervention that steers the law away from a pre-determined direction, it may be useful to take the state’s preferences and inclinations into consideration. The copyright system, including law on the books and its implementation, is part of the state’s policy initiatives that seek to propel economic growth in digital media. And as Macfarlane and Osawa (2016) have noted, market concentration actually helps to enforce copyright on the Internet. Thus, the state’s and large businesses’ agendas may share much in common regarding IPR and market growth in digital media. The implications of such correlations, however, suggest not a public-oriented copyright system but pro-concentration proprietary control.

Conclusion

This research examines copyright growth in China’s digital media as a historical process to establish proprietary control. It sees copyright as a historically specific mechanism to allocate resources and to regulate relationships in cultural activities and media production, and holds IPR against not market benchmarks but democratic principles (Hardy, 2014). The law and its implementation are part of China’s market-oriented reform, West-looking legal transplantation, elite-driven policymaking, and business-friendly Internet governance. The three moments of digital copyright growth show a legal system that is top-down imposed, leans toward proprietary control, and responds to market monopoly interests. Copyright’s ascending role as proprietary cultural control on the Chinese Internet is not necessarily laudable but needs to be assessed historically and critically.

Footnotes

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Dong Han

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