Are We About to Lose Youtube Again?

Friday, January 4, 2008 15:25
Posted in category Invest in China, Red Tape

By now, everyone reading this post knows my love for Youtube. In the last 12 months, tons of new high quality China specific content has been posted, and I find it to be really useful when I want to see what is going on at large conferences and events.

Well… if the analysts are right, everyone in China may have the Youtube plug pulled on Jan 31, and unlike the outage before, it may not come back until Youtube signs on with a state owned media group.

The full details (with analysis) can be found at the NY Times and Redherring, but here are a few highlights of the regulation:

  • China will allow only state-run Web sites to broadcast video or radio through the Internet
  • Starting Jan. 31, Internet broadcasting license applicants must be government-run entities
  • Operators will be banned from offering content that promotes sex, violence, gambling or religious cults or divulges state secrets
  • It’s still unclear the effect the new regulations could have on the ownership and operation of these companies

The loss of one source of entertainment aside, this regulation in my mind could ripple out far enough that the domestic China online media industry is hurt:

  • Advertising revenue for the 100+ sites could come into question
  • This could bring about revised valuation figures
  • Revised valuation figures may result in a slowdown in investment
  • A slowdown in investment may affect China’s domestic media/ online industry

For corporations operating in China, I do not see a wide impact from an operational perspective, however, with many firms looking to reach young consumers this regulation may make it more difficult to advertise.

In the end, we will all just have to wait and see what the impact is, but I am not holding my breath

Youtube is keeping their chin up:

“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.”

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3 Responses to “Are We About to Lose Youtube Again?”

  1. Chris Devonshire-Ellis says:

    January 9th, 2008 at 3:18 am

    Hi Rich, I just discussed this issue last night with the Senior Legal Counsel for Google China, whose main US parent of course purchased YouTube last year. The new regulatory environment concerning video streaming, content and distribution – which still has to be fully understood – doesn’t actually affect You Tube as the entire service is based offshore. So what Chinese legislation does has no effect on YouTube. However, it will affect the planned rollout for YouTube China, which will have to be put on hold until the issue over State ownership of streaming video activities in China can be clarified. So – you’ll still be able to access YouTube (as long as the Chinese don’t block the site, but thats a different matter) but you won’t get a Chinese version of it until this mess of ill-thought out rulings becomes clearer. Hope that clears up these muddied waters just a little over You Tube access in the PRC.

  2. Rich says:

    January 9th, 2008 at 4:06 am

    Chris,

    Thanks for letting us know. I have seen a lot of speed issues related to Youtube lately, and with the outage this summer, I am still in a wait and see pattern as I can see where shutting down these offshore sites to force partnerships is possible.

    An update of my own, I received this from someone in the investment community on my Skype window:

    This puts all the youtube type businesses in trouble for sure.
    next thing you know, they’ll be going after mobile content… that has always been my feeling about “media” in china

  3. MisterDD78 says:

    March 15th, 2008 at 6:56 pm

    I can’t get in Youtube since yesterday night, here in Shanghai. By which I mean I can’t get in it if I use the internet explorer. I still get there using the firefox’s Tor Button.

    Anyway, I find it weird China wanting to block Youtube on purpose 3 months away from the Olympics.. Think of the bad publicity.

    This just may be like what happened in October, just a technical thing.

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