Digital Media in Asia Blog

A teenager was arrested in Hong Kong for hosting 600 songs for download on his computer, and a court sided with the movie industry, requiring internet service providers to turn over the names of users sharing movies online.

Speaking privately to people in the Hong Kong entertainment industry last week, there is pessimism that these tactics will yield results. The fact is, they acknowledge, that young people view the likelihood of getting sued or arrested on par with the likelihood of winning the lottery.

According to China’s Xinhua news agency, “Only one in ten films made in China last year attracted an audience, indicating major problems in the domestic cinema market.”

Piracy, of both the optical disc and internet varieties, is a major cause of the lack of a solid Chinese film market. In my view, it not only leads to a lack of financial resources that can be reinvested into the Chinese film industry to stoke innovation, but it also causes Chinese filmmakers and studios to be extremely conservative with their creative choices. Thus, most Chinese films are highly formulaic because the margins are so slim that filmmakers are only comfortable going for the broadest possible tried-and-true market. This result is often the reverse of what’s intended–so many Chinese films are so similar that the market is awash with films that from the cover alone look identical. Rather than attracting customers, this causes many films to cancel each other out in the marketplace and leave customers dissatisfied and disinterested in general.

Of course, Hollywood suffers from the same disease to a lesser degree, but piracy in China amplifies the problem there significantly.

Last year, Warner Brothers reportedly introduced cut-priced DVD versions of its Hollywood movies for 22-28
yuan (2.7-3.4 dollars) in China. The price cuts were a direct attempt to compete
against pirated versions of the same movie which sell in supermarkets for as
low as 5 yuan (about 60 cents).

However, MSNBC reports that
less than a year later, Warner is further lowering its Chinese prices once again, by about 50%, to
12 yuan ($1.50). The new cut-rate releases, called “simple pack” editions,
contain cardboard packaging and few special features, compared to the typical
plastic DVD case and loads of special features like deleted scenes and
director’s commentary.

US film companies are betting that the Chinese population is ready to accept
paying a premium for legitimate Hollywood DVDs. Indeed, as the urban middle
class becomes more affluent, they will naturally want, and can now afford,
luxury items like DVDs. Through the internet and the Westernization
of China’s middle class, Chinese interest in Hollywood films is increasing. For
years now, Chinese films have stood alongside Hollywood films in Chinese video
rental stores. With the government allowing only 20 Hollywood movies to be
shown per year in theaters, and a general dearth of theaters, watching DVDs
(and VCDs) at home is the way in which most Chinese consumers are able to enjoy US (and Chinese) films.

Despite favorable conditions for Warner Brothers to sell its
DVDs, it’s unlikely that Chinese consumers will switch from buying pirated DVDs
to legitimate copies. For one, the price point for DVDs, at about 5-7 yuan, has
been ingrained for years. Also, the quality and packaging of pirated DVDs are
currently very comparable to what Warner is offering. So, while a growing number of Chinese can certainly afford twice what they currently pay for DVDs, they have little incentive to do so.

In the West, some incentive for purchasing legitimate goods arguably stems from a culturally instilled sense that purchasing pirated goods is moral and legal wrong. However, in China, these ideas are nascent, if they exist in any meaningful way at all. Buying pirated content is the norm, and finding a legitimate copy of
media is the exception.

So unless Warner can convince consumers that its product is
superior to pirated versions, either through incentives, moral justification,
or legal pressures, it’s unlikely that they will have success selling their
product at twice their competitors’ price.

Celebrated Chinese film director Chen Kaige (Farewell My Concubine) has threatened to sue Hu Ge, a 31 year-old Shanghai audio engineer, with copyright infringement–because of a homemade spoof about steamed buns.  Hu was so disappointed with Chen’s latest film, The Promise, that he put together The Steamed Bun Murder, a 20-minute parody of the film, and posted it on the internet. Hu’s parody has become an overnight sensation in China, and something of a cause c�l�bre.

From The Times:

[Hu’s] satire, unprecedented in China’s carefully monitored media, has
attracted millions of viewers, almost certainly many more than paid to
see The Promise. The film has proved to be something of a box-office flop, although distributors say it has earned �15 million.

Chinese collapse in gales of laughter as they watch Mr Hu’s spoof. The Steamed Bun Murder
not only parodies the most expensive film made in China, but also pokes
fun at state television. He uses a poker-faced presenter and stuffy
communist terminology in his tongue-in-cheek report of the
investigation into the humble bun murder.

If Chen pursues a legal case it is unclear if Chinese courts would allow a parody fair-use defense. Such parodies are rarely produced or broadcast by the strictly controlled state-run traditional media, so these might be untested legal waters.

There is a developing trend of homemade spoofs gaining phenomenal popularity over the internet in China (e.g., the Back Dorm Boys, whose goofy dormroom webcam video of themselves performing Backstreet Boys tracks was such a sensation it landed them an advertising deal with Motorola). Clearly, Chinese consumers see the internet as a source of alternative content that’s in tune with the modern Chinese urban experience in a way that the conservative state-run media is not. Hu’s spoof is a salient example, taking direct shots at a state-run media perceived as stuffy.

An interesting news article about China’s digital media situation.

Some interesting snippets from the article:

“I would like to plant this challenge: by 2008, to have more
legal than illegal DVDs sold in China, to have more American
movies in Chinese theaters and to have more Chinese movies in
American theaters,” says Dan Glickman, CEO of the MPAA.

“It is virtually impossible to find counterfeit Olympics
goods in China. Why? As one of the Chinese officials said, it
is because fakes dilute the value of the logo, the intellectual
property upon which the Chinese have invested to finance the
games,” he continues.

A decrease in piracy from 90% to 50% is a four fold change. This may be difficult to achieve considering the evolving technologies that make filesharing easier, and pervasive broadband access that makes it faster.

In the first-ever bittorrent file sharing criminal prosecution, a Hong Kong man, Chan Nai-Ming, was sentenced to three months in jail November 7 for making available online copies of the movies “Miss Congeniality”, “Daredevil” and “Red Planet” without the owners’ authorization.

In the ruling, the judge acknowledged the man did not gain financially from making the files available, but said that fact and the high prices of legitimate DVDs are no justification for infringing copyright and do not allow him to escape liability. The judge also indicated that future convictions could lead to even stiffer penalties.

Customs officials claim that bittorrent use in Hong Kong has dropped by 80 percent since Chan’s arrest.

The ruling did not extend liability to downloading files, only uploading them–a fact that upset the entertainment industry, which wanted liability for both.

But that distinction does not seem applicable to bittorrent. From the South China Morning Post:

“Kevin Pun Kwok-hung, associate professor of computer science and law at the University of Hong Kong, pointed out that BT technology works with the downloaders also automatically becoming uploaders, and questioned the wisdom of launching criminal prosecutions against users of such technology instead of leaving it to businesses to take civil action. ‘If you say by placing something on the internet, you are committing a crime, you are saying all BT downloaders are criminals because their computers are downloading and uploading,’ he said.”

“‘The key issue is whether placing something on the internet amounts to distribution, but I personally don’t find the legal argument convincing — it amounts to authorisation but not distribution.'”