Music Matters Scoop: China's Plan To Fight Piracy

from right to left: Christopher Martius, Bill Zang,
Yushu Le Guyader and Thomas Reemer

By Eric de Fontenay
http://china.musicdish.com

I don't usually go to conferences expecting to get scoops. Oh sure, you have lots of announcements - so and so have partnered, such and such launches new service, blah, blah, blah... Didn't he announce that at another conference last month? Even during last year's Music Matters, the launch of Google Music China had been covered well beforehand, though it was neat to actually get a demo. So I had to literally stop and rub my ears when I could have sworn that I'd caught a scoop at this year's Music Matters.

The setting was a presentation by 88tc88, which had introduced at SXSW its Web-based translation service for Western bands wanting to enter the Chinese market - more about that here. Joining Chairman Thomas Reemer, CEO Christopher Martius and Partner Yushu Le Guyader (who provided translation) on the stage was Bill Zang, Vice President at Shanghai Synergy Culture & Entertainment Group. Owned by one of the largest media conglomerates in China, SSCEG is at the core of the Chinese government's efforts to develop comprehensive multimedia entertainment services for its domestic market while fighting piracy and addressing royalty collection.

Let me stop here to remind readers of a little fact. Until relatively recently, copyright in China was illegal. All intellectual property belonged to the people, ie. government. If you wrote a book for example, the government would 'own' it and reap any 'profits,' while providing the author with a salary, housing, medical and education. So when some rant on about piracy or the lack of enforcement, this should be put in context. The Copyright Law of the People's Republic of China was adopted in 1990 - we in the US on the other hand have had a Copyright Act on the books since 1790 and we still can't seem to get it right!

On the other hand, the government does often seem capricious in its enforcement of copyright. They like to point to last year's shutdown of 200 pirate movie sites, including the largest video BitTorrent site. It just so happens though that the crackdown coincided oh so nicely with the launch of CCTV's major online video initiative. Nor is it clears whether the shutdown didn't have more to do with fighting pornography - a much bigger taboo for the government - rather than piracy. Having said that though, the fact is that for both economic and diplomatic/political reasons, the Chinese government will increasingly get serious, get tough and tackle the IP issue in the broad sense, not just piracy.

For one thing, China is no longer the low-quality, copycat manufacturer people still seem to imagine. As its economic power has grown, so has domestic innovation. It is following the path of Japan and South Korea, except at warp speed. You've certainly heard that they now have the fastest train, 2nd most powerful computer,... you get the picture. Nor is all this growth in IP restricted to patents & gadgets. Anyone who has hung out at Beijing's indie clubs like D-22 and Yugong Yishan, or strolled through its 798 Art District quickly realizes that China has a big cultural muscle it is anxious to flex. So it will become an economic imperative to protect its intellectual property which the government will increasingly view as a strategic asset.

Secondly, the Chinese government wants to attract more Western culture and the know-how that comes with it. To do this, they are building three national music industry parks, located in Shanghai, Beijing, and Guangdong that are slated to be operational in 2011. These high-tech parks will serve as performance stages as well as provide facilities for Western and Chinese musicians and professionals to collaborate. But of course, in order to attract Western musicians and firms, they need to tackle piracy.

This is all good, but it is at this point where I start get sceptical. It's fine to talk about tackling piracy and shutting down sites, but without a strategic plan to develop a legal market for IP content, it's pretty much talk. So it was with a little surprise (shared by my friends at 88tc88 who assured me it wasn't in the script) that I heard Mr. Zang get very specific and present the outlines of a plan: The Chinese government will use watermarking technology to embed a unique code into every creative works released - music, film, graphic,... - allowing the government to easily identify, fine and shut down websites peddling pirated material as well as track all plays for royalty collection and disbursement.

"That's it?! Aren't we doing that already?" you say. Sure, watermarking technology has been around for well over a decade and while not a panacea, has become an important tool in IP management and protection. But it is the fact that the government is publicly outlining a strategy and process to tackling the problem which is a watershed... and the scoop. Even more encouraging was the emphasis on using the technology not just to fight piracy, but also properly compensate rightsholders for the use of their music. Just consider that China has the potential to be the largest music market in the world, easily surpassing the US and Japan.

And unlike in the West, when the Chinese government sets its mind to something, it usually gets done.