Even if the payment channel issue is solved, the remaining question is how to create a system which allows content to reach more users. Lv saw the potential of 3G when Joy.cn was first constructed, and “Joke” was built more or less for 3G. As online TV appeared, Lv also put the terminal in his strategic map and put forward the “three screen in one” strategy. “As long as you are a user of Joy.cn, you can watch our content on any terminal,” said Lv. That means a user can pay for content on any terminal.
Content from three sources (TV, film and self-made videos) on one platform (Joy.cn) provides users three terminals (three screens) and forms two business modes (B2C user payment, B2B advertising), whcih is the strategy mapped out by Lv. It brings a video site to three markets. “Firstly, it must face traditional Web advertising market, whose present scale is 18 billion Yuan. Besides, in a sense it faces TV advertising market, which is approximately 80% of the 69.5 billion Yuan market. Secondly, our films faced a huge consumption market, and the most basic is the pirated DVD market, whose scale was about 45 billion Yuan in 2008. Lastly, we are also facing the large paid market of 3G and future online TV,” Lv told a China IP reporter.
The strategy is still based on content and copyright, but few people can see that. Despite his patience regarding his copyright ideals, Lv is anxious. In his words, the existence of piracy not only causes him to lose profit, but damages trade rules and creates an unfair competitive environment.
However, Lv never expected the situation to change suddenly, as it did in 2009. He once believed “authenticity is the only way out to the video industry”, but now, authenticity has become a consensus of the whole industry.
Turning point In March 2008, Joy.cn obtained the first batch of “permission for dissemination of audiovisual programs on information network”, and became the first privately run video website to receive such rights six months ahead of www.tudou.com. It was not until then that Lv and his site became known, along with his idea of authenticity. At the end of that year, many video sharing sites became willing to pay for copyrights.
“Obtaining the ‘permission’ was one of the turning points in our development, and from that time on we began to show our strength and the society started to care about copyrights,” said Lv.
China saw a change in the larger environment of copyright in 2008. Cultural creative industry became an important sector in which intellectual property was the key. State special campaigns were launched against the Internet infringements. Inside the industry, video sharing sites even began to deny themselves profits while investors walked away after September 2008 due to unsatisfactory returns. This year, advertisers began to doubt piracy on video sites. Despite their “portal-level” traffic, they were neither recognized by the mainstream society nor favored by advertisers.
In early 2009, Lv took the initiative to set up an “anti-piracy alliance” by organizing 80 right holders, which was established against tudou.com and caused a stir in the society.
Only six months later, the alliance reappeared with a completely new look. Firstly, souhu.com and voole.com joined in with a high profile. They launched a stronger verbal war against piracy and even lodged lawsuits. Secondly, advertisers became another entity and declared their withdrawal from piracy sites. Thirdly, the number of right holders increased and third-party assessment institutions also joined in.
The video site industry has been in chaos since the birth of the alliance, filled with lawsuits, news, counterattacks from sharing sites such as youku.com and exchange of abuses. Despite this turn of events Lv kept a low profile. “I’m not interested in verbal war. What I need is an environment. Now everybody should understand that a video site can only survive by switching from piracy to copyright. It’s a pity if they still don’t understand.” He went on to say, “now a consensus has been reached in the whole industry and that is important.”
The environment Lv needed is taking form, and his strategy began to show strength. But he still knows a fact: there is a long way to go for the industry. This year, Joy.cn might well enter the capital market, but its listing plan was put off till 2011. Lv explained: “we still need a bit of time to develop, and the industry needs to be mature. I believe that 3G will take shape in 2010, advertising will be on a scale by 2011 and payment business will rise in 2012, which will also be a peak for the listing of video sites.”
Will there be more rivals when the industry becomes mature? Lv was not so anxious: “actually portals are our biggest competitors now, and films are more and more expensive. But I think it’s normal. There are always competition and cooperation between companies of the same industry. It’s more important to build up the industry first.”
We hope Lv is correct about the future.
By Zhou Yi, China IP
(Translated by Li Heng)
