China’s top video site Youku Tudou denies copyright violation claim from rival

Youku Tudou, China’s largest online video site, has refuted claims that it is housing unlicensed content on its site, after a lesser domestic rival took a complaint against the company to court.

Web content form Xunlei, which runs a video-on-demand site among other services, is claiming that Youku Tudou — which was formed following a billion dollar merger between two of China’s top YouTube-like sites — is housing 13 movies and TV dramas that it has the exclusive rights to. Xunlei filed a copyright violation lawsuit with the Haidian District People’s Court in Beijing. The firm says that Youku Tudou’s unlicensed use of the content — which has seen it made available to social network Douban — makes it unable to sell the rights to the programming to other services.

Nasdaq-listed Youku Tudou has content agreements with all of Hollywood’s top studios, including Sony, WB, DreamWorks, Paramount and Disney. Its director of international communications, Shao Dan, dismissed Xunlei’s claims as a move for publicity, telling Global Times:

We have legal rights, including the authorization to broadcast on Douban, to all 13 movies and TV dramas that are in question. We believe the court will make a just and fair decision. Competitors sometimes use so-called copyright complaints to market themselves.

The legal case is yet to be accepted by the court, since it was submitted during the Chinese New Year period. That timing could chime in with Dan’s comments that Xunlei is seeking publicity, since the court is not expected to respond to the suit until after the holiday period. Cynics could argue that this puts the case in the limelight for longer, giving Xunlei more exposure.

The company has won copyright violation pay-outs in the past, but a spokesperson told Global Times that it is aiming to land modest 1 million yuan ($160,400) in compensation. While not a huge amount of money, the associated publicity and decision itself would be a boost for the company.

China’s video and music sites were loaded with unauthorized, pirated content when they first sprang up, but that has changed in recent times. As well as striking deals with international producers, the likes of Youku Tudou creates and airs its own original content.

The Chinese online video industry is expected to see further consolidation over the company period as firms battle to turn in profit against the high cost of infrastructure and content deals. Those factors led to the Youku-Tudou merger last March, and the new entity is estimated to save $60 million on shared costs.

Youku Tudou’s rivals banded together in an informal alliance to help work to lower the cost of content deals. This week Nasdaq-listed Sohu revealed that it expects to spend $70-$80 million on content deals in 2013.

In its final earnings release as a single company, Youku posted losses of $14.6 million despite seeing revenues rise 84 percent year-on-year. Tudou’s last results were similar, and saw revenues rise by 50 percent but losses double to $24 million.

Headline image via Spencer Platt / Getty Images