Stayed Tuned To Baidu For The Next Episode

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Beijing-based Internet search engine Baidu has not only run Google out of town, but it is also taking the plunge into the online video market. The company plans to launch a subsidiary company that will run a website hosting free, high-quality licensed television shows, movies, and other video content. While no tentative launch date has been announced, it is known that the future site will run on ads, following a similar structure to the American Hulu.com. Given China’s relaxed attitude towards intellectual property laws and the many already-existing file sharing services that host a plethora of both licensed and unlicensed video content, the question that comes to most people’s minds is “why?” [more]

In an online space where many can already access what they want through illegal file-sharing services like Youku.com, “going legal”–and paying licensing fees when authorities turn a blind eye to illegal content–seems unnecessary. And yet, as The Wall Street Journal suggests, Baidu’s edge on the competition, licensed content, in fact, shows remarkable foresight on the part of Baidu executives.

Over the past eight months, China has been slowly tightening control over the Internet. Social networking sites like Facebook have been blocked and file-sharing services, like Youtube, which are hosted by companies that have no interest in censoring content to suit the government, have as well. This and the recent announcement that individuals are no longer allowed to register .cn websites and that domestic businesses and foreign websites must register with authorities, or else be blocked, all suggest that the government is focused on getting its online space in order.

Although it is hard to say if Internet restrictions will ever be as tight as the government demands, it is certain that accessing the Chinese public online will become increasingly difficult. And if the government in the future decides that it doesn’t like unlicensed online file-sharing content and shuts down these services—a possible scenario considering its recent Internet controls—Baidu stands to benefit as one of the only legal content providers in the country.  Not a bad strategy from a brand whose shares are already surging.

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