A Country a Week: China, Part 3

Going Forward: Possible next steps for Chinese Copyright Law

There are three foreseeable paths that China could take in the future. I’ll start with the most reasonable, that China will stay the course and continue to expand it’s copyright laws and slowly enforce them. The second involves cracking down more harshly on piracy, both physical and digital, in the attempt to completely eliminate it. The third involves implementing an Alternative Compensation System which I will explain in the next blog post on China.

What we can expect to see is that China will stay the course with what it is currently doing. Slowly, the government is training officials to deal with copyright infringement cases. They are educating the public also, on the importance of copyright protection to a growing society. It will protect the music and film industries in China and help build a strong economy based on scientific and artistic relevance. The Chinese government is also doing more raids for illegal physical copying and implementing and enforcing more laws to bring justice to the copyright holder.

This will however, be a long journey. Most foreign countries are looking for the solution to be quick in order to regain lost revenues in the Chinese market. Often times, countries and businesses are pulling out of China. We do see some promise though. As the economy grows, the middle and upper classes will grow, and there is a possibility that the market for legal copies will grow. The number of arrests for copyright infringement has grown in China within the last couple years.

There are a couple possible outcomes to this way of moving forward. With a slow move to enforcement and a huge loss in capital due to bringing infringers to court, companies will start finding new ways of making revenue. They will most likely abandon physical copies as a means for making money and look to other ways to fund themselves. This will become a very creative environment, I believe, and produce an evolving and changing market that will be good for the music business around the world.

Another outcome could be that instead of moving away from relying on copyright protection, companies could increase their control by reinstating DRM or other software that would protect the copyrights. This would minimize the amount of music and art the public would have access to and in the end, lessen the desire to contribute creatively to society. Only really commercial artists would make it and only the rich would be able to access the plethora of music available. This may also bolster the demand for physically pirated CDs and DVDs which would provide a wider array of choices.

Because China was coerced into introducing a copyright law for the benefit of others, it didn’t see the merit in it at first. Now that Chinese film and music companies are feeling the pressure and loss from not having their works protected, I believe the Chinese government will crack down harder on piracy. They are slowly making moves and as they realize their own economy is at stake, they’ll begin implementing laws and enforcing them more quickly.

The second course China could take would be to begin to crack down very hard on both physical and digital piracy. Both types of enforcement have their own unique problems. I will start by looking at physical piracy.

To begin with, one must consider the vastness of China. It has an area of 9,706,961 kilometers squared and holds 1,353,821,000 people. That is a lot of ground to cover and a lot of potential pirates to monitor. This makes it rather difficult to enforce and keep a watchful eye everywhere at once. Therefore, China has many small politicians in towns and areas. Because they are so small and poor, they are often corrupt. The central government has little knowledge or power over these small entities. Thus, piracy runs rampant in these parts ofthe country. It brings in much revenue for the towns, which the politicians then tax and make revenue off of. There is little impetus for these officials to crack down on it. There is a set of checks and balances in place, but it has a serious flaw. “Local officials report to higher-level units within the same administration regarding their professional duties, but local politicians control the officials’ appointments, dismissals, salaries, housing, and other benefits.” In this way, these so called enforcement officials have little to no power over the officials below them and can face harmful consequences if they speak out against piracy.

The ideas of intellectual property and copyright law are new to Chinese citizens. Therefore, most courts on a local level are unprepared to hold trials and mete out punishments to the nth degree of the law, because they are uneducated in this area. In piracy cases, the criminal is tried in the county or city where he lives. Most counterfeiters do not set up business in the middle of a large city. They choose to be located in smaller, less visible cities. These cities are the ones that house the least educated judges in matters of copyright and therefore the criminal is often let off easy.

Going hand in hand with this is the idea that the criminal penalties are not severe enough to deter potential pirates. The thought is that they’ll get a slap on the wrist, maybe a fine and then can go on and continue what they were doing. The business is so high in revenues for people who have so little that there is a high reward versus low risk involved.

The Chinese government has a strong hold on the influx of foreign movies into the country. They only allow a certain number to be shown on screens and sold in stores. Therefore, demand for these other movies has skyrocketed, producing a pressure on the pirating industry to fill the void. This is one huge problem that the state has in reducing piracy. Along with this is the reality that technology is becoming so good and so easy to use that pirates are producing products that are virtually indistinguishable from the original. This raises the question, “Why buy the original when the pirated copy is half the price and functions exactly the same way?” As the economy gets stronger and the middle and upper classes grow, the thought is that there will be more of a demand for the original, unpirated product. I believe, however, that consumers will continue to buy the cheaper product, regardless of their income because they are both used to it and see no added value in buying the more expensive of the two. I assume that this would change if the government were to educate people on the values of copyrights and instill in them the morals of buying the original copy regardless of the price. If the upper and middle class public could be convinced that they would benefit in the long run from buying the original and supporting the copyright owner, I think this would turn around and produce a reduction in the demand for pirated copies. “The goal is to inculcate an innate sense of ownership regarding one’s own creations, and to teach people that there is value in purchasing legitimate rather than pirated goods.

Now comes the question of cracking down on digital piracy. The actors that are trying to eliminate this form of piracy are failing miserably. The idea is to monitor websites and try to punish all those that are downloading music and film illegally. Outside of China this proves to be a difficult problem and most people instill some sort of value in copyrights. Inside of China, there are millions of people with internet access that hold no value in copyright. It is nearly impossible to seek to eliminate it. Some companies are trying though. Universal Music just employed a company called R2G which will monitor websites for illegal use of Universal’s copyrighted songs. Universal has given them permission to sue copyright infringers for them, but the idea is to nudge them into using a legal site for their music experiences instead. Companies have been suing the search engines as well who list illegal sites and essentially aid in copyright infringement. These paths seem useless however, because it is very difficult for private entities to spend the time and money to essentially police the internet. There seems to be another way that is slowly evolving, called an “Alternative Compensation System,” which I will cover in the next blog.

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