China's Youku video-sharing site taking off

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HONG KONG -- Chinese video-sharing site Youku.com said Tuesday that it topped 100 million daily video views and 12 million daily users in December, milestones confirmed by Nielsen NetRatings and reached just ahead of new government rules restricting China's booming and controversial online video space.

Youku CEO Victor Koo told The Hollywood Reporter he is thrilled about the Shanghai-based company's breakthrough in a space that, since it launched in China in 2006, has seen more than 100 local challengers to worldwide leader YouTube, including Ku6.com and Tudou.com.

"There has been rapid momentum observed in 2007," Koo said of the 30 million increase in Youku's daily video views from October to mid-December. "The progress of Youku indicates that online video has quickly become a mainstream application for users in China, just as it has in the U.S."

With that growth has come regulatory attention. On Dec. 30, China's Ministry of Information Industry and State Administration of Radio, Film and Television set new and rare joint-rules saying that as of Jan. 31, only Web sites with licenses will be allowed to operate online video services. Two days earlier, the ministry arm cautioned against anti-socialist, pornographic, terrorist or violent content in online videos.

Koo, former president of Nasdaq listed web portal Sohu.com, welcomed the new regulations.

"Having more transparency helps the whole industry itself. Now we know how to work in a regulatory environment, it provides more clarity to the industry," he said, adding that he is keen to work with the government on the licensing process "all through 2008."

Koo reserved judgment about the new relationship between two government bodies with little history of cooperation.

"It's starting to have more clarity, who and what authorities we have to work with, what kind of guidelines, but the actual implementation itself will require leading Web sites like Youku.com to work with the correct branches of people in terms of making implementation happen," Koo said.

Ever since the posting of an online video that mocked director Chen Kaige's 2005 cinematic flop "The Promise" -- and the government reaction warning against inappropriate parody -- China's rapidly expanding online space has been subject to growing scrutiny.

Youku.com uses around-the-clock in-house technology and a team of monitors to review and approve video content posted to the site.

"If our users upload videos that are inappropriate, pornographic or politically sensitive in nature, we screen them out," Koo said.

Koo said Youku had long been working with SARFT, the state news agencies and other media regulators to play an active role in creating "a clean online environment," as stipulated by the SARFT regulations.

"We want to shape a socially responsible platform for online content," Koo said, citing a Youku video of a senior citizen from Shandong Province who recorded himself fulfilling his dream of watching the morning flag raising in Beijing's Tiananmen Square. The video became an online hit and later was broadcast on China Central Television.

But not all online videos are in keeping with Beijing's views. The same day as the new regulations were released, a marital dispute captured on video and posted to YouTube interrupted the renaming of CCTV's sports channel -- CCTV5 -- the Olympics Channel. A few days later, SARFT announced that the producers of director Li Yu's racy contemporary drama "Lost in Beijing" would be banned from working in China after one of them, Fang Li, was accused of distributing pornographic trailers online.

"It's not any one thing that has triggered (the new regulations), but a combination of several things that have happened over the last year that have begun to alarm policymakers," said Kristian Kender, research director of Beijing media consultancy China Media Monitor Intelligence.

Jonathan Landreth in Beijing contributed to this report.
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