Sohu, Ku6 to show H'wood films
Companies to invest up to $10 mil for licensed content
Both firms will invest up to $10 million in total for the fund and also pledged to remove pirated video content from their Web sites, Ku6, a unit of Shanda Interactive Entertainment, said in a statement.
China is home to the most number of Internet users in the world but as sectors in the industry grow at a rapid clip, such as online gaming and online video sharing, regulation and piracy have emerged as chief concerns.
China, which imposes strict controls on imported media material, said on Tuesday it regretted the loss of its appeal against a World Trade Organization ruling that its import monopolies violated trade commitments.
China had appealed the WTO ruling against import monopolies on books, film and audio entertainment, saying that it should have the right to control imports that might harm public morals.
A panel of trade judges turned down China's appeal on Monday. The United States, which brought the original complaint, had argued that China should not impose monopolies on imports of products that are authorized for sale, or are widely available in pirated form.
Most of the American clips on popular video sharing websites in China are pirated, although increasingly, regulation and self censorship is playing a role in bringing down the numbers.
Video sharing firm Tudou's chief executive Gary Wang said this month the movement from television sets to Internet videos was happening at a much faster pace in China than in the United States as Chinese youth want a greater variety of programs than those offered in China's tightly controlled media sphere.
American movies, cartoons and television shows are rarely shown on Chinese television channels.
Recently Youku, a leading Chinese video sharing Web site, was involved in a lawsuit with Sohu Inc. over what Sohu alleged was unauthorized use of its videos.