New Internet Regulations Tighten State Control Over Audio and Video Content

May 5, 2008

New regulations, which went into effect January 31, further tighten the state's control over online audio and video content in China. Notably, the Provisions on the Administration of Internet Video and Audio Programming Services (the Provisions) now require state ownership in companies providing these services (hereinafter referred to as A/V companies), although the Chinese government has said it will not impose this requirement on the mostly private companies already in operation.

New regulations, which went into effect January 31, further tighten the state's control over online audio and video content in China. Notably, the Provisions on the Administration of Internet Video and Audio Programming Services (the Provisions) now require state ownership in companies providing these services (hereinafter referred to as A/V companies), although the Chinese government has said it will not impose this requirement on the mostly private companies already in operation. In addition, the Provisions reaffirm the requirement for A/V companies to obtain an "Internet Audio/Visual Program Transmission License" from the government, increase companies' obligation to maintain records of content they host, and extend liability to "major investors and managers." In conjunction with the Provisions, the State Administration of Radio, Film, and Television (SARFT) said it had recently conducted an inspection of select audio and video Web sites, according to a March 20 announcement on the SARFT Web site. As reported in a March 22 Wall Street Journal (WSJ) article (subscription required), the inspection campaign, which lasted from December 20, 2007, to February 20, 2008, resulted in the closure of 25 video Web sites. Another 32 Web sites received warnings about their content. Among the "major problems" cited in the announcement were Web sites posting content containing "obscenity and pornography," "terror and violence," or which "endangered the security and interests of the state," as well as Web sites operating without a license to broadcast video and audio content.

The Provisions, issued jointly by SARFT and the Ministry of Information Industry (MII), require Internet companies engaged in "producing, editing, and integrating video and audio programming and offering it to the public over the Internet" or "offering to others the services of uploading and disseminating video and audio programs" over the Internet to be "wholly state-owned" (guoyou duzi) or "state-controlled" (guoyou konggu). On February 3, however, Xinhua reported that during a question and answer session with the state-run news agency, representatives from SARFT and MII said that a company already offering these services could "re-register and continue operating" without meeting the state ownership requirement, as long as "prior to the release of the Provisions [such company] had been established legally and had broken no laws or regulations." Most A/V companies, including the popular video sharing sites and, are privately run and financed by domestic and foreign venture capital, according to a January 7 Beijing Business Today article.

The Provisions' New Requirements

A/V companies had already been subject to the 2004 Measures on the Administration of Broadcasting Audio/Visual Programs Over the Internet or Other Information Networks (2004 Measures), which required the companies to obtain an "Internet Audio/Visual Program Transmission License" from SARFT, have as its sponsoring agency a radio/television, news, publishing, cultural, or propaganda unit at the local level or higher, and maintain records of audio and video content. The Provisions, while continuing to require the "Internet Audio/Visual Program Transmission License" and imposing the new state ownership requirement, also introduce a number of other changes that could have the effect of strengthening state control over A/V companies:

  • The Provisions increase licensed companies' recordkeeping responsibilities. The 2004 Measures required companies to maintain a record of the title of the program, summary of its contents, time and length of broadcast, and source, for at least 30 days. The Provisions now require companies to maintain a complete copy of a program for at least 60 days (Article 16).
  • The Provisions extend liability to "major investors and managers" of the A/V company, who are now expressly responsible for their Web site's audio and video content (Article 18). Such individuals face a fine of up to 20,000 yuan (US$2,850) for, among other things, failing to report and delete "harmful content" (Article 23); in the case of "major" violations by an A/V company, major investors and managers would be barred from investing in or providing online audio or video services for five years (Article 27).

Like the 2004 Measures, the Provisions prohibit A/V companies from disseminating politically sensitive content, including content the state considers "harmful to the honor or interests of the nation," "endangers the unity, sovereignty, and territorial integrity of the nation," or "disturbs social order" (Article 16). Even before the 2004 Measures and the Provisions, A/V companies had been subject to Internet regulations that imposed similar requirements. For example, the Measures for the Administration of Internet Information Services, issued in 2000, had already required all Web sites to be licensed or registered, prohibited the dissemination of content falling within a similar enumerated list, and required maintenance of records of customers' online activity for 60 days. Furthermore, as reiterated in Article 9 of the Provisions, A/V companies that engage in "current events-type video and audio news services" must still apply for a separate "Internet News Information Service License" from the government.

Freedom of Expression Impact

Chinese and outside observers have indicated that the Provisions could lead to greater censorship of politically sensitive audio and video content. According to a January 4 Southern Metropolitan Daily editorial, the regulations "restrain the civil right of social expression in the era of the Internet." The March 22 WSJ report noted that affected businesses "have been scrambling to prove themselves" following the issuance of the Provisions. "[W]e're always working to upgrade our filtering system, to catch things that need to be caught," said Tudou's vice president of business development after his company received a warning in the recent inspection campaign. Much of the problematic content involves pornography, according to a January 4 WSJ article (subscription required), but the Provisions also require removal of politically sensitive content. Following the recent unrest in Tibetan areas of China, and were reportedly devoid of any news footage of the protests, according to a March 18 WSJ article (subscription required). At the same time, China reportedly blocked access to the U.S.-based video sharing Web site after videos of the Tibetan protests showed up on the site, according to a March 17 Associated Press (AP) article (via New York Times). The January 4 WSJ article noted that: "Online-video technology potentially poses a major challenge to the Communist Party's control of information. Content-filtering technologies that can identify politically objectionable text on the Internet can't be used to screen videos effectively."

The Provisions' liability for investors and managers, as well as the risk that currently exempted companies may be subject to the state ownership requirement in the future, provide further incentives for A/V companies to exercise effective self-censorship. Chinese officials also continue to urge Internet companies to sign on to "self-discipline pledges" to improve online censorship. In February, at a meeting attended by representatives from more than 40 A/V companies, government officials presided over the announcement of a self-discipline pledge (via the CCTV Web site) that calls on A/V companies to "meet the standards of socialist morals" and to contribute to a database that would allow companies to share information about content they have deleted from their Web sites, according to a February 23 Xinhua article.

Commercial Rule of Law Impact

The Provisions require A/V companies to "respect copyright laws" and to "adopt copyright protection measures, and protect the lawful rights and interests of copyright holders" (Article 15). Under Article 23 of the Provisions, companies that fail to adopt copyright protection measures face warnings and fines of up to 30,000 yuan ($4,280), while major investors and managers face fines of up to 20,000 yuan (US$2,850). It remains to be seen whether these provisions will lead to better enforcement against pirated online audio and video content.

Some industry participants have praised the regulations for clarifying China's policy toward A/V companies. Tudou's chief executive, Gary Wang, said that three years ago, "we couldn't tell who the governing body was and might be" and "[n]ow this is at least clearly a joint effort," according to the January 4 WSJ article. At the same time, the state ownership requirement led some companies to seek clarification from the government over how the Provisions would be implemented, according to the WSJ article and a January 10 AP article (via Seattle Times). Even though the Provisions provide no express exemption for the state ownership requirement, analysts said that the Chinese government would let private companies sidestep the rule for business reasons, according to the AP report. Chinese officials ultimately announced the exemption, but in the form of a question and answer session with a Xinhua reporter, as opposed to a more formal legally binding document, and three days after the Provisions went into effect.

Finally, the state ownership requirement may act as a further barrier for foreign companies to invest in the industry. The Provisions expressly encourage state-owned strategic investors to invest in the industry (Article 15). Under the 2004 Measures, wholly foreign-owned companies, Chinese-foreign joint ventures, and Chinese-foreign cooperative ventures "could not engage in work to disseminate online audio and video programs," but it is not clear how widely enforced this policy was. The January 10 AP article reported that as of November, had raised $40 million from U.S. and Chinese venture capital investors.