COPYRIGHT INDUSTRY:THE NEXT BOOM?

By Zhang Hongrui

“Without copyright protection, iQiyi would not be here today,” declared Gong Yu, founder and CEO of the company. At the 2018 China Network Copyright Protection Conference held in Beijing on April 26, Gong shared his belief that China’s continuous efforts towards online copyright protection are precisely the reason the online video industry and online digital distribution industry are thriving in the country. On the evening of March 29 Beijing time, iQiyi was listed on the NASDAQ Stock Exchange under the trading code “IQ,” and its total revenues in the first quarter reached 4.9 billion yuan(US$770 million), a year-on-year increase of 57 percent.

In his keynote speech at the opening ceremony of the Boao Forum for Asia Annual Conference, Chinese President Xi Jinping solemnly announced to the world that China would enact a number of major measures to expand its opening up. In terms of intellectual property rights,President Xi not only reiterated the necessity and urgency of strengthening protection of intellectual property, but more importantly proposed that institutional reforms be carried out to ensure such measures are effective. The president’s report to the 19th National Congress of the Communist Party of China calls for fostering a culture of innovation and strengthening the creation,protection, and application of intellectual property. This clearly evidences the developmental direction of intellectual property in the new era.

Continuous Growth of Copyright Industry

The First Jiangsu(Nanjing) Copyright Trade Fair kicks off at the Nanjing International Exhibition Center on September 15, 2017.

Piracy was once rampant in the market. After strengthening of China’s copyright protection and improvement of relevant laws and regulations, public copyright awareness has increased significantly, and user payment models in literature,images and video content have gradually formed. According to Report of China on Development of Online Copyright Industry(2018) released by the National Copyright Administration, the market volume of China’s online copyright industry reached 633.5 billion yuan (US$99 billion) last year, a year-on-year increase of 27 percent. Total user payments reached 318.4 billion yuan(US$49.8 billion), a growth of more than 50 percent. According to the definition provided by the World Intellectual Property Organization (WIPO), the copyright industry refers to any industry in which copyright can play a significant role, so various copyright-related industries together contribute to the national economy. The common feature of these industries is that the copyright system forms their basis for existence, and their development is closely related to copyright protection.

On the evening of March 29 Beijing time, iQiyi was listed on the NASDAQ Stock Exchange under the trading code“IQ,” and its total revenues in the first quarter reached 4.9 billion yuan(US$770 million),a year-on-year increase of 57 percent.

Distributed across 351 subcategories in the more than 1,000 categories of China’s national economy, the copyright industry is divided into core copyright industries, related copyright industries, partial copyright industries and nondedicated support industries.Among them, the core copyright industries are most closely related to copyrights and also the key to the development of China’s copyright industry. The report Economic Contribution of China's Copyright Industry in 2016 released by the China Press and Publishing Research Institute found that the capacity of China’s copyright industry in creating jobs has also increased yearly, and its scale of foreign trade has expanded. In 2016,the number of employees in China’s copyright industry in urban areas was 16,724,500, an increase of 9,095,300 over 2006,accounting for 9.35 percent of the total employment in urban areas in the country.Meanwhile, the export volume of copyright industry increased from US$149.3 billion in 2006 to US$241.7 billion in 2016.

China’s copyright industry is taking shape with a relatively complete industrial system already established. Fan Jun,deputy director of the China Press and Publishing Research Institute, believes this is related to the increasingly improved development environment.From the country’s regulation of copyright market order to promotion of public awareness of copyright protection,myriad tasks have contributed to the sound and rapid development of the copyright industry in China.

Opportunities for Development

In January 2017,the State Council of China issued the National Plan for the Protection and Use of Intellectual Property Rights during the Thirteenth Five-Year Plan Period. It marked the first time IP was mentioned in the national key special plan.As an important part of the IP work, copyright was placed high on agenda. In February,the State Council officially issued Plan for Copyright Work during the Thirteenth Five-Year Plan Period which contains a comprehensive deployment on national copyright work. In November, the first meeting of the leading group for comprehensively deepening reform of the 19th CPC Central Committee deliberated and adopted Opinions on the Issues Concerning Strengthening Reform and Innovation in the Field of Intellectual Property Trials.The introduction of these favorable policies has created developmental opportunities for China’s copyright industry as well as providing guarantees for building the nation into a copyright power and an innovative country.

According to statistics from the National Copyright Administration of China, the volume of copyright registration in the country has seen explosive growth in the last five years.In 2017, the total number of copyright registrations in the country reached 2,747,652, an increase of 3.3 folds compared to 845,064 in 2013. Of that total number,200,1966 were work registrations and 745,387 were computer software copyrights registrations.

Online games and advertising services still remain the core of China’s network copyright industry. In 2016,the scale of China’s online gaming industry reached 182.74 billion yuan, maintaining an average annual growth rate of more than 20 percent after surpassing the United States for the first time in 2013 thanks to the popularization of mobile devices. The overall scale of China’s online game industry is now 1.8 times that of the United States. The scale of China’s online advertising industry is 280.8 billion yuan, and it fully enjoys data flow dividends in the mobile era. Its growth rate remains faster than that of the United States. In the near future, China will surpass the United States in online advertising industry.

In 2016, the number of employees in China’s copyright industry in urban areas was 16,724,500,an increase of 9,095,300 over 2006.

The export volume of copyright industry increased from US$149.3 billion in 2006 to US$241.7 billion in 2016.

Since 2000, online Chinese literature has been spreading to overseas markets. In 2016,the scale of China’s online literature industry reached 10 billion yuan (US$1.56 billion).The online video industry has also been strong. A relatively sound network video copyright environment has already formed. In 2016, the scale of China’s online video industry reached 52.1 billion yuan(US$8.13 billion), an increase of almost 100 times compared to 530 million yuan (US$82.66 million) in 2006. Similarly,the music industry, the last piece of the puzzle in the copyright market, is also actively working on copyright transfer cooperation. In 2016, the scale of the online music industry exceeded 15 billion yuan(US$2.34 billion). This is the result of copyright protection that has fueled the music market’s transformation and upgrade for many years.

According to Fan Jun, online payments will some day become the main trend of industrial development, and China’s copyright industry will flourish.You can expect the copyright industry to cause China’s next gold rush.