There are those that hear the same old tired scapegoat. Profits down? Blame piracy. Sales down? Blame piracy. Sales up? It’s in spite of piracy and there could be more sales. Profits up? It’s in spite of piracy and they could be higher. Who knew that a major software giant would use piracy to their legal advantage?

It’s an interesting development. According to ALB Legal News located in Australia, “Microsoft may have a viable legal defence against its first ever anti-monopoly claim in China, given the prevalence of pirated Microsoft products in the country and how “market share” is defined by the Chinese authorities.”

The report further comments:

When lawyer Dong Zhengwei, a partner with Beijing-based Zhongyin law firm grabbed the headlines by alleging that Microsoft was using its dominant market share to manipulate software prices in China and calling for a US$1bn fine to be imposed on the global software giant, Microsoft global VP Zhang Yaqin was quick to reply with an interesting counter argument: “Microsoft did not even have the preconditions of conducting monopoly activities in China,” he said “genuine Microsoft products have a very low market share in China because its products are widely pirated.”

It may be a form of confirmation that major corporations need piracy at some point in their existence to gain an edge in the market. While most examples point to long-term solutions, this may be one of the few instances that it’s actually going to help the corporation in the short term.

The debate over whether or not piracy actually helps the major incumbent industries has been around for years. The timing on this, though, is interesting given that it was only late last month that Russell McOrmond pointed to an article on how software piracy actually aids proprietary software in the war between proprietary software and open source/free software.

While the excuse may be convenient for Microsoft at this point, it’s doubtful the company will be thanking software pirates afterwords if the legal argument works.

It’s almost a cliché all on it’s own. China is a major hotbed for piracy. Of course, a number of these accusations come from major anti-piracy organizations like the MPA (Motion Picture Association) which says:

Illegal motion picture and television piracy is a thriving international enterprise. The Motion Picture Association (MPA) estimates that its member companies lose approximately US$1.2 billion each year in potential revenue in the Asia-Pacific region alone, and US$6.1 billion globally. In many countries, MPA member company losses are far outstripped by production, theatrical exhibition, home video distribution losses to local industry, as well as losses to governments in uncollected tax revenues. Consumer spending losses on filmed entertainment worldwide are estimated at US$18.2 billion.

If you follow the press releases of the Motion Picture Association, you’d think that it’s a miracle that any sort of entertainment industry even exists over in China because of widespread piracy. Recently released figures suggest that China’s online video game industry is not only surviving, but thriving and growing. With this thought, perhaps the other cliché of the Chinese economy growing at an incredible rate might be more fitting.

The report comes from a media outlet in Taiwan called Digitimes. The report says that the Chinese video game industry has “generated total revenue of 4.43 billion yuan (US$637 million) during the second quarter of 2008, rising by 11.2% on quarter and 65.9% on year, according to China-based consulting company Analysys International.”

Not bad for one quarter. So how does the US gaming market compare? According to an ESA report:

The computer and video game industry’s value added to U.S. Gross Domestic Product (GDP) in 2006 was $3.8 billion

It might be poor economics/math, but if one were to divide that number by 4, you would get $950 million USD per quarter on average – a difference between the markets by $313 million.

Unfortunately, most of the articles on DigiTimes is behind a paywall, but if one were to look at the headlines in the “related” section, one would see, “China market: Online gaming services valued at nearly 4 billion yuan in 1Q08″, “China market: Online gaming services valued at over 3.3 billion yuan in 4Q07″, “China market: Online gaming services valued at over 2.9 billion yuan in 3Q07″, “China market: Online gaming valued at 2.67 billion yuan in 2Q07″ Quite an impressive rate of growth (note: headlines in reverse chronological order. #Q denotes the quarter of the year and the two numbers following denotes last two digits of the year) considering the country is said to have a huge piracy problem.

It’s not perfectly clear what this means for all the claims of piracy, but it certainly puts the so-called devastating effects of piracy, even in China, in question here. We here at ZeroPaid don’t support physical piracy, but we also don’t support the distortion of facts on a situation either.

Reuters is reporting on Google’s newly launched free music service. The service will be available through Top100.cn (Google translation)

From the report:

Google said on Wednesday its service would initially let Internet users search tens of thousands of Chinese songs by singer or song title on its website and download them from Top100.cn, a Chinese music website co-founded by basketball star Yao Ming.

Advertising revenue from the service will be shared among Top100.cn and its music partners.

“The Internet industry should by no means stand in the opposite camp against the music industry,” Google China President Kai-fu Lee said in a statement.

“Google always believes profoundly that mutual interest, rather than monopoly, is the key to sustainable growth.”

Google may dominate many world markets like in North America, but the search engine giant pails to search engine rival baidu.com which is the biggest search engine in China. Last year, the IFPI lost a lawsuit against the search engine, but early on this year, the IFPI appears to be trying to sue the search engine again.

There’s little wonder why Google wants to dominate the Chinese search engine market. Late last month, Information Week reported that Chinese internet users recently outnumbered US internet users. It’s clearly something that major companies that use the internet cannot ignore.

It’s unclear if DRM is used in the new service or not. Either way, there doesn’t seem to be a reason why users from around the world can’t check out some of the music other than the fact that the site is in Chinese.

Link to Baidu.com (Google Translated)

As if the US wasn’t already angry enough over widespread piracy in China, it’s being reported today that the country’s infamous movie pirates have unleashed a $1 bootleg copy of Spiderman 3, a movie which is reported to have cost over $500 million dollars to make — the most expensive movie ever made.

Earlier this month, the US filed 2 complaints with the WTO claiming that China was not doing enough to punish music and movie pirates and that its restrictions on entertainment imports violated WTO trade rules.

China immediately criticized the move and Vice Premier Wu Yi, who heads the country’s economic dialogue with the US, bluntly warned that the complaints would bruise bilateral trade ties.

He said that the complaints to the WTO will “badly damage” cooperation, and that China has gone to great lengths to enforce copyright protections.

“The United States Trade Representative, the USTR, has totally ignored the massive strides China has made,” Wu told an intellectual property forum in Beijing.

The U.S. action “flies in the face of the agreement between the two countries’ leaders to propose dialogue as a way of settling disputes,” Wu said, adding that never before had a WTO member simultaneously mounted two cases against another country.

“This will have an utterly negative impact and will inevitably badly damage bilateral intellectual property cooperation,” she said, while also warning it would “harm” cooperation over market access issues.

“The Chinese government is extremely dissatisfied about this, but we will proactively respond according to the related WTO rules and see it through to the end,” Wu added.

Yet, in a tragic bit of irony, the mega blockbuster movie Spiderman 3 has already surfaced on the streets of Beijing at reported $1 dollar a copy.

The movie cost in excess of $500 million USD to make, making it the most expensive movie ever made, and the fact that it is already in the hands of Chinese pirates is certain to make the MPAA and thus their REPs in the WTO quite angry to say the least.

China, for its response, noted that it has formulated an anti-piracy action plan, and that it will will soon draft and implement 14 laws on intellectual property rights and usage, and issue explanations and guiding policies for handling copyright violation cases.

Wu also pointed out that 988 people were arrested for copyright infringement last year and that courts heard 6,441 cases.

“Over the last few years, the amount of manpower and work that China has put into protecting intellectual property rights and the results that have been achieved, have been unprecedented,” she said.

“Every year we have nationwide events to protect intellectual property and we have always kept up the pressure on the pirates. The effects of this clean-up get better every year.” 

However, Wu also admitted that a lot of work lay ahead.

“At the moment, China’s burden is heavy and the road is long, with relatively little of its own intellectual property, weak competitiveness, continuous piracy disputes and a prominence of fake products,” she said.

“It’s cheap to pirate goods, but expensive to protect copyright … and society as a whole does not know enough about the problem,” Wu added.

“It’s too expensive to go to the cinema to watch movies,” said Beijing resident Duan Nana. “This has a lot to do with why people are rushing to buy fake DVDs and watch movies at home. It’s very common and it’s logical.”

What happens next is anybody’s guess but, something tells me that the MPAA isn’t too thrilled about the fact that the most expensive movie ever made is being peddled for little more than a dollar in a country of 1.6 billion people, and that any chance that the US would ease up in it’s complaints to the WTO are gone for good.

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The US recently asked the World Trade Organization to investigate whether China is doing enough to reduce counterfeiting of CDs and DVDs.

‘The United States Trade Representative, the USTR, has totally ignored the massive strides China has made,’ China’s Vice Premier Wu Yi told an intellectual property forum in Beijing.

She said that the US action goes against an agreement between the two countries to settle disputes with dialogue.

It was first released in 2003 but, was later later dropped due to a lack of demand from consumers and also because of disputes over licensing fees amongst producers.

The EVD is part of a massive state-backed campaign to reduce dependence on foreign know-how and technology. Chinese electronics manufacturers have pledged to stop making DVD players entirely by 2008, and to switch completely over to EVD compliant devices. The ability to possibly to reap licensing fees and royalties is an added benefit if the effort proves successful.

With Chinese companies producing over 80% of the world’s DVD players they definitely have the ability to make EVD players on a scale large enough to satisfy consumer demand. Let’s only hope they continue to make standard DVD players, for many manufacturers complain that the licensing fees they have to pay are too steep.

The rerelease of the EVD, and this time in full force, adds a new front in the ongoing battle between HD DVD and Blu-ray. EVD proponents say that it has a better picture, holds more data, and has increased security features than a standard DVD. This will certainly make trying to sell either the HD DVD or Blu-ray disc difficult in China if the picture isn’t dramatically better than what they have, the EVD.

Moreover, this move is another bold step forward for The People’s Republic of China, where the govt. as well as its people are willing to do whatever it takes to win, and they have the education and the resolve to do so. Unlike the United States, the Chinese take care of their own, and they make for an almost unstoppable economic and technological powerhouse.

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SOULXTC: “walkin’ the streets of P2P”

Users reported Friday that the site was unavailable in several parts of China, barely a week after it suddenly became accessible.

It wasn’t immediately clear if user-contributed encyclopedia was unreachable due to technical glitches or because government censors had blocked the site again. The Foreign Ministry and Ministry of Information Industry did not immediately respond when contacted for comment Friday.

Beijing first blocked access to the English and Chinese versions of Wikipedia in October last year, apparently out of concern about entries touching on Tibet, Taiwan and other sensitive topics.

Fred Tipson, senior policy counsel for the computer giant, said concerns over the repressive regime might force it to reconsider its business in China.

“Things are getting bad… and perhaps we have to look again at our presence there,” he told a conference in Athens.

“We have to decide if the persecuting of bloggers reaches a point that it’s unacceptable to do business there.”

The new rules enacted in Chonging, a major industrial city in China’s southwest, against “online defamation” come as Beijing tries to tighten control over the freewheeling Internet.

The rules target Web users “who spread information or remark defaming others, launch personal attacks or damage others’ reputations online,” the official Xinhua News Agency said.

Potential violations included posting online video “to satirize others or social phenomena,” Xinhua said.

“We are pleased to see the change, but would like to see the Chinese version unblocked, too,” said Jimmy Wales, founder of Wikipedia, the encyclopedia created by voluntary contributors. “We don’t know what prompted the block and don’t know what prompted the unblock.”

Even days after word first spread on the Internet about the change in access, Wikipedia contributors and administrators in China, Taiwan and Hong Kong said they were trying to determine if any English-language articles were still being blocked. Andrew Lih, a Chinese-American in Beijing researching a book about Wikipedia, reported on his blog, www.andrewlih.com/blog, that he could get access to many controversial subjects, but could not read the English-language article about the suppression of the pro-democracy movement in Tiananmen Square in 1989.

Internet companies and nonprofits like Wikipedia have been forced to choose between cooperating with the Chinese government and losing access to the growing online audience there. Organizations like Reporters Without Borders have criticized Yahoo, Google and MSN, saying they have “yielded to the Chinese government’s censorship requests.”

The Chinese-language Wikipedia has more than 90,000 articles, and one long-time contributor to the site said that “conservatively 40 percent are mainland contributors.” That contributor, who insisted on anonymity for fear of antagonizing the Chinese government, also wrote in an e-mail message yesterday that, “although I have no solid evidence, the growth of the number of mainland users is much lowered,” citing the ban on the site last October and the creation of the more restricted “Baidupedia,” by Baidu, China’s largest search engine. Still, the contributor concluded, “no matter the situation, some access is definitely better than no access.”