China eased new Internet controls that limited video-sharing to state companies, saying yesterday that private companies already operating in the fast-growing industry are allowed to continue.
However, any new competitors must comply with the rules, which took effect last Thursday, the government said.
The rules, announced abruptly in December, appeared to be aimed at extending China's pervasive Web censorship ahead of the Beijing Olympics and prevent unflattering videos from popping up. But industry analysts said regulators would be reluctant to enforce them strictly and possibly damage a promising industry.
"Companies that began operation legally before the regulation was issued and have not violated laws or regulations can be licensed and continue operating," said a statement issued by the two agencies that imposed the rules, the Ministry of Information Industry and the State Administration of Radio Film and Television.
Video-sharing services that were launched after the rules were issued "must comply," the statement said.
China's video-sharing sites are all privately owned, and the rules could have forced some out of business. Industry analysts had expected companies to try to comply by forming partnerships with state-owned broadcasters or newspapers. No such deals have been announced.
Online video has exploded in popularity in China, which has 210 million people online and says it expects to surpass the US this year as the country with the biggest population of Internet users.
Estimates of the number of video-sharing sites in China runs into the hundreds. The most popular, such as Tudou.com (
That rapid growth appears to have caught regulators by surprise and prompted them to rush new rules into place.
A key question in the industry has been how regulators will treat amateur videos. The statement yesterday gave no indication whether they would still be allowed.
Such videos have made stars of some of their amateur creators, but the phenomenon is at odds with the government's insistence that all media be state-owned.
Online video revenues, mostly from advertising, are modest but are growing nearly 100 percent a year, and investors are pouring money into sites.
The government-sanctioned Internet Society of China is forecasting total revenues this year of 160 million yuan (US$22 million) this year -- nearly double last year's level.
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