Youku.com, a video sharing website in China, had more than 12 million daily unique visitors during a week in December 2007, according to a report by Internet media and market research firm Nielsen/NetRatings. Youku had a 20-fold increase in its daily video views and daily unique visitors to become one of the fastest growing websites in China since its launch in December 2006. Youku completed three rounds of venture financing worth a total of $40 million last year.
Good news for Youku but new regulations to be implemented on January 31, 2008 could put video sharing websites in a precarious position. The new regulation states that websites showing online videos inside China will need a license. State owned or controlled companies in China are the ony ones that will be eligible.
One way to get past the new rules would be for private sites inside China to partner with TV stations or newspapers, which in China all are state-owned, said Dick Wei, a Hong Kong-based technology analyst for investment bank J.P. Morgan. Wei said the state entity could own the content _ satisfying the new rules _ while splitting the profits with the private entity.