Author：Verbena C. W，Elaine Yang
It has been a year and a half, since 26-year-old Cai Wen was imprisoned in China’s Chongqing City Detention Center. In 2007, this unemployed youth , who was addicted to online games transformed into a pseudo-wire “big shot” of online games and was sitting on tens of millions in assets, drove luxury cars, and lived in a mansion. But by the end of 2010, he had become a suspect, trapped in prison.
Cai Wen’s legendary rise to riches started with a South Korean game, “Legend,” and its 2001 entry into the Chinese market. In September of 2002, “Legend”‘s source code was leaked. In China a lot of people make use of all sorts of channels to acquire programs. This sort of server was offered without the authorization of “Legend”‘s agent in China, Shanghai Shanda Interactive Entertainment Limited. It was called “pseudo-wire” (PW), and constituted a network infringement. But in the Chinese online games market, 60% or more of players are using PW. Due to intense competition, PW bosses have no choice but to create ads in order to attract even more players. Cai Wen caught sent of a business opportunity and formed the “Knight’s Attack Group” as a PW advertising agent for “Legend,” and which could carry out traffic attacks on distribution stations that refused to provide personal advertising agency rights. After just three months, 13 PW advertisement distribution stations had succumbed one after another under the foot of “Knight’s,” and their power of attorney had fallen into Cai Wen’s hands. Even more ironic was that Shanghai Shanda Interactive Entertainment Limited, in order to attack PW, sent the “undercover agent” Chen Rongfeng into the “Knight’s Group;” however, unable to resist the enticement of tens of millions in riches, he was arrested together with Cai Wen et al.
Although Cai Wen’s team has now been caught, Shanda, as China’s largest internet media company, remains in an extremely awkward position. Domestic online games, represented by Shanda, already lacked originality and had slow innovation. With the addition of rampant PW piracy and official servers, more and more users are rapidly draining away from them. In just two years Shanda’s business profit margin plummeted from 40% to 5%, and internet piracy was undoubtedly the main reason. And it did not stop with online games; Shanda Literature (Cloudary) suffered similar harm from piracy.
The “BamBook” is a hand-held e-book reader put out by Shanda that is similar to Amazon’s Kindle. When it hit the market in August, 2010, it received widespread attention. The seven largest literature websites in China such as Starting Point already fall under the banner of Shanda Literature (Cloudary), holding more than 90% of China’s online literature market shares. But one year after it hit the market, the BamBook’s sales are weak. Allegedly, in the first quarter of 2012 Shanda Literature (Cloudary)’s income from non-pirated e-books was around 191 million RMB, but the annual income of the pirated copy market was as high as 5 billion. In China, internet piracy has always been difficult to regulate and manage, and these days, differences of opinion have begun to emerge in the drive to legislate. There is even one view whose proponents believe that if copyright protection is overly strict, it will put a stop to the enthusiasm of traditional industries to explore new methods (meaning, internet innovations). One must admit that compared with the enormous social effects and economic benefits that the development of the internet has brought to China, the total income from the digital publishing market is pathetically tiny. But this sort of purely utilitarian way of thinking has been much criticized. There are also people who believe that the reason China’s piracy trend has flourished is that the spending power of the Chinese people is far from a point where it can sustain a market for non-pirated e-books; thus, it has achieved excessive consumption in a dishonest sort of manner. However, once the use of pirated copies becomes a vice of the masses, it will push copyright protection into a bottomless abyss.
In any case, China is still a long way from strict copyright protections. A copyright holder cannot obtain reasonable returns; their living space has been squeezed. Relying on the higher short-term profits from plagiarism has already become a vicious cycle that every innovative industry — from books to movies and television to the internet to online gaming — is finding difficult to overcome.