The Successful Transformation of VeryCD: China’s Biggest Download Website Becomes a Webgame Company

TM截图未命名(By  Huang Mengren) The21st Century Business Herald has reported (note: the link is in Chinese) that eMule, one of the biggest video, music and game resource sharing websites in China, has had early success in webgaming after its abandonment of downloadable content hosting, with a current monthly income of tens of millions yuan.

VeryCD, who introduced the open source software eMule into China in 2003, is the 462nd most visited website according to Alexa as of 7th February 2012. The software eMule is a P2P web sharing software based on open source code, and its main difference from the P2P sharing software Bit Torrent is that it works without the torrent file and tracker. Therefore, the operational risk to the operator of the software is much lower in theory than that of other BT sites. The report states that VeryCD.com made modifications to the eMule software for the avoidance of political risk and also shielded KAD research service. It is also stated in the report that the total cumulative downloads from VeryCD.com’s eMule are more than 30 million times.

Despite these changes, Very CD was under heavy pressures by the local administration’s focus on cyber infringement. According to the website of Shanghai Pudong New Area People’s Court, VeryCD.com faced a new lawsuit weekly. Furthermore, Shanghai Copyright Administration also placed pressure on the website. Therefore, the website adjusted its material content, with many video and music resources being deleted and only online videos from other video sites remaining, while download addresses are now no longer offered.

VeryCD made no statement on the large-scale withdrawal of its resources; however, it could be easily noticed due to the pressure from the many copyright disputes. VeryCD faces high legal risk from the ubiquitous piracy on its site despite its claim that all the files are stored on users’ computers with Very CD only offering a sharing platform.

In a report by 21st Century Business Herald, VeryCD has seen a drop of 50% of its user traffic since its adjustment of the website’s content, which has significantly impacted the company because of its reliance on ads revenue. Shortly after that, VeryCD made the decision to become a webgame company and planned to advertise its games based on its abundant experience and numerous registered users.

After all, VeryCD is one of the top 500 most visited websites in the world, according to Alexa, having tens of thousands of visitors daily. In just one year, the site successfully remade itself into a webgame company, and currently has a monthly income of more than 100 million yuan (approximately 16 million dollars)and a profit of 40 to 50 million yuan (approximately 6 to 8 million dollars). Considering its number of servers and peak concurrent users, VeryCDis emerging as the dark horse of webgaming.

To our knowledge, China’s administration takes a strict approach towards the management of the Internet and many rigorous measures were adopted as early as 2008. Furthermore, the infringer may be punished by criminal law. Undoubtedly, with the proceeding of the administrative combat on IPR infringement, there will be more and more pressure on websites like VeryCD which run unauthorized content. On the other hand, for newly emerged commercial enterprises, the transformation for them is feasible and necessary. For this reason, we estimate that there will be more sites in the grey zone like VeryCD.com which choose to transform their business rather than continue to host unauthorized content.

Author: Mr. Huang Mengren
Attorney-at-law of DeBund Law Offices
Co-author: Mr. You Yunting
Founder & Editor-in-Chief of Bridge IP Law Commentary
Partner & Attorney-at-law of Shanghai DeBund Law Offices
Email: Bridge@chinaiplawyer.com, Tel: 8621-5213-4900,
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Bridge IP Law Commentary is a website focused on the introduction of commercial laws in China, especially intellectual property laws. All the posts here are our original works. And all news or cases referred here are from public reports, and our comments or analysis are of due diligence, neutrality and impartiality, representing our own opinions only and are our original works. You may contact us if you have any opinions or suggestions.


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